GovernanceInterview with an External Director

In order to achieve the “total optimization” requiredof the Wacoal Group, I will provide valuable feedback
from an external perspective in an effort to enhance
the Company’s corporate value.

Koji Nitto

External Director

in finance and as CFO in my previous job. I knew deep downthat it was now or never for Wacoal to transform itself.

However, the role of monitoring and supervision as anexternal director is only one function behind the enhancementof corporate value. When I thought about the current situation—What issues does the Wacoal Group face?

at Wacoal, the significance of being invited to serve as anWacoal is a powerful brand that leads the innerwear market inexternal director at this time, and the expectations of Wacoal,

Japan. There are many talented people at the company, whoI have made it a point to communicate closely with thework hard and make high-quality products with confidence inmanagement team and focus on everything I can do totheir manufacturing. Therefore, there is a strong tendency toenhance Wacoal’s corporate value and restore its

carry on with the status quo, almost to a fault. Although itperformance. This does not mean that I’m on the businesstried new things in the past, the company was unable toexecution side. As an external director, I hope to provide

transform its core parts. However, the needs of the world are

maximum support to the management team in formulatingchanging. We find ourselves in an era where certain

highly effective management strategies and implementing

companies are now competing against one another, eventhem with a sense of urgency.

though we thought this would never be the case. If theChange requires ensuring that management philosophy

assumptions of the business environment have changed,and goals are shared within the company, and that executives

Wacoal’s approach to doing business must also change.

and employees are on the same page as they work together

Wacoal has upheld the notion that its “manufacturing isto achieve them. Considering the current situation of theunique,” and the fact that it did not pursue reforms has led to

Wacoal Group, it was necessary to clarify the direction of thethe current difficulties in performance.

medium-term management plan and formulate a detailedIn 2022, the Wacoal Group systematically defined its

action plan with a high degree of effectiveness. In this regard,management philosophy and formulated the medium- toI provided quite strong input from an external perspective.

long-term management strategy framework called VISION

Other directors have endorsed my contributions. The revised

2030. This framework is put together very well. Yet, I feel thatmedium-term management plan was formulated by internal

what the company aims for in 2030 and what it will do todirectors and corporate officer with the support of an external

achieve it is not shared internally, leading to a disconnect withconsultant. External directors were also deeply involved in theindividual work. Given the severity of the external environment,

process of formulating important agenda items.

the company has not been able to produce results, so it
appears as if the company is actually only working on cost
cutting from a short-term perspective. Without a strategy that
motivates employees to work hard and is supported byshareholders, it is impossible to aim for medium- to long-term
growth and sustainable corporate management. In that sense,
I thought the plan lacked connection.

—With this current situation in mind, how were you
and other external officers involved in the process forIssues Faced by Wacoal Group and the Role of External Directors

formulating the revised medium-term management plan?
At my previous job, the basic stance of governance was that

—You were appointed an external director inI felt a keen sense that the company needed to change.

directors were responsible for monitoring and supervision,

June 2023. What are your thoughts since taking up

I decided to take on the job because I thought that myand that business execution was entrusted to internal

your position?

knowledge would be useful to the Wacoal Group. Above all,directors who also served as executives. For example, whenIn April 2023, I was asked to become an external director

I wanted to help turn around the company because it isformulating strategies and measures, external directors

after a request was made to increase the number of external

headquartered in Kyoto, similar to OMRON Corporation,

naturally gave their opinions, but they were not involved indirectors. Honestly, I was surprised by this development. Even

where I worked previously.

actual business execution. From the executive’s point of view,

before I took office, I was aware that Wacoal was struggling in

After starting my role, as I began to understand thethe Board of Directors existed to rubber stamp their projects.

terms of performance. Yet, I didn’t expect the situation to beinternal situation and the expectations of external

An ideal style of governance is one where such oversight,

this severe because Wacoal is one of Kyoto’s leading

stakeholders, the opinions and suggestions of investors weresupervision, and execution are separated and supported by ablue-chip companies. While talking with the management,

quite natural based on my perspective of having held positions

relationship of trust.

59 ■ WACOAL HOLDINGSINTEGRATED REPORT 2023

■ 60

GovernanceInterview with an External Director

Strengthening Connections to Enhance Corporate Value—With the transformation of its corporate structure

I have told the executive management team that I want themunder a new management system, how do you view theto create opportunities to talk about difficulties, dreams and—ROIC management, which was introduced as part ofcustomers in a timely manner. “Supply chain management

Wacoal Group going forward?

hopes for the future. The long-term slump in businessthe company’s revised medium-term management planreform” is the first agenda item in the revised medium-term

In reviewing the medium-term management plan, the Board ofperformance may have opened up a gap between

is one of your specializations. Were there any issues

management plan. This is proof that the executive teamDirectors held considerable discussions on the basic

management and employees. Yet, communication to deepen

associated with its introduction at Wacoal Holdings Corp.?

understands the importance of cooperating and connecting

approach to formulating the plan. As a result, we came to themutual understanding is something that must be done even if

ROIC management balances “earnings power” and “thewith the perspective of total optimization. The other thing is toconclusion that the Wacoal Group would incorporate

it takes time and money.

power to create value,” which helps strengthen each function

be aware of the sense of urgency and take action.

everything that needed to be done without compromise. TheIf it sees results in the future, the company will be able tofinal product was the revised medium-term management plan.

have a sense of reality and expectations regarding theto make this possible. ROIC management cannot be achieved—In terms of total optimization, the company clarified

In particular, the plan is backed by supply chain management

achievement of its goals and the goals set forth in the VISION

unless the corporate officer and related members look in theits plan for asset reduction.

reform and brand strategy. I would like to speed up the2030. That is, the company should be highly motivated. In

same direction across departments and understand andROIC management is about how to efficiently manage theprocess a little more. Although the external environment isthat sense, the revised medium-term management plan is anagree on what needs to be done. The most important thing tomoney you receive and achieve high yields. From that

also uncertain, I would like to see the company exceed theespecially important period. In addition, ROIC management

be competitive as an organization is to be aware ofperspective, if there are assets that do not contribute to thefigures set in the revised medium-term management plan atand improvement of capital efficiency are only a means to“connections.” When introducing ROIC, I insisted on this point

bottom line or corporate value, the company’s overall

the very least. Therein, the motivation of workers becomesenhance corporate value. Achieving an early recovery into avery strongly. Things are inherently connected by a causal

performance will appear to decline, which should be avoided.

important. Employees need to move in the same directioncorporate entity capable of generating cash, appropriatelyrelationship. Internally, however, the reality is that there is a

Wacoal Holdings Corp. should continue to generate profits byand move forward with a sense of unity as a company, but

returning the generated cash to stakeholders, and redirecting

mixture of clear causal relationships and opaque relationships.

providing products and services in the innerwear market andthis depends on whether all employees can incorporate thethis cash to growth investments for the next stage of growth

For example, if the company wants to reduce inventory while

the fashion industry. There is no need to have assets that dorevised medium-term management plan revision into theirwill lead to the realization of the Wacoal Group’s corporate

securing sales, the sales department can only accomplish so

not contribute to this core business.

own work and take action. However, just showing the target

philosophy. Utilizing my own knowledge, I will continue toof the company. However, it is up to each and every employee

In order to revamp management, it is essential to clarify

number will only cause pressure. This will not motivate

provide strong input and supply a variety of supports that

improve the supply ratio, and build out a production system toand promote the basic policy of asset reduction and to utilize

employees. In order to make the power that comes fromcontribute to Wacoal’s growth and enhancement ofprevent excess inventory, the production and planningthe funds obtained from this policy to invest in employees, asemployees’ love for Wacoal into the strength of the company,

corporate value.

departments must also discuss matters together. By beingthey are responsible for the revised medium-term

thoroughly aware of how business and departments aremanagement plan. Or the funds should be returned toconnected, Wacoal Holdings Corp. can determine what isshareholders and invested in businesses.

much alone. In order to optimize the product mix in stores,

needed and what is not necessary to achieve its goals.
I’ve said that Wacoal Holdings Corp. has a corporate—Wacoal Group is making progress with structural

culture in which each individual is serious and works hard. Onreforms. What changes are being made to the Board

the flip side, though, this also means that Wacoal is aof Directors?

company that has an extremely strong tendency to toward

President and CEO Yajima and Vice President Miyagi believe

departmental or partial optimization. What the Wacoal Group

that outside knowledge is extremely important for the Wacoal

needs now is the concept of total optimization. Departments

Group today. They want board members to be free to express

and individuals must work together as a team to fulfill their

their opinions. The two of them continue to hear tough talk,individual roles and move flexibly toward a shared goal.

with some painful points and unprecedented proposals. The

Fortunately, however, each of Wacoal’s divisions has a highBoard of Directors is serious about the situation and able tolevel of competence, so the company can maximize its

have a deep discussion on each agenda item. There is nopotential by reviewing and connecting existing ways ofsense of distance between internal and external directors.

thinking, methods, and priorities.
In the process of formulating the revised medium-term

This stance has had a positive impact on everyone on theexecutive side. Participants in board meetings take a positive

management plan, I repeatedly explained three things. First,

view of our opinions and proposals and work together tothe importance of understanding that supply chain

exchange opinions on reforms for the Wacoal Group.

management can be fatal if it fails in even one place. Second,

Discussions and information exchanges between external

in order to fully realize its potential, the supply chain must be

directors and executives actively take place away from board

connected end-to-end from procurement to customers.

meetings. In the future, I would like to further engage both toFinally, no matter how much new product development orpush back on execution, while monitoring and supervising,brand development the company may accomplish, it iswhich will help to speed up reforms.

ProfileKoji Nitto
After graduating from the Department of Instrumentation Engineering, Faculty ofScience and Technology at Keio University in March 1983, Koji Nitto graduated fromDoshisha Business School in March 2006. Nitto joined Tateisi Electronics Co.
(currently, OMRON Corporation) in April 1983. He was appointed an executive officerof OMRON Healthcare, Inc. in April 2008. He was appointed as Director, Senior
Managing Executive Officer, and Senior General Manager of the Global Strategy HQ,OMRON Corporation in June 2014. Nitto became Director, Senior Managing
Executive Officer, Chief Financial Officer (CFO), Global Strategy HQ, OMRONCorporation in April 2017 (stepping down in March 2023 and retiring in June 2023).
He was appointed as an external Director of Wacoal Holdings Corp. in June 2023. He
has also served as a Director of the Japan Association for Chief Financial Officers, andDirector of the Center for iPS Cell Research and Application, Kyoto University.

meaningless unless the company can deliver products to61 ■ WACOAL HOLDINGSINTEGRATED REPORT 2023

■ 62