Pan Pacific International Holdings CorporationFebruary 8, 2023

Overview of Q&A Session at Analysts Briefing for Q2 FY June 2023
This document provides an overview of the Q&A session at the analysts briefing for the second quarter results.
Questions and answers have been edited for clarity.

Q1. With regard to the domestic DS business, could you explain the reasons behind the improvementin the figures from Q1 to Q2 with relevance to the separate elements of top line, gross profit, andexpenses? In addition, I believe the hurdles will also be higher than the previous year for Q3 andbeyond. Do you think this trend will continue?

A: In Q2, active event demand due to Halloween, Christmas, and year-end celebrations led to significant
growth in customer numbers across all time periods, including the late-night period, at stores in the city andstation front stores. This boosted the top line. GPM ratio improved due to the strengthening of PB/OEM,
which we have been advancing since last fiscal year. We also increased floor space for PB/OEM throughmeasures to reduce inventory, making it possible to roll out even more PB/OEM products and thereby
contributing to improvements in GPM ratio.
With regard to continuity from Q3 and beyond, as inventory reduction that was initially scheduled for thefull year was completed in the first half of the year thanks to the strong performance in the first half. Since
inventory budget for the full year has remained unchanged, improvement in the second half of the year will
be slower due to the inventory released in the first half of the year.
As for profit margin for products, the gap with the previous year will be narrowed due to the ongoing
PB/OEM strengthening efforts since Q2 last year, and GPM ratio will continue to grow. There was only aslight difference in SG&A ratio between Q1 and Q2, and the rise in top line is one of the reasons why theratio appears to have increased. Amidst the rising utility costs, we will continue to control SG&A ratio inQ3 and beyond.

Q2. I felt that a stark difference has emerged between regions where measures for the overseas businesswere implemented successfully, and regions where they were less successful. Could you provideadditional explanation on how to organize the internal factors and external factors in this respect?

A: We believe there are both external and internal factors. In North America, even as the retail environment
deteriorates, we are gradually having success in addressing the factors, for example, by changing ourapproach to shifts such as rising hourly pay and labor shortage.
There seems to be somewhat fewer external factors in Asia than in North America. Although it has only
been a short time, since we opened our first store in Singapore in December 2017, we get the sense that weare now in Phase 2. As we consider the types of lineups that will bring us success overseas, positive1

Pan Pacific International Holdings CorporationFebruary 8, 2023

examples are emerging in each country. Hence, we should be able to improve profit margin quickly bymatching the respective strengths and weaknesses.

Q3. With regard to the published budget for this fiscal year, there were no changes to the GMS budget
while the budget for the DS business had increased. In the actual results up to Q2, the GMS businessregistered an annual profit increase of more than 2 billion yen, in contrast to the initial forecast ofsingle-digit growth. What was the reason for not changing the published budget for the GMS business?
A: The GMS business faced difficult circumstances in the previous fiscal year, particularly in the firstquarter. Therefore, we had planned for largely flat results throughout the year, with profit increases in thefirst half and decline in profits in the second half. The progress in the first half was on track with this budget,
so we had maintained it as it was.

Q4. What is the basic stance amidst growing calls to increase wages?

A: In the Medium-to-Long Term Management Plan (Visionary 2025/2030) announced last August, wecommitted to operating profit of 120 billion yen for FY2025, based on the assumption of an increase inwages.

Q5. The Medium-to-Long Term Management Plan sets out the goal of increasing overseas profits by
15 billion yen over three years going forward, but there were changes of as much as 6 billion yen in therevision to planned figures this year. Are there also plans to make changes to the Medium-to-Long TermManagement Plan?

A: Changes will be communicated precisely at the appropriate timing. We have no intentions of changing
the overall operating profit target of 120 billion yen for FY2025. However, we would like to take some time
to consider what the composition of this operating profit will be like.

Q6. Is the business slump in Hong Kong, Macau, and Hawaii during the first half a factor for thedownward revision for the second half?

A: Yes, that is correct.

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February 8, 2023

Q7. With the new outlook for the domestic DS business, consolidated operating profit increases by 5billion yen in the first half and 1 billion yen in the second half. On the other hand, inbound sales has
been revised upward by 16 billion yen. Isn’t the forecast for the second half too low?

A: In response to the recovery in inbound demand, we have also factored in the drop in non-tax-free sales
due to changes in product composition to specialize in inbound-oriented lineup in inbound flagship stores.
Moreover, profits increased in the first half of the year due to a larger-than-expected boost received from adecrease in the inventory write-down. However, since we will not reduce the inventory more than the budget
for the full year, the boost in profits in the second half will be smaller than the first half.

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