3

RYOHIN KEIKAKU CO., LTD.

About MUJI REPORTThis report is intended to lead to dialogue with stakeholders by presenting goals for medium- to long-term value creation,
management policies, business conditions, and other financial and non-financial information based on the philosophy andmission of Ryohin Keikaku, which is aiming to help create “a truthful and sustainable life for all.”Information Resources
Non-Financial Information

Financial Information

MUJI REPORT
Information on medium- to long-term value creation
Securities Report(Japanese only)

Consolidated
Financial Results

Investor Relations(website)

Sustainability (website)
https://ryohin-keikaku.jp/eng/sustainability/

https://ryohin-keikaku.jp/
eng/ir/Contents
Introduction

Our Philosophy

3

Our History

5

Toward “a Truthful and Sustainable Life
for All”

Enhancing Our
Corporate ValueBusiness Strategies
Material Issue 1:
Build a Sustainable andCircular Society That
Coexists with Nature

7

Financial and Non-Financial Highlights

9

Global Network

11

Message from the Chairman

13

The Value We Create

15

Ryohin Keikaku and Sustainability

17

Message from the President

19

Our Goals and How We Will Achieve Them

25

Feature 1: Overseas Growth Potential

27

Feature 2: Changes in Our People and Stores

29

Feature 3: An IT Strategy Aimed at Realizing
Comfortable Online Services

31

Feature 4: Strengthening Our Earning Power35

Ryohin Keikaku’s Business Strategies

37

Ryohin Keikaku’s Unique ProductDevelopment

39

Apparel41

Household Goods

42

Food

43

Overseas Product Development

44

Supply Chain Management

45

Raw Material Procurement

47

Recovery and Recycling Initiatives

48

Caring for the Environment

49

Climate Change

50

Material Issue 2:
Address Local
Challenges andRevitalize Regions
Material Issue 3:
Practice Business
Activities in Which Eachand Every Diverse
Individual Plays a
Leading Role
Material Issue 4:
Realize GovernanceAligned with Public
Interest and PeopleCentered Management
Basic Information

Store Strategy

51Interview with a General Manager

53

Sustainable Community Design

55

Human Resource Development

57

Initiatives for Diversity & Inclusion

59

Working toward “Public Interest andPeople-Centered Management”

61

Directors and Corporate Auditors

63

Corporate Governance

65

Messages from Outside Officers

69

Message from an Outside Corporate
Auditor71

Risk Management and Compliance72

11-Year Summary75

ESG Data

77

Stock Information

79

Corporate Information

80

Scope of This Report Consolidated subsidiaries and consolidated companies of Ryohin Keikaku Co., Ltd.
Period Covered

Fiscal year ended August 2023 (September 1, 2022 to August 31, 2023)
Note: Information outside this period is reported when it is appropriate to show past events and data or recent examples. In this report, amounts and number ofshares that are less than one unit are rounded down, and all ratios and percentages are rounded to the nearest whole number.

Forward-Looking Statements
This report contains forward-looking statements and projections. These statements and projections are based on the Company’s judgments at the time the report was
produced, and include risks and uncertainties. Changes in various factors could cause actual results to differ materially from forward-looking statements and projections
contained herein.
MUJI REPORT 2023

2

MUJI Tsubame

3 MUJI REPORT 2023

Our Philosophy
Our Corporate Purpose
Our corporate purpose is to contribute to the creation of “a truthful andsustainable life for all through our products, services, stores and businessactivities; believing human society rich in heart, with balanced relationshipbetween human, nature and artifacts.”

Our Two Missions
1. To provide daily necessities and services with genuine quality andethical value, at appropriate and affordable prices.
2. To have a positive impact on each region by operating stores thatserve as community centers, sharing concerns and values with local
residents and collaborating with them to tackle local issues.

Our Core Value
We make efforts to reduce our environmental burden and to respectindividual human rights through our product development, services andactions. Through our core value of “contributing to society and people”
our employees and associates will proactively respond to issues facing
society and the Earth.

Our Management Policy
We will practice “public interest and people-centered management,”
where each of our employees and associates contribute to the public
interest through our business activities and locally rooted stores, havea sense of ownership and take leading roles in the community.

Enhancing Our Corporate Value
Through our activities, we will create a highly profitable business structure, pay
taxes properly and return profits to shareholders appropriately. Furthermore,
we will strive to create long-term value for the Company by making a
positive impact on society together with stakeholders.

MUJI REPORT 2023

4

Introduction

Our History
Ryohin Keikaku’s “Grand Strategy” is to realize “a truthful and sustainable life for all.” Our “Grand Strategy” defines who weare—being useful to people and society. Of course, as a business enterprise, profit is also important, but our top priority is
this “Grand Strategy.” Ryohin Keikaku has been working since its founding to make a contribution wherever it can help
with social issues and people’s concerns. This approach has led to the Ryohin Keikaku of today.

2001-2015

1980-2000
Redefining the value of goods

The relationship between life and goods

We aimed to minimize unnecessary elements and create
products that are truly useful to consumers from the perspectiveof selection of materials, streamlining of processes andsimplification of packaging.

We sought to give customers a feeling of rational satisfaction,
expressed not with “This is what I really want,” but with “This will do.”Our Perspective

Products with simplicity

Products that fit all life occasions

New store openings both inJapan and overseas

Launch of flagship stores and new services

Evolution of
Our Products
Evolution of Our
Stores and Services

History of Ryohin Keikaku

1980
Seiyu Co., Ltd., a Japaneseretail company, establishedMujirushi Ryohin (MUJI) as
its private brand

1983

1991
Began business outside Japan(First store in U.K. and first store in
Hong Kong opened)

2001

2011

MUJI Yurakucho, a flagship store for
information dissemination, opened

Found MUJI Aoyama opened

2005

2013
Joined UN Global Compact
Launched MUJI passport smartphone app

1995
MUJI Tsunan Campsite opened

1986

2006

2000

Business transfer from IDÉE Co., Ltd.

Listed on the first section of theTokyo Stock Exchange*
MUJI.net Co., Ltd. established(currently MUJI HOUSE Co., Ltd.)

2007

1989
Ryohin Keikaku Co., Ltd.
established

5 MUJI REPORT 2023

*N
 ow listed on the Tokyo Stock
Exchange Prime Market

Muji Retail (Thailand) Co., Ltd. established

MUJI (Shanghai) Company Limited
establishedFirst directly managed store,
MUJI Aoyama, opened in Japan

Production and procurement
started outside Japan

2012

First store in U.S. opened

2010
Began MUJI x JICA Project Kyrgyz

2014
MUJI Sino-Ocean Taikoo Li Chengdu opened

2015
Began ReMUJI initiative for reuse and recyclingof fabric items

Introduction

2016-2020

2021-

A truthful and sustainable life

“A truthful and sustainable life for all,” and beyond

By providing functional, streamlined products that help simplify
and beautify people’s lives based on our concept of “conscienceand creativity,” we have contributed to solving social issues withproposals for peaceful, relaxed living.

We offer affordable products that are not only essential and useful but also
beneficial for the environment, producers and local communities. We will also
evolve our efforts to help address local challenges, and contribute to the harmonious
coexistence and development of daily life, culture and the environment together
with local communities.

Products for organizing people’s life

Expansion of services close to daily life

Products in harmony with society

Creation of platforms for realizing a better society

2016Entered the market in India as the first Japaneseretailer there

2017
Number of MUJI stores surpassed 400 both inJapan and overseas

2018
Began sales of frozen food2019
MUJI Ginza and MUJI HOTEL GINZA opened

2020
Established production management base in Vietnam
Launched MUJI passport Pay service2021
New start under our “Second Founding”
Started monthly furniture rental service
Opened Healthcare Center

FY2023/8

2022

JPY

Opened MUJI Hiroshima Alpark
Started sales of MUJI products in Lawson convenience
stores nationwide and through CO-OP Sapporo’s Todock
home delivery system

2023

Operating revenue

581.4 billion

Operating profit

JPY

33.1 billion

Expanded range of plastic products collected
Reopened MUJI Shinjuku Yasukuni-Dori as a specialty
clothing store
The graph in the background shows operating revenue.
MUJI REPORT 2023

6

Introduction

Toward “a Truthful and Sustainable Life for All”
The scope of our activities has greatly expanded since the creation of MUJI 43 years ago, but our core philosophy has remained
the same. We envision a future where “a truthful and sustainable life for all” is a reality. We will provide various products basedon our concept of “conscience and creativity,” and help solve social issues through our businesses and services.

A store with all lifestyle essentials

Local comm

Organization of loc
local businesses a
ApparelHousehold goods

Food products

Events and workshops

Fresh food

Circularity: Collaborating with custom
recycling and waste reduction

MUJI CYCLE (page 48)

ReMUJI (page 48)

Services that support daily life: Enhancing customers’
well-being

Mobile sales

7 MUJI REPORT 2023

Healthcare Centers (page 56)

MUJI SUPPORT (page 52)

Introduction

munity centers

Platforms for realizing “a truthfuland sustainable life for all”

cal resources: Collaboration withand sales of local products

Community Market events(page 55)

Space design business: Designing residences andspaces that reflect MUJI’s value

Residential design

Development of local products
exclusive to the area

Public spaces

Renovation

Revival projects for regional areas: Highlighting local
traditions and utilizing local resources

Rental of stall space inside MUJI
stores at shopping arcades
Store opening support for local
business owners

Café&Meal (local production
for local consumption)

Revitalization of shopping
arcades

Store openings at roadsiderest areas

Revitalization of housing complexes
and renovation projects

Repurposing of abandoned
school buildings

Revitalization of unused houses Shokoku Ryohin (Sales of local
products)

mers in productMottainai Market (page 48)

Accommodation business: Managing facilities andfacilitating local experiences

MUJI BASE (page 56)

MUJI HOTEL

Campsites

Community engagement: Developing activities and collaboratingwith local governments, entrepreneurs and producers

ITSUMO MOSHIMO (page 56)

Satoyama landscapeconservation​

Art events
MUJI REPORT 2023

8

Introduction

Financial and Non-Financial Highlights
Operating Revenue

Operating Profit/
Operating Profit Ratio(Billion JPY)（%）

(Billion JPY)

581.4

600

320

40

267.4

42.4
40

453.6

438.7

（%）

(Billion JPY)

15

50

496.1

500

Net Assets/ROE

12

36.3

182.9
9

20

160

8.3

17.3

300

6.6
20

200

0

5.7

179.3
10

100

0
2020/2 2020/8 2021/8 2022/8 2023/8

0.5

0.8

2020/2 2020/8 2021/8 2022/8 2023/8

Operating profit (Left scale)

Total Assets/ROA
（%）

500

25

400

3

0

0

(80)

47.9

50

20

40

306.5

15

10.8

8.7

（%）

40.0

40.0
40.0

36.4

(8.8)
2020/2 2020/8 2021/8 2022/8 2023/8(10)

ROE (Right scale)

Net assets (Left scale)

Includes licensed stores, Cafe&Meal MUJI and IDÉE

50

1,500

40

1,200

1,251
1,033

31.8

30

10

0

42.9

41.1

399.3

11.8

Number of Stores (Total) in Japanand Overseas

(JPY)

343.9
300

80

Operating profit ratio (Right scale)

453.7
393.3

6

Dividends per Share/
Dividend Payout Ratio(Billion JPY)

30

214.8

208.4

9.4

30

240

33.1

32.7

400

244.8

30

1,136

1,068

1,029

654

900
604

12.8

12.3

200

9.4

10

20

20

600

5

10

10

300

0

0

556

550

571

477

479

497

8.5
100

597

5.0
0

0.2
2020/2 2020/8 2021/8 2022/8 2023/8

0

ROA (Right scale)

Total assets (Left scale)0

2020/2 2020/8 2021/8 2022/8 2023/8

2020/2 2020/8 2021/8 2022/8 2023/8

Dividends per share (Left scale)

Capital Investment andDepreciation(Billion JPY)

(Billion JPY) 30.0

60

63.7

61.4

56.5

Parentheses indicate percentage of total(Billion JPY)

600

26.3
24.8

25

24.4

18.9 18.9

17.6

23.3

17.6

15

0
(31.4)

(1.7)
(4.2)

(13.5)(16.6)(15.1)

400

300(22.1)(11.2)(11.4)

500

22.0
20

30

(30)

Operating Revenue by ProductCategory

30

90

10

10.3
9.0

100

(58.6)(90)

2020/2 2020/8 2021/8 2022/8 2023/8

Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities

02020/2 2020/8 2021/8 2022/8 2023/8

Capital Investment

Depreciation

Note: Due to the change in fiscal year, 2020/8 covers the six-month period from March 1 to August 31, 2020.

9 MUJI REPORT 2023

18.2
（4.0%）
54.5（12.0%）

211.8（46.7%）

20.7（4.2%）
59.9（12.1%）

232.7（46.9%）

23.9（4.1%）
74.8（12.9%）

260.0（44.7%）

200

5

(60)

Number of storesin JapanNumber of storesoverseas

Dividend payout ratio (Right scale)Note: T he dividend payout ratio for FY2020/8 is not presented
as the Company recognized net loss per share.

Cash Flow

532

0

169.0
（37.3%）

2021/8182.7（36.8%）

2022/8222.5（38.3%）

2023/8

ApparelHousehold goods

Food products

OtherIntroduction

Number of Employees1

Percentage of Women in
Managerial Positions1

Number of employees at the end of the period
3,000

2,500

Number of New Employees Hired1
400

2,874
2,446
2,285

2,343

131
（27.8%）

1,576
2,000
1,250

366

2,527

1,374

1,295

142

300
252

1,404

208

340
（72.2%）

1,500

200

173
103

200
1,000
1,035

500

1,072

1,048

100

1,298

1,123

66
28

Total 47105702020/2 2020/8 2021/8 2022/8 2023/8

Number of male
employees

Number of female
employees

FemaleMale（t）(ReMUJI products)(t-CO2e)35,00050,000

49.1

52.0

44.2

CO2 Emissions/Emissions per
Unit of Operating Revenue
20.0

40,37840,00030,83930,00020,00027,07310.1 9.5

12.0

11.8

11.6
10.0

8.0

20,00010,00017.1

16.0

35,81925,00015,00011,6144.0

10,0005,000
0(t-CO2e/per 100 million JPY)

30,43328,62340

20

Number of midcareer hires

Scope 1 and 2 only1

30,000

60

105

38

Number of new university
graduate hires

ReMUJI1, 2 Sales Volume

66.9

52

2020/2 2020/8 2021/8 2022/8 2023/8

Volume of Textile ProductsCollected1
80

224

116

2020/2 2020/8 2021/8 2022/8 2023/8

0

3,927

3,214
224

0

2020/2 2020/8 2021/8 2022/8 2023/8

Sales grew substantially in FY2022/8 due to the expansionof ReMUJI sales at MUJI Shinjuku* from September 2021.
* Currently MUJI Shinjuku Yasukuni-Dori

Number of Regional
Cooperation Agreements1
40

Number of Employees in Employee
Shareholding Association1

2020/2 2020/8 2021/8 2022/8 2023/8

CO2 emissions(Left scale)

0.0

Emissions per unit of operating
revenue (Right scale)

Number of Employees underthe Balanced Four-Day
Workweek System1
100

3,000
2,626

89

2,623

31
75

30
2,000

19

20

1,425

17

50
32

1,000

25

10
5

0

70

1,848

5

2020/2 2020/8 2021/8 2022/8 2023/8

02020/82021/82022/82023/802021/82022/82023/8For FY2021/8, the figure covers the four-month period
since the launch of the system in May.

1. Ryohin Keikaku Co., Ltd. only
2. Resale of goods reprocessed from products collected at stores for recycling and from products soiled or damaged during the manufacturing process
MUJI REPORT 2023

10

Introduction

Global Network (As of August 31, 2023)
We operate directly managed MUJI stores and a wholesale business in Japan and overseas, with more than 1,200 stores in
32 countries and regions. Although points of emphasis differ depending on the region, by enhancing our lineup of locally developed
products and services that match lifestyles in each region, we establish a locally rooted business model. We also focus on hiring
employees locally. We will continue to expand globally with the aim of being useful to the people of each country and region
where we operate to help realize “a truthful and sustainable life for all.”East Asia

Europe7,274 (2,070)

1715 (334)

1

482
25
2

384

Japan
10,737 (7,784)

1

5712
26
1
3

Southeast
Asia
1,545 (208)

1

834
3

Oceania
136 (68)

1

4

11 MUJI REPORT 2023

Introduction

Employees

Stores

CafésHotelsCampsites

Countries/Regions
Where We Operate

32

Number of Stores

1,251

Number of Group
Employees

20,7953

1(10,721)

Breakdown of Operating Revenue by Area

North
America

Europe/North America

388 (257)
19

1Southeast Asia/
Oceania

6.1%

5.4%

Japan

59.0%

East Asia

29.5%

Breakdown of Employees by Area
Europe/North America

Southeast Asia/
Oceania

5.3%

8.1%

Japan

51.6%

East Asia

35.0%

1. Number of non-regular employees (average number of employees per year
based on an eight-hour workday calculation method)
2. Including 9 IDÉE stores and 84 licensed stores
3. Including licensed stores, Café&Meal MUJI and IDÉE
4. Including licensed stores

MUJI REPORT 2023

12

Enhancing Our Corporate Value

Message from the Chairman

We intend to continue building our envisioned consumer society byreturning to the concept that defined MUJI when it started out, andevolving and deepening it.
Masaaki Kanai
Chairman & Representative Director

Achieving the satisfaction and value that comesfrom being one’s true self is the concept thatdrove MUJI when it started out.
We introduced Koshin Shiitake Mushroom Pieces to the market in
1980, at around the same time MUJI itself was established. Dried
shiitake mushrooms were prized for their high nutritional value andbecause they can be rehydrated for use as a soup stock, but thegeneral perception back then was that they were too expensive. In
reality, it doesn’t matter to customers if some mushrooms are broken
or come in different sizes. However, at the time, only standard shaped
and sized shiitake were valued by the market, and non-standard
shiitake were piling up at farms. We were the first to skip the sorting
process used to standardize sizes and reject broken items, and to
start marketing those non-standard pieces as a commercial product.
Our idea of developing a product to “provide customers with thelifestyle essentials they actually need, in the form they actually want”
found acceptance among many people, and was adopted as aslogan that was printed on the package at the time of the launch.
This simple story illustrates how MUJI approaches productdevelopment. From the very beginning, our attention has been on

In offering a lineup of products essential to daily life, MUJI’s
approach encompasses the belief that people, not goods, should takeprecedence, and that the products themselves should never prevailover or get in the way of that concept. We also try not to lead people
into placing too much emphasis on product attributes such as simplicity
or being free from bleach or artificial colors. We just want to offer
straightforward and unassuming products that people can feel
comfortable with in their “me time,” when they just want to be themselves.
Since we do not embellish our products with contrived charm andvalue, their sense of seamlessness increases, and they become true
“no-brand” products. The products created in this way are naturallyeasy on the environment, and on customers’ wallets.
We genuinely take the viewpointof consumers in developing good
products based on what is true
and real in production, and passthose products along as they are,without dressing them up. That is
why developing products with adirect link to production is soessential.

people’s lifestyles as well as production sites. In addition, we have

• Selection of Materials

placed importance on MUJI’s unique marketing approach of focusing• Streamlining of Processeson the satisfaction that people experience when they embrace their• Simplification of Packaging

true selves, rather than on established standards of value.

13 MUJI REPORT 2023

Shitake mushroom pieces

Enhancing Our Corporate Value

This is a perspective that does not bow to the current form ofcommercialism or trends, which rely on attributes such as uniqueness,innovativeness, luxuriousness or a position of superiority. It is thereason that people appreciate MUJI as the only store of its kind.

We aim to continue building our envisioned
consumer society.
Economist E.F. Schumacher makes some very interesting observations
in his book Small Is Beautiful, published in 1973. He wrote that

The “Second Founding” means going back to
our roots of contributing to society and people.
Ryohin Keikaku has two missions. One is to provide daily necessities
and services with genuine quality and ethical value, at appropriate
and affordable prices. The second is to have a positive impact oneach region by operating stores that serve as community centers,
sharing concerns and values with local residents and collaboratingwith them to tackle local issues.
The “Second Founding” we set out in 2021 represents a new“Since consumption is merely a means to human well-being, the aim

commitment to realizing “a truthful and sustainable life for all” by returning

should be to obtain the maximum of well-being with the minimum

to MUJI’s origins of providing satisfaction and value. We want to helpof consumption.” I think this is something that many young people ofpeople be their true selves, and will work to evolve and deepen thattoday would agree with. If we follow his theory, people in modern society

concept. One example is IDEA PARK. This is an initiative featured on theare likely to view natural resources not as capital, but as their own

MUJI website aimed at helping consumers better understand the MUJI

income. That has made us into a civilization that thinks of everything

concept while also helping us to create better products through dialogue

in terms of monetary value, which has led to excessive consumption.

with consumers. This initiative enables people to contribute a variety of

Humans have a desire to gain superiority over others, and worrying

comments and suggestions, such as “We need children’s playgroundabout what others think in order to get ahead has created fertile

equipment in the town’s parks.” It is also extremely significant for us inground for this society that embraces excessive consumption.

terms of our efforts to serve as community centers that create “a truthful

The result is that the constant push to consume has led toand sustainable life for all” together with the local residents.

faster product obsolescence, and society has moved in a direction

We are also promoting employee-driven independent store

in which needs are never satisfied. In other words, it has produced

management to accelerate activities that lead to solving issues inlarge quantities of products with transient ownership value that iseach community. Dialogue and co-creation with stakeholders arequite divorced from their utility value. This society of excessive

essential to that effort. Going forward, we plan to increase the number

consumption has given rise to shortages of water, food and energy,of Shareholders’ Meeting events and opportunities for dialogue withand further exacerbated global warming, inequality and conflict.

customers. It is also important that all stores, employees, products

Furthermore, a digital culture that is tied to how we ourselves haveand services share our unique concept to maintain overall consistency.

essentially become domesticated1 and capital theory has given

Ryohin Keikaku endeavors to nurture employees who have the same

added impetus to the trend toward excessive consumption.

values as consumers, and places employees with a sense of ownership

The way I see it, the desired consumer society should notin leading roles in order to enhance autonomous, decentralized

depend any more than necessary on the modern excesses of goods

organizations and businesses where employees consult with eachand civilization, but should reflect a world in which people can enjoyother and support each other’s growth. We are practicing “public

life on their own terms, and in which each of us can achieve a highinterest and people-centered management” in which the activities ofcultural level. The original concept behind MUJI was to develop

individual stores rooted in their communities, and the actions of“good products” from a true consumer perspective, and to offer

individual employees and stakeholders, benefit the public interest.

them to customers just as they are, without any unnecessary

MUJI stores will continue to serve as community centers thatembellishments. Ever since MUJI was founded, we have prized ourcreate value in partnership with local businesses and residents. Weview of product development that emphasizes three perspectives:

will strive to realize “a truthful and sustainable society for all” while

selection of materials, streamlining of processes and simplificationachieving a balance among the economy, the environment andof packaging. How we see apparel is a good example. We define

culture. Ryohin Keikaku cannot do that alone. We hope you will join

apparel as clothing that helps people stay at a comfortable

us as we work to make this future a reality.

temperature, is easy to wear, looks good, and has an impact on the*feelings of the person wearing it. We have always come up withattractive designs requiring minimal materials and processing. Thatmeans simply respecting the diverse people who live for the here
and now, and providing a lineup of products that serve as the means

Services

Good
products

Promotion

for giving customers the chance to organize their own lifestyles theway they want.2 We believe that reenvisioning our consumer society is
an urgent matter, and one that Ryohin Keikaku continues to address.
1. The idea that if domestic animals can be defined as “animals that have been cut off from thewild and have undergone changes in their appearance and habits for the convenience ofGood
environment

Ideas

Good
information

humans,” then human beings themselves have also been domesticated as a result of theiradaptation to our current social and economic systems, turning themselves into domestic
animals through the loss of intrinsic human emotions and senses (i.e., their true selves).
2. The concept of rethinking and rearranging one’s current lifestyle in pursuit of an ideal state* Back to the beginning again
and again. Imagining thefuture again and again.

Activities
MUJI REPORT 2023

14

Enhancing Our Corporate ValueThe Value We Create
Structure of Our Business Activities
Based on our core value of “contributing tosociety and people,” we will work with all of
our stakeholders to solve social issues. The
participation of stakeholders with different
backgrounds and values enables us to provide
products and services “to be a part of people’s
daily necessities” and to promote activities thatenable us “to take root in local society,” which
will lead to the creation of new value.

Six Foundations
Number of Group employees: 20,795
A corporate culture based on our founding
philosophy of practicing ESG management● Human resources that drive MUJI’s unique formof product development● An advisory board made up of industry experts●●

Social Issues
Escalating
environmental
problems

Shrinkinglabor force

Changes inlifestyles

Ruraldepopulation

Human CapitalCountries/regions where we operate: 32
Downloads of MUJI passport app: 78.53 million● Number of regional cooperation agreements: 31● Community Market events in stores●Social Capital●

MUJI design
Product planning know-how● Know-how in sourcing of materials andraw materials● Store design with consideration for theenvironment and community●

Intellectual
Capital●

Net assets: JPY 267.4 billion
Capital: JPY 6,766,250,000● Equity ratio: 58%●

Financial Capital

Manufacturingand Marketing
Capital

●Number of stores: 1,251
Distribution bases in Japan: 11● Distribution bases overseas: 22● Production partners who share MUJI’s
perspective of product development●●

Electricity consumption: 87,684 MWh
CO2 emissions: 1.23 million t-CO2● Water consumption: 144 thousand m3(Ryohin Keikaku Co., Ltd. only)●

Natural Capital

15 MUJI REPORT 2023●

Enhancing Our Corporate Value

Public Interest and People-Centered Management
The MUJI stores that Ryohin Keikaku operates are venues for activities that benefit the public interest. Our aim is to practice “public interest
and people-centered management” in which the value and profit generated by the participation of stakeholders are shared with thosestakeholders and used to fund further activities.

Participation

Returns

Stakeholders are encouraged to freely participate in
Ryohin Keikaku’s activities in various ways, such as
by making an investment, cooperating in initiatives
or purchasing products.

Co-Creation

Stakeholders participate directly in MUJI’s activities,
and we also develop new products and services
together with them.

Stakeholders receive benefits in some form,
whether it be dividends, profit, or discounts.

Enjoyment

Stakeholders benefit in various ways, including
through quality products and services, community
vitality and growth, and improvement of the environment.

Public Interest and People-Centered Management

Co-Creation

Participation

Circularsociety

Customers

Employees

Structure of Our
Business Activities

Business
Partners

Enhancementof qualityof life

To be a part of To take root
people’s daily
in localnecessities
society
Local
Communities
and Society

Economic
growth inproduction
areas

Shareholders
and Investors

Governments

Community
revitalization

Helping to Realize“a Truthful andSustainable Life
for All”

Returns

Enjoyment

Four Material Issues

See pages 17–18 for details. See page 37 onward for information on the progress of initiatives.

MUJI Concept
MUJI REPORT 2023

16

Enhancing Our Corporate Value

Ryohin Keikaku and Sustainability
A Consistent Commitment to ESG since Day One
Ryohin Keikaku’s MUJI brand has consistently served society as a whole since day one. Our core value is “to contribute to society andpeople.” This is a value that is rooted in all of our business activities.
Our commitment to the three perspectives of selection of materials, streamlining of processes, and simplification of packaging has
made us a pioneer in what the world now calls sustainability. We continue to create products with social and environmental considerations
in mind based on these three perspectives. That policy will not change, and will become even more important as we work toward a better
future society over the next 100 years.
We will achieve our ideal ESG management by implementing innovative ESG approaches for products, business activities andcommunities to create new value and contribute to society.

ESG in products
ESG in business activities
ESG in communities

We will democratize sustainability* by adopting circular design for all products andoffering them at affordable prices.
We will collaborate with stakeholders to reduce social costs and environmental burden.
At the same time, we will contribute directly to solving social issues through ourbusiness activities.
We will make a positive impact on society by leading the revitalization of local areas
through activities with local communities.

* “Democratizing sustainability” means promoting sustainability in a way that is accessible to everyone. We recognize that in the current consumer market, in general,companies strengthen ESG and sustainability initiatives in a way that makes consumers bear some of the cost. Ryohin Keikaku conducts environmental and social
initiatives that take nature into consideration, and provides products and services at affordable prices. Through MUJI, we want to reduce our environmental impact ina way that occurs seamlessly in daily life—in fact, that is MUJI’s founding philosophy. By practicing and broadly expanding this philosophy, we seek to promotesustainability in a way that is accessible to everyone.

ESG Strategy through 2030
Process for Identifying Material Issues
Ryohin Keikaku identified material issues in formulating its ESG strategy through 2030. The process involved:2) Conducting interviews with management executives and experts3) Implementing a scoring system that is unique to Ryohin Keikaku
with the help of an external organization

Stakeholders

Importance1) Identifying and understanding social issues

Ryohin Keikaku

Importance

We used the scoring system to narrow our focus to four items. These items were then approved by the Board of Directors and positioned
as our material issues. In January 2024, we reviewed some of our material issues due to changing market and business conditions.

① Build a sustainable and circular society thatcoexists with nature
Reduce the use of fossil-based raw materials and fuels
Ensure business operations based on integrity andethical judgements●
Democratize sustainability in a way that is accessible
to everyone●●② Address local challenges and revitalize regions
Revitalize regional economies and industry through store
openings and business development that highlights local
traditions and utilizes local resources●
Build local communities that are active and lively●

17 MUJI REPORT 2023

③ Practice business activities in which each andevery diverse individual plays a leading role
Maximize the value of diversity and inclusion to achieve
open innovation●
Build a self-motivated and autonomous corporate culture●Achieve high employee engagement and workplaces where
everyone can play an active role●

④ Realize governance aligned with “public interest
and people-centered management”
Generate co-creation with people and local communities
Realize governance with people in local communities
as shareholders●
Encourage co-owned management by employees●
Earn strong support from investors●●

Enhancing Our Corporate Value

ESG Management Structure
Ryohin Keikaku launched the ESG Management Committee at the start of FY2022/8 to address its material issues and further accelerate
ESG management. The chairman & representative director chairs this committee, which addresses medium- and long-term Company-wide
ESG issues. Inside directors, executive officers, managers and people in charge of related business divisions participate in the committee’smonthly meeting.

Board of Directors
ESG Management Committee(Chairperson: Chairman & Representative Director)

Administrative Support: Corporate Planning Division

Ryohin① Build a sustainableKeikaku’s
and circular societythat coexists with
Material
natureIssues② Address local
challenges andrevitalize regions③ Practice businessactivities in which
each and every
diverse individual
plays a leading role

④ Realize governancealigned with “public
interest andpeople-centered
management”

In FY2023/8, we promoted 19 Company-wide, cross-functional projects organized by theme to address our material issues. Executive
officers are responsible for each project and select project leaders. Project leaders then select project members from throughout Ryohin
Keikaku. Progress toward achieving goals for 2030 is their benchmark.
In September 2023, we established a system to make ESG the main focus of our business, with the 19 projects divided among
different divisions. Each division has formulated short-, medium- and long-term ESG targets and roadmaps based on our material issues,and is working to further incorporate ESG management into our business activities and create value unique to Ryohin Keikaku. The ESG
targets of each division are also incorporated into the individual targets of the persons responsible in each division. The divisions andadministrative support office have established a forum to regularly exchange opinions, where they discuss issues related to ESG promotion.
The progress of each division is reported to the ESG Management Committee, and discussions take place among the inside directors,
executive officers, managers and people in charge of related business divisions.

Main Themes●

Reduction of use of virgin plastics in our products and packaging. Acceleration of recycling and reuse of products ▶Page 48●

Development of new materials and new businesses that take environmental and social issues into consideration ▶Pages 47-48, 55-56●

Reduction of greenhouse gas (GHG) emissions globally and across our supply chains, looking ahead to 2030 and 2050 ▶Page 49●

 inimization of adverse impact of business activities on the environment, including in areas such as water resources, biodiversity andM
waste ▶Page 49●

Projects that improve diversity & inclusion and engagement ▶Pages 59-60●

Achieve “public interest and people-centered management” ▶Pages 57-58, 61-62●

Enhancing information and data security including personal information and ensuring compliance with various laws andregulations ▶Pages 73-74

MUJI REPORT 2023

18

Enhancing Our Corporate Value

Message from the President

We will firmly establish the foundation for our “Second
Founding” by enhancing the value of our products.
Nobuo Domae
President & Representative Director

I would like to extend my deepest sympathies to everyone who was impacted by the 2024 Noto Earthquake. We hope for the earliest
possible return to normal life for the people in the region.

19 MUJI REPORT 2023

Enhancing Our Corporate Value

Progress of the Medium-term Business Plan
Ryohin Keikaku operates in line with its corporate purpose, which we redefined in conjunction with the announcementof the medium-term business plan. To realize our corporate purpose, we will take a two-pronged approach to ourcore business. First, we will create and provide products and services that are essential to people’s daily lives. Second,
our stores will function as community centers that contribute to solving local issues and to local revitalization.
In advancing these objectives, we will embrace three values. The first is helping to build a sustainable andcircular society that coexists with nature from the perspective of benefitting people and society. The second value ispracticing “public interest and people-centered management” as our core management policy. We will ensure thatour business activities benefit the public interest, with people at the core. The third value is creating a positive impact
on society together with local residents and business partners, and obtaining reasonable earnings as a result.
In the medium-term business plan, we have set four goals:
1. Complete the finest and most unrivaled product lines essential to daily life and and the procurement and production
system for these products
2. Establish a community-based business model centered on independently managed stores and open new storesthroughout Japan while maintaining profitability
3. D evelop an organizational culture in which all
associates work proactively, leading to the independent
growth of each store, region and country
4. Build the business infrastructure and headquartersfunctions to support independent store management
and localization
In advancing these goals, we are addressing
the six priority issues we identified in FY2023/8. We
have reinforced our personnel structure to effectively
respond to these issues, and the foundation of ourbusiness operations is now in place.

2030 Vision
To be a part of people’s
daily necessities
To achieve this, we will

To take root in
local society

Practice independent store management
and co-owned management
Provide comfortable online services
Be a front runner of ESG management

MUJI REPORT 2023

20

Progress on Addressing the Six Priority Issues
1. Enhance product value
We have reinforced our product development team. We also expanded the lineup of daily necessities in household
goods, and worked to improve basic clothing items in apparel. However, we still have much more to do interms of enhancing the value of our products. I will talk more about this later.

2. Increase involvement in production
We are strengthening our human resources by recruiting professionals from outside the Company, and areworking to establish the organizational foundation to insource production functions, including taking overaspects of production management that were previously outsourced.

3. Enhance marketing activities for products
To reach the many different consumers who have never had the chance to try our existing lineup of products,
we launched a new communication strategy that includes digital communications and mass advertising.

4. Establish a store network and new channels
With a new store development framework in place, we increased the number of 600 tsubo (approx. 2,000 m2)
stores next to supermarkets in residential areas to 200. We began sales at convenience stores all over Japan,
and through the home delivery services of consumers’ co-operatives (co-ops).

5. Enhance operations
We enhanced human resources and infrastructure for back-office functions such as logistics, systems andproduct planning. These efforts have led to a reduction in logistics and IT costs. We also continued to makeinventory control improvements, and are working to optimize inventory levels.

6. Make ESG the core of our businessWith the goal of establishing a new industrial structure, we will work to create a business model linked toresource recycling. This includes expanding the number of products made from natural materials, promoting
collection and reuse of apparel and plastic products, and establishing a supply chain model based on local
production for local consumption.

Enhancing the Value of Our Products
We are aware that stores with large sales floor space of 600 tsubo, particularly those in Japan, are currently nottaking full advantage of that space. To “complete the finest and most unrivaled product lines essential to daily life”
and to promote them effectively, sales floor space of at least 600 tsubo is required. However, not all products havereached the level of competitiveness to make that concept successful. In apparel, we have started to move in a new
direction. In household goods, however, there arestill issues that need to be addressed.
For household goods, the product group thathas been the mainstay of MUJI to date, we haveachieved a very high level of quality in existingproduct lineups, and because of this, customers’
expectations are also high. Therefore, we need todevelop new product lineups that exceed those
expectations. We are now facing some obstacles
in our quest to create new value, but we will
overcome them whatever it takes.

21 MUJI REPORT 2023

Enhancing Our Corporate Value

The Four Elements of Product Development
In enhancing the value of our products, in addition to offering long-lasting products that are useful in daily life ataffordable prices, we will work to develop the following four types of products.

(1) Products that take the environment into consideration
We develop products with consideration for their environmental impact throughout their lifecycle, including
after they are no longer used. For example, rather than worrying about subtle differences in appearance, we
focus on offering products that use 100% recyclable pure raw materials, are designed for easy disassemblyand separation after use, and will not result in unnecessary energy consumption during manufacturing andtransport. This helps to maintain and protect the environment and reduces the environmental impact of products.
By choosing MUJI products, customers can also feel they are making a contribution to maintaining andprotecting the environment. That is our approach to product development.

(2) Products that solve social issues
We take materials that are difficult to manage because of their fast and excessive growth rates—for example,
waterweeds that pose obstacles to shipping in wetlands, or rapidly growing bamboo that gradually erodes
mountain forests—and adopt them as raw materials. We then transform them into products used to store
items. In industrially underdeveloped regions, we create new employment and train human resources throughvocational education. As a result, regional development is enhanced as industry is created and wealth circulates. In
addition to making and providing quality products at low prices, we also contribute to community development
by working with reliable local managers, and reinvesting the profits generated locally back into the local economy.
We create products that can help to achieve these objectives.

(3) Products that let the individuality of the consumer shine, not the uniqueness ofthe product
Our products are designed to be useful and spotlight the individuality of the consumer, not the uniquenessof the product. Rather than emphasizing brand or product prestige, or distinctiveness and uniqueness indesign, we are committed to providing products that offer intrinsic value to each individual consumer. With
that value as part of our products, the individuality of the consumer will shine, not the uniqueness of the product.

(4) Products inspired by culture and tradition
The cultures and traditions that have evolved in each region are filled with life’s lessons. We learn from eachregion’s culture and tradition, such as the wisdom that comes from knowing the materials native to a region
inside out, and the technologies and innovations that were developed to solve inconveniences experienced
over a long history. We then adapt these ideas to modern lifestyles and society to create new products. I think
it is wonderful when we are able to introduce products like this to the world and people find them useful.

If these items can achieve the kind of product value that enables us to support the essential aspects of daily
life, then each of the stores with 600 tsubo of sales floor space will be able to contribute even more to their region.

Status of Store Openings
In Japan, we opened 75 new stores in the FY2023/8. This was basically in line with our plan. We expanded our store
network with a focus on stores next to supermarkets in residential areas, bringing the number of stores at the end of
the period to 562. To provide products essential to daily life, we need to secure a certain amount of sales floor
space. The advantage of these local residential zones is that rent is lower than in urban areas. This helps stores
maintain profitability even if sales per area are slightly lower. One challenge going forward is determining how we can

MUJI REPORT 2023

22

contribute to daily life through our products and services and attract many local residents to our stores, as well as
improve sales per area as a result.
Outside Japan, we opened 65 stores, mostly in mainland China, Taiwan and Thailand, and the total number ofstores reached 626. In Asia in particular, many countries and regions are still in the economic growth period, andmore and more new shopping centers are being built. This business environment makes it comparatively easy toopen new stores. On the other hand, in North America and Europe, our stores until now have been very small, and
MUJI’s philosophy and product selection have not been fully communicated. We need to launch large flagship storesand promote understanding of the MUJI concept.
Even in our 600 tsubo stores around the world, there are merchandise-related issues we need to address inorder to improve sales per area. Currently, we are enhancing our product development and production system
globally. In Asia in particular, we are developing and producing new products while responding to the lifestyles,
regulations and other characteristics of each region. We are also establishing frameworks to ensure a two-way flowof goods between those regions and Japan.

MUJI Itoku Oga Shopping Center (Akita Prefecture)

MUJI JIO World Plaza (India)

Put People at the Heart of Our Business and View
Profit as an Outcome, Not the Goal
Ryohin Keikaku’s corporate purpose, whether it be enhancing product value or revitalizing communities, will be achievedby people. Currently within the Company, we define the order of priority for everything we do in the following way:
people, business and profit. We place people at the heart of our business—people who become the most valuabledriving force behind business success, which in turn leads to profit as an outcome. First is “people.” I believe ourmost important task as a company is to enable individual employees to make full use of their abilities with a highlevel of engagement, produce results in a spontaneous and autonomous way as members of a team, and continue
to grow. Once we have assembled a team of independent individuals, our next step will be to move forward as abusiness toward common goals. Then, if we are able to effectively execute various initiatives in our business, we will
surely achieve positive financial results. This is the essence of our thinking. Conversely, we believe that the pursuit ofonly short-term, superficial financial goals and that randomly executing short-term measures without building acohesive team and developing talent will not lead to the sustainable provision of value and business growth. It is
important to have people, business and profit in place all at the same time, and in that order of priority. This is the
management approach we are pursuing.
To enable us to effectively carry out the medium-term business plan, we have been hiring people at a rapid
pace. We used to hire about 10 to 20 recent university graduates a year, but have expanded that number to 100
to 200 people a year. These new employees have grown through training and experience in the field, and are startingto fully demonstrate their abilities. At headquarters, around 30 percent of the staff have come on board in the last
two years. Welcoming so many new people may seem chaotic and confusing to long-time employees of Ryohin
Keikaku, but only by increasing diversity in this way will we be able to continue delivering value to society. I believe
this approach to be very important.

23 MUJI REPORT 2023

Enhancing Our Corporate Value

Toward a New Industrial Structure
When it comes to fulfilling our corporate purpose, our current global manufacturing retailer business model will not
be sufficient. We need to transform ourselves into a platform for localization and circulation of resources—a new
business model in which materials and resources are circulated locally. The global manufacturing retailer businessmodel is one in which the same products used around the world are centrally procured and produced at the optimal
location from the perspective of supply chain efficiency. Products are then shipped to and sold in various regions
worldwide, thereby achieving both high product quality and low prices.
We believe it is important to build a new business structure that seeks localization rather than globalization, andwhere the mission is the circulation of resources rather than being a manufacturing retailer. Of course, we will continue
to contribute to the economic development of emerging regions through production based on the global productdeveloper and retailer format that utilizes a global supply chain, primarily for apparel. In addition to this, we will promotelocal production for local consumption for food products. We will also establish a local production/local consumption
recycling and reuse business using items discarded from households as the main raw material. Instead of relying on
primary resources such as oil and plant materials, this business will use secondary resources such as discarded
items from households dispersed across different regions. Ultimately, we want all of the products we sell to becollected and reused after they are no longer needed. To make that possible, we are working to build a businessmodel based on circulating resources while co-creating with consumers and other companies. We aim to be a businessgroup that is indispensable to society, with talented human resources and a strong lineup of products. We want ourstores to be community centers that are an integral part of the local social infrastructure. This is precisely what we
aspire to achieve through our “Second Founding.” Please keep an eye on what comes next for Ryohin Keikaku as wework to create a new business model.

MUJI REPORT 2023

24

Enhancing Our Corporate ValueOur Goals and How We Will Achieve Them

Second Founding

2023

2024

Financial KPIs

Results for FY2023/8

FY2024/8 Plan

Operating income

JPY 581.4 billion

JPY 640.0 billion

Operating profit

JPY 33.1 billion

JPY 48.0 billion

Number of stores

1,188

1,331

ROA (Return on Total Assets)

8.5%

10.3%

ROE (Return on Equity)

8.7%

12.6%
Actions up to 2030

Six Priority Issues

Main Points

Creation of the Foundation
for Our “Second Founding”

1. Enhance product value

2. Increase involvementin production

Strengthen product competitivenessby developing:●

Products that take the environment
into consideration●

Products that solve social issues●

Products that let the individualityof the consumer shine, not theuniqueness of the product3. Enhance marketing activities
for products

4. Establish a store networkand new channels●

5. Enhance operations

6. Make ESG the core ofour business

25 MUJI REPORT 2023

Products inspired by culture andtradition

Complete the finest and most
unrivaled product lines essential todaily life and the procurement andproduction system for these products

Establish a community-based
business model centered on
independently managed stores andopen new stores throughout Japan
while maintaining profitability

Develop an organizational culture
in which all associates work proactively,
leading to the independent growthof each store, region and country

Build the business infrastructureand headquarters functions to
support independent store
management and localization

Enhancing Our Corporate Value

2026

・
・
・

2030

FY2026/8 Target

2030 Vision

JPY 850.0 billion

We make efforts to reduce ourenvironmental burden and torespect individual human rights
through our product development,
services and actions.

JPY 75.0 billion

1,750
13% or higher

To bea part ofpeople’s daily
necessities

15% or higher
To takeroot in local
society

Build a New Industrial Structure

Platform for Localization
and Circulation of Resources
In addition to maintaining our global supply
chain model, we will also build up a businessmodel centered on a supply chain based on
local production for local consumption.

Practiceindependent store
management andco-ownedmanagement

Helping to Realize“a Truthful andSustainable Life
for All”

Providecomfortable
online services

Be a front
runner of ESG
management

MUJI REPORT 2023

26

Enhancing Our Corporate Value: Feature 1

Overseas Growth Potential

We are making clear progress in our efforts to achieve autonomous
growth globally. In mainland China, we will take new steps torespond to the uncertain economic outlook.
Satoshi Shimizu
Executive Vice President & Director
In charge of Household Merchandising Division, Mainland China, Taiwan and Hong Kong BusinessInitiatives in Line with the Medium-term
Business Plan Are Making Steady Progress
In the medium-term business plan aimed at building a solid foundation
for achieving our vision for 2030, we are selectively concentrating
resources according to the operating environment of each country
and region, with an eye on achieving autonomous growth globally.
In mainland China, medium-term business plan-related initiatives,
including our store opening strategy, are generally going well. Key
achievements have included our ability to effectively manage inventory
levels and success in rapidly developing products in response tochanging needs as consumption rebounded following the end of thezero-COVID policy. Take household goods for example, we haveprogressed beyond simply adapting products to fit local specifications
such as size to being able to develop highly original products. We
will continue to establish and expand new categories of products inareas such as fabrics, houseware, pet goods and camping gear.
We are also introducing our own IT infrastructure adapted to themainland China business. This move has already led to significant
improvements in various areas. As the next step, we plan to upgrade
systems for the future, including those related to customer relationshipmanagement (CRM) and supply chain management (SCM).
Another issue we need to address is strengthening ourcompetitiveness. In a market characterized by rapid shifts in consumer
trends, such as changes in brand preference and diversification ofpurchasing channels, we need to work harder to achieve resultsthat set us apart.
Agriculture and food-related businesses are beginning to
make inroads in Taiwan and Hong Kong as well as mainland China,
with movement toward commercialization already gaining momentum.
In Southeast Asia, we are making progress in addressing the shift

Products Developed in Mainland China Business

Cool Touch fabric series

27 MUJI REPORT 2023

Stainless steel mugs

Pet supplies series

Smartphone and gadget accessories

Enhancing Our Corporate Valueto larger-scale stores by developing product mixes that take thelocal climate and lifestyle habits into account, and by expanding
our lineup in ways such as introducing products made specificallyfor the region in certain household goods categories.

Mainland China: An Increasingly Challenging
Market Environment and Our Response
I recognize that the economic conditions in mainland China havebecome increasingly challenging recently due to China’s debt andproperty crisis. There are concerns that this could directly impact
consumer spending in mainland China, where real estate investment
has become more widespread and larger in scale.
Even under these conditions, we remain committed to realizing
our corporate purpose of contributing to the creation of “a truthful andsustainable life for all through our products, services, stores andbusiness activities; believing human society rich in heart, with balanced
relationship between human, nature and artifacts.” Therefore, we willcontinue to maintain the pace of store openings and shift to larger
stores, develop products supported by the local market, strengthen
our omnichannel strategy to make full use of store resources, andexpand the reach of marketing with a focus on strengthening CRM,
PR for events and products, and branding. We believe it is important toproduce concrete results through reform of our visual merchandising*practices, which are directly related to branding. One example is
MUJI Shinjuku Yasukuni Dori, which reopened in the fall of 2023.
The first MUJI store specializing in apparel, MUJI Shinjuku Yasukuni
Dori has given MUJI a fresh new image that has been well-received
by our customers. MUJI was created to be an ethical and universal
brand that handles mainly standard products. However, the approachof offering new brand value and new experiences while keeping thatbasic identity intact will surely be of use in future business development
in mainland China. We are also opening stores in mainland China thatutilize scrap materials and recyclable items. This approach also has
the potential to become another new business model.
* Visual merchandising is the practice of creating sales floors that attract and motivate
customers to make a purchase.

Launch of Global Planning and ProductDevelopment System

in mainland China, but also globally. Ryohin Keikaku has always
done virtually all of its planning and product development in Japan.
That made it difficult to create plans and products that were tailored
to regional characteristics in our overseas business. In line with the
Ryohin Keikaku Group’s strategy of co-creation with communities,
we will conduct overseas planning and product development andoffer services that are tailored to regional characteristics.
Ryohin Keikaku’s overseas operations have traditionally been
limited to supplying and managing products that were plannedand developed in Japan. Our new approach will enable us to firstdevelop some products in each overseas region, and then sell thebest ones in other areas. In the future, we will establish productplanning, development, production and logistics bases in East
Asia, Southeast Asia and Europe. Representatives from Japan andthese other major areas will consult with each other and work
together to increase productivity and efficiency. We are alsoplanning to promote global procurement and logistics aimed atstabilizing trading expenses from FY2025/8.
After that, we plan to handle all operations independently ineach region from the R&D stage, not just product planning.

Developing Talent Globally Is a Priority
Up until now, we have managed operations in mainland China
through the support of and information provided by the headquarters
in Japan, but because mainland China covers a vast area, there arelogistical challenges involved in getting information to the frontlinesof each site in a timely manner. Securing and developing talentlocally is an urgent priority in order to further accelerate and localize
management. With that in mind, we are focusing on developing or
recruiting highly motivated executives, and are already beginning to
see results. Currently, we are also recruiting and developing people
at the general manager and section manager levels to cultivate
employees with strong leadership awareness and a commitment
to a high level of service. We want to provide opportunities for themto experience success through on-the-job training.
There is still a wide range of issues that we need to resolve,
but I believe that by making improvements, our overseas businesscan grow further and become an essential part of the daily lives ofcustomers around the world.

We launched a new development and production system in
September 2023 with the goal of expanding sales not just

Product Development System (through 2019)

Europe
Japan
East
Asia
Southeast
Asia

Product Development System (from 2024)

North
AmericaDevelopment baseDevelopment baseProducts

Products

Europe
East
Asia

Japan

North
AmericaSoutheast
Asia

MUJI REPORT 2023

28

Enhancing Our Corporate Value: Feature 2

Changes in Our People and Stores

To achieve our two missions, we are implementing store reforms
centered on people, starting with increasing the ownershipmindset among store staff.
Takuo Nagahara
Executive Officer
In charge of Sales and Marketing Group (Japan)

Making Steady Progress with Store Reforms
We want MUJI stores to evolve into local community centers throughthe “Second Founding.” We are placing top priority on attracting
more customers to our stores and making them feel glad that theycame to shop at MUJI. We have been carrying out store reforms
to achieve that goal.
We are making good progress toward the achievement of the“Second Founding” through these reforms. It is important for eachstore staff member to think and act on their own, with the needs ofthe customer in front of them in mind. In the past, the focus of ourstores was on faithfully following instructions from headquarters andhitting numerical targets, but that has gradually changed. Even if
they receive instructions from headquarters, staff are now able togive priority to their own ideas and put them into action if they thinkthat course is right for that store, based on their store’s circumstances
and the characteristics of local customers. A culture of looking at
instructions from headquarters as guidelines and actively incorporating

29 MUJI REPORT 2023

their own ideas is spreading—in other words, independent store
management by staff who have a sense of ownership is becominga reality, little by little.
This transition is necessary at all stores, of course, but is a
crucial point for suburban stores in particular. In contrast to urban
areas, MUJI’s brand recognition in suburban areas is not as high.
As such, it is essential to design suburban stores in a way thatmakes it easy for people who are unfamiliar with MUJI to come inand physically examine products. In that sense as well, store staff
will play the leading role, and stores will need to offer a productselection and personalized service suited to the customers in thearea. We can already see these changes happening in stores, so
I am confident that our reforms are heading in the right direction.

Transformation of Staff Mindset Is Producing Results
The above changes in the way store staff work are one indicationthat Ryohin Keikaku’s order of priority of “people, business andEnhancing Our Corporate Value

profit” is understood and taking root on the frontlines. If we put too
much emphasis on financial results and neglect to develop people
and maintain motivation, the focus of staff will no longer be on thecustomer. For example, they may not notice that customers feelinconvenienced by products being out of stock, or by long lines atthe cash registers. To avoid such a situation, it is very important tothink of people first, assign the right staff to stores, and provide
high-quality service to customers.
Localization of stores as local community centers will only bepossible if the capabilities of store staff are put to full use. We aretaking steps to ensure that this mindset, in which store staff havea sense of ownership and do what they think is right based on thecharacteristics of local customers, takes root on the frontlines. We areusing monthly meetings, which bring together store managers
throughout Japan, as opportunities to cultivate that mindset throughongoing discussions. In the beginning, there was some confusion
about the sweeping changes in the organizational culture and way ofworking, and this contributed to poor results in the Company-wide
engagement survey conducted in December 2022. To address that,
executives first reflected on their actions, and conducted a thoroughcritique of their own leadership. They also engaged in in-depth
discussions on how to create better work environments for on-site
staff. The results of the discussions were passed on to managers andstore managers at the store manager meetings and other gatherings,
and those people in turn conveyed the results to on-site staff. Thisapproach led to extensive discussion throughout the Company, andhelped identify problems in how headquarters operates and theissues facing stores. We are also constantly working to change theawareness of store managers. They are gradually becoming awarethat they must take the initiative in changing the mindsets of their staff.
As we proceed with the “Second Founding,” one positive
outcome that I have started to see is that during MUJI Week* in
October 2023, the focus was on the goal of delivering the best
possible shopping experience to customers, rather than on performancetargets. As our stores and online store are visited by many different
types of customers, we tried a trial-and-error approach at stores,
with the most significant metric being whether the best shopping
experience was delivered to each and every customer. The result wasa dramatic change in the actions taken by stores to address
problems and inconveniences as seen from the viewpoint ofcustomers, such as cash register congestion and productstockouts. A review based on that perspective was conducted
after MUJI Week ended. I was very pleased about that.
* A period of exclusive discounts and promotions for MUJI members

Our Immediate Challenge Is Securing the Right People
With store reforms and the transformation of store staff mindsets
producing results, a challenge will be securing human resources. Since
we have 70 to 80 new stores opening each year, we are hiring new
university graduates year-round, and are also aggressively pursuingpeople in mid-career. We are also focusing on internal recruitmentof part-time and temporary employees, and on creating work
environments that will make them want to stay with MUJI as
permanent, full-time employees. With that in mind, we will work toquickly adapt to changes and promote flexibility in optimizing work
environments. For example, we are transferring authority for hourly
wage management and recruiting activities to store managers, aswell as making personnel system reforms such as improvements
in compensation and benefits.

Products and Selection to Support Appealing Stores
Periodic store renovations are important in terms of raising the valueof stores. In autumn 2023, we carried out major renovations at MUJI
Ginza, MUJI Grand Front Osaka, and MUJI Shinjuku Yasukuni
Dori—flagship stores in their respective areas. While these stores
carry a full lineup of apparel, household goods and food products, we
introduced some new innovations to deepen their specialization, withthe themes of “food” at Ginza, “spatial design” at Grand Front Osakaand “apparel” at Shinjuku Yasukuni Dori. We have received a lot of
feedback from customers, who say they discovered new items at thosestores that they never knew about before. This is a good example ofbeing useful to customers by identifying the characteristics and rolesof each store, and developing strategies in line with these aspects.
Incorporating feedback from customers in product improvement
is another important role of stores. Comments from customers about
products and services are aggregated at the customer support center.
Based on that information, relevant divisions meet regularly to analyze
the comments and make improvements as part of the Customer
Comment Project. We also have an internal app called MUJI noMori, which is a tool employees can use to share things they noticeat their stores, such as customer buying patterns. This makes it
possible for all staff members, including part-time and temporary
employees, to get information from stores throughout Japan in atimely manner. The information gathered about customer needs
and opinions is reflected in new product development and service
improvements. Using these systems and tools to look at the issues
facing customers and the local area, and helping to solve them isalso an important role played by stores and their staff members.

MUJI REPORT 2023

30

Enhancing Our Corporate Value: Feature 3

An IT Strategy Aimed at Realizing Comfortable
Online Services

Tatsuya Kubota

Takahiro Miyazawa

Executive Officer
In charge of IT Services Division

Executive Officer
In charge of EC & Digital Service Division, Open Communications
Division and Circular Business Division

Ryohin Keikaku is leveraging information technology (IT) to implement business process reforms and upgrade digital services across theCompany to support product development with integrity and the management of stores that also serve as community centers. Our
overarching goal is to provide “comfortable online services.”“Comfortable online services” describes a state in which technology and services are seamlessly and imperceptibly integrated into
daily life, like the air we breathe, and do not impact the natural flow of customers or employees. By properly utilizing technology as a tool,
we can provide a high level of convenience and functionality to support a stress-free shopping experience, and also draw an emotional
response such as warmth and a sense of touch by directly connecting people with each other.
Ryohin Keikaku is overhauling its core systems and working to strengthening its organizational structure. This will involve building up
the necessary IT infrastructure and promoting in-house development as much as possible. We are steadily implementing business process
reforms across the Company in support of independent store management and autonomous decentralization, as we strive to become atechnology-driven company.

Promotional Structure
In carrying out Company-wide business process reforms using IT, we will enhance our IT infrastructure and strengthen our organizational
structure. Our goal is to promote collaboration in working to improve online services for customers. In the IT Services Division, we are implementing
internal IT infrastructure upgrades such as revamping merchandising systems1 and point-of-sale (POS) systems,2 and developing store networks,
starting with overhauling our core systems. We are also working on improving information security and the governance framework.
On the other hand, the EC3 & Digital Service Division is responsible for providing and enhancing services for customers online. Specifically,
the division is developing a user interface4 (UI) that lets customers directly experience the concept of “comfortable online services.” We will
create a user experience5 (UX) suited to the post-digital era utilizing the MUJI passport app, and share engaging content through various
owned media channels as we pursue digital communication that combines functionality and emotional aspects.
1. Merchandising system: A system for managing general store operations, including merchandise control, numerical control and sales slip management
2. POS system: A system for managing sales data and product information at the point of sale
3. Short for e-commerce
4. User interface: This refers to all aspects of the interaction between users and devices (or in this case, those related to products and services), including the visual elements used inlayouts, fonts, and the usability of menus and buttons
5. User experience: This refers to the experience that users have with products and services, including elements such as feeling of enjoyment, sense of beauty, or ease of use incomparison with a competitors’ offering
For more details on information security ▶Page 72 (Risk Management and Compliance)

Realization of“comfortable online
services”

31 MUJI REPORT 2023

IT Services Division

Maintenance and development ofinternal IT infrastructure

Collaboration

EC & Digital Service Division

Design of digital communication
with customers

Enhancing Our Corporate Value

Implementing Employee Work Reforms
Overhauling Core Systems
Our core systems have undergone various improvements up to now, but in FY2022/8 we reached the stage where we realized the difficulties
in realizing the digital utilization that we envision, or being able to continue supporting that vision in the future. The fundamental problem was
our reliance on vendors6 for systems and related work. We did not fully take into account non-functional requirements7 in areas such as
scalability and operation/maintenance. This has led to our systems becoming more complex, which has resulted in slower development
speed, reduced cost efficiency and difficulty in responding to failures.
Therefore, we launched a project to overhaul our core systems, and are undertaking fundamental reform of our operating systems. We
will upgrade existing systems, as business efficiency will still be important during the period in which we are preparing to get the new coresystems up and running. As the overhaul of core systems is positioned as a Company-wide business reform and to be undertaken basedon a medium- to long-term perspective, the process will entail a thorough visualization of business processes to identify fundamental issues,
followed by the creation of a detailed description of what our business operations should look like. In FY2023/8, we closely observed
various business sites, and conducted numerous interviews with employees. From this, we were able to visualize current business processes
and begin the process of identifying issues and rethinking business requirements. Specifically, we reached the stage of rethinking business
requirements in areas such as merchandise budgeting and product planning, product information and master data management, productordering and results management, and purchasing management. In FY2024/8, we are shifting to the system construction phase in order toachieve our desired business framework. We will create a business platform for inventory control, order management, store sales planningand order acceptance.
In addition, we are also expanding recruitment of IT talent to promote in-house system development. It is essential to establish anorganization where IT engineers can grow as professionals. As such, we will define the required skill set for engineers and conduct performance
evaluations. We will also hold in-house technology sharing meetings to support skill development, promote the hiring of technical advisors,and formulate development guidelines.
6. Venders: Refers to business parts involved in software sales and system development
7. Non-functional requirements: Requirements that are not directly related to system functions such as availability, performance, scalability, operability, maintainability, portability and security

Roadmap
Visualization of business processes

Until FY2022

Identification of issues

Until FY2023

Rethinking of business requirements

Renewal of core systems

System replacement

Improvement of existing systems
Strengthening of IT recruitment and skill development

Measures for Promoting Store Operating Efficiency
Ryohin Keikaku employs a one-stop business model as a manufacturing retailer. It involves developing and manufacturing products andservices, and delivering them directly to customers. Because of this, boosting the efficiency of store operations accounts for a large part of theCompany-wide business reforms, so there is an urgent need to revise some of the backstage operations.
While we are improving our existing systems, we are making IT-driven store operational reforms,
and assigning priority to tasks related to acceptance of customer orders,8 which plays a large role instore operations, including identifying issues in our current business processes. Our goal is to enableself-ordering by customers and to shift order confirmation and acceptance contacts online. In FY2023/8,
we started introducing self-checkout registers and rapidly accelerated efforts to update the register
POS system. A total of 977 self-checkout registers with the new POS system specifications were
installed in 194 stores. We plan to further expand rollout of the new POS system at manned registers
as well. With the new POS system, we can check and utilize POS data in real time, and will be able
to make significant progress in simplifying inventory and order management. By also making register
operation improvements, we expect self-checkout register operations by customers will becomesmoother, which will help reduce congestion at the registers. In addition, consolidating customer service
operations other than checkout at the service counter enables store staff to focus on communication
with customers, and helps to create stores that are also community centers. Going forward, we will
work to maintain the POS system infrastructure to support a store opening pace of 70 to 80 storesper year in Japan, and will pursue sales system efficiency and optimization of store IT expenses tocontribute to independent store management.
8. Customer orders categorized into holds, back-orders, and reservations of products that are not in the store

Self-checkout register
MUJI REPORT 2023

32

Providing “Comfortable Online Services” to Customers
Ryohin Keikaku aims to provide an experience that brings customers closer to MUJI,
and to each other, and leads to creativity that emerges through online interactions.
Making it easier for customers to obtain information about MUJI’s products, services
and activities helps to create excitement in their daily life and promotes better
identification with the MUJI concept. In addition, it leads to an online shopping
experience that is convenient and emotionally fulfilling.
We updated the look of our online store homepage in FY2023/8. In addition,
we added a furniture simulation tool and assembly instruction videos, expandedfeature pages, and greatly increased notifications and event information from stores.
We also posted more snapshots taken by store staff. These are just a few of theways we have worked to better provide information about our products and services.
As a result, the number of visitors to our online store and traffic to product pages
has increased, and the conversion rate is growing steadily.
Our in-store pickup service allows customers to pick up merchandise theyorder online at the nearest MUJI store. This convenient service allows them to saveon shipping costs as well as enjoy shopping, and the usage rate is increasing every
year. We have expanded the type of products covered by this service from appareland household goods to larger products such as beds and shelving, and even tofood products such as curry and confectioneries—giving customers more options
and improving convenience.
To boost our brand recognition and attract more customers, we are also
focusing on posting information on social media. We are working to make MUJI’s
products and activities feel more familiar. This includes providing information on
activities with communities and local governments and profiles of MUJI storesoverseas, as well as information about all product categories—apparel, household
goods and food. One of our social media initiatives is recognizing creators who
actively communicate information about MUJI on Instagram, X (formerly Twitter) andother platforms as ambassadors. As part of that effort, we are strengthening cocreative communication, such as having them try pre-launch products. The socks9

Usage Rate of In-Store Pickup Serviceof Products Ordered Online(%)

Usage rate (Number of orders)

Usage rate (Amount)

40

31.4
30

23.2
20

15.4

10

0

18.0
10.2

5.4
2021/9 to2021/122022/1 to
2022/122023/1 to
2023/12

Note: The current version of the in-store pickup service has been in
operation since September 2021.

that we launched in November 2023 are a unique product that we designed incollaboration with ambassadors. As part of our staff ambassador initiative, we arealso boosting support for ambitious employees who post MUJI-related content onsocial media. As these examples illustrate, the information put out not just by
Ryohin Keikaku, but also by customers and employees is an important part of ourdigital communication that helps promote the concept of “comfortable online
services” with a high level of convenience as well as emotional aspects.
9. Product name: Right-angle, loose-top socks that are easy to write a name on and stain resistant (kids),
right-angle, loose-top, combinable wool blend socks, etc.

1) Build interest
Recognition and interest

Our own social
media information

Digital advertising

33 MUJI REPORT 2023

2) Build empathy

SearchSearch advertising/Natural inflow (SEO)Store visits/Purchases

Visits to and purchasesfrom physical stores andonline (e-commerce)3) Build trust
Share

Social media publicity bycustomers and creators

Repeat purchases/
Becoming a fan

Review
posting

Personal
recommendation

Enhancing Our Corporate Value

Initiatives Using the MUJI passport App
Ryohin Keikaku’s MUJI passport app started out as a simple membership card,
but we have since improved its convenience by adding a series of new functions,
including access to the online store and content from the owned media platform“From MUJI.” We plan to use various kinds of data to make functional improvementsthat will enable us to deliver the right information to customers at the right time.
Specifically, we will support communication and services tailored to each individual
customer digitally—for example, by sending information about coordination
options to customers who have purchased clothing, or informing customers
about events and sales at the store they follow. We will also consider incentives
and ways to generate excitement so that even more people can experience theconvenience of the app. By doing so, we will increase downloads and enhance
its functionality as a tool for use in daily life.

Number of MUJI passport App Downloads
and Active Members(Millions)

Downloads

35
30

25
20
15
10
5
0

2020/2

2020/82021/82022/82023/8Notes: Ryohin Keikaku Co., Ltd. only

How We Use Customer Feedback

Number of Product Reviews

We analyze product reviews from online purchases and look at the comments andinquiries. We use this feedback to help in product development and resale, makespecification improvements and enhance information provision. Our goal is to raise
the level of customer satisfaction. For product reviews in particular, we have adopted
measures including a program initiated in September 2022 that awards 100 miles
for each review,10 and added prompts to the purchase completion screen. The

200,000

number of reviews has expanded as a result. The results of the analysis areshared with related departments, including the customer support center andmerchandising divisions, and by using them to make improvements based on a
consumer perspective, we are working to ensure that customers will want tocontinue using the MUJI online store.

Active members

168,624

150,000
100,000
50,000049,915
2018/9 to
2019/8*38,92037,85333,065

2019/9 to2020/8*2021/82022/82023/8* The Company changed its fiscal year end to August 31 as of the fiscal
year ended August 31, 2020. The same aggregation period is also
used for years prior to that.

10. MUJI Mile service: A service in which customers earn miles by making purchases from MUJI, checking inat stores, and so on. By accumulating miles, members can receive gifts such as MUJI Shopping Points
that they can use for purchases, with one point equal to one yen.

Using Online Resources to Help Build a Circular Society
Ryohin Keikaku aims to build a circular business model from an ESG perspective. To achieve that, it is important to step up online communications
that encourage reuse and recycling. We are establishing the infrastructure to realize a circular business model so that customers can more easily
participate in the recycling and reuse of items, and are working to create online frameworks with the MUJI passport app as the focal point.
Our monthly furniture subscription-type rental service and the Mottainai Market11 for selling used furniture are services available throughour online store, and they are being used by more and more customers every year. There is still potential to expand such services—services
that are closely related to societal trends and issues—and we will continue to proactively work to find ways to do so. Through these services
and other measures, we seek to give customers a better sense of how reuse and recycling contribute to a virtuous cycle for the environmentand society. By doing so, we will evolve toward online communication that helps support the creation of a circular society.
11. Service also available at some stores (see page 48 for details)

Special Feature

MUJI Products Now Available on ZOZOTOWN
After we signed a sales consignment agreement with online fashion retailer ZOZO, Inc., sales of
MUJI products on that company’s e-commerce site ZOZOTOWN began in September 2023. By
offering products on ZOZOTOWN, a popular site with young people, we can create more opportunities
to inform those consumers about MUJI’s products, services and activities. On ZOZOTOWN, we areoffering approximately 500 clothing items, including womenswear, menswear, children’s clothing,shoes and bags, plus about 900 household goods including storage items and kitchen utensils, aswell as cosmetics. Core products include MUJI Labo goods, loungewear, and backpacks in the apparel category, and cosmetics andskin care products and interior fragrance oils in household goods. Through our online presence, as well as through our stores acrossJapan, we will leverage the strengths of external shopping outlets to develop new customers and increase awareness of MUJI’s products,
services and activities among all consumers.
MUJI REPORT 2023

34

Enhancing Our Corporate Value: Feature 4

Strengthening Our Earning Power

Guided by our corporate purpose, we are working to achievebusiness growth from a medium- to long-term perspective andenhance our corporate value together with stakeholders.
Kenta Horiguchi
Executive Officer
In charge of Corporate Planning Office, Finance Division and Business Administration Division

How We View Corporate Value
Ryohin Keikaku’s corporate purpose includes the element of contributing

Progress of the Medium-term Business Plan andRecent Performanceto the creation of “a truthful and sustainable life for all through our products,

Results for FY2023/8

services, stores and business activities.” To achieve that, we have defined
two missions: “To provide daily necessities and services with genuine quality
and ethical value, at appropriate and affordable prices” and “To have apositive impact on each region by operating stores that serve as community
centers, sharing concerns and values with local residents and collaboratingwith them to tackle local issues.” Based on our corporate purpose, we
practice “public interest and people-centered management” to realize thetwo missions. In our day-to-day business activities, we put people first,
and try to balance our profit growth as a company with contribution to the
public interest. The result of this approach is that we have built a strong
earnings structure, properly pay taxes, and consistently deliver appropriate
shareholder returns without falling into short-term thinking. By creating a
positive impact on society with our stakeholders, we want to enhance ourlong-term corporate value.

In FY2023/8, operating revenue was JPY 581.4 billion and operating profit
was JPY 33.1 billion. Although operating profit increased, the operating profit
ratio was 5.7%, a 0.9 percentage point drop from the previous year. In thefirst half of the period, the rapid weakening of the yen and continued high raw
material prices significantly eroded the operating profit ratio in our domestic
business, and the impact of COVID-19 substantially reduced profit in mainland
China. In response to the conditions in the first half, we implemented priceadjustments in our domestic business in January and February of 2023,
resulting in improved performance in the second half. To limit the impact of
exchange rate fluctuations, which were the cause of profit deterioration, we
accelerated the timing of exchange contracts and increased the hedge ratio.
Outlook for FY2024/8
In FY2024/8, we expect to reach record highs in operating revenue (JPY
640.0 billion) and operating profit (JPY 48.0 billion), with significant growth inProgress of the Medium-term
Business Plan

2021/8Results(Billion JPY)

2022/8Results

2023/8Results

2024/8Planannounced
in July 2021

Recently announced
plan

2025/82026/8Plan

Plan

If the exchange rate at
the time of the July 2021
announcement is appliedAchievement
rate/Variance

Achievement
rate/Variance

453.6

496.1

581.4

700.0

640.0

91%

616.0

88%

750.0

850.0

Domestic business

296.9

308.1

342.8

450.0

378.5

84%

378.5

84%

–

–

Overseas business

156.6

188.0

238.5

250.0

261.5

105%

237.5

96%

–

–

42.4

32.7

33.1

75.0

48.0

64%

44.6

59%

61.0

75.0

Operating profit ratio

9.4%

6.6%

5.7%

10.7%

7.5%

(3.2%)

7.2%(3.5%)

8.1%

8.8%

ROA (Return on total assets)
ROE (Return on equity)

12.3%
17.3%

9.4%
10.8%

8.5%
8.7%

15.0%
15.0%

10.3%
12.6%

(4.7%)(2.4%)

–
–

–
–

12.1%
13.8%

13.6%
15.4%

Operating income

Operating profit

35 MUJI REPORT 2023

Enhancing Our Corporate Value

both revenue and profit in the domestic business and increased earnings in all

the end of the previous fiscal year. By enhancing our organizationaloverseas subsegments.

capabilities, we have been able manage inventory more precisely, andAfter reviewing the plan for FY2024/8, we announced the adoption of ainventory turnover also continues to improve.

three-year rolling business plan, starting from the current fiscal year. Regarding
future earnings forecasts, we will continue to provide information on thethree-year rolling business plan and update it on an annual basis as part ofefforts to communicate changes in the business environment to stakeholders.
In the current plan, we will accelerate the pace of growth both in Japan and in
the overseas business, centered on mainland China and Southeast Asia. We
are projecting operating revenue of JPY 850.0 billion, operating profit of JPY
75.0 billion, and an operating profit ratio of 8.8% in FY2026/8.
Progress of the Medium-term Business Plan
In the medium-term business plan that began in FY2022/8 and announced in

Investment Strategy and Allocation of Funds
In FY2023/8, we invested JPY 26.3 billion. This mainly consisted of JPY 19.3
billion in store investments related to store openings in Japan and mainland
China, and JPY 6.7 billion in IT investments. For FY2024/8, we are planning toinvest a total of JPY 36.6 billion, including store investments of JPY 24.7 billion
and IT investments of JPY 10.0 billion, primarily to improve the efficiency ofstore operations. In the current fiscal year, we will continue to open new storesin Japan and mainland China, while more firmly establishing our presence inSoutheast Asia, which has excellent growth potential. We consider this the
preparation phase for accelerating store openings in the next fiscal year.

July 2021, we set the targets of operating revenue of JPY 700.0 billion andCurrently, the Ryohin Keikaku Group is in the business growth phase.

operating profit of JPY 75.0 billion for FY204/8, the final year of the plan.

As such, we are aggressively making growth investments funded by cash

However, we have revised the forecast in light of the most recent results. If theflow generated in our core business. Our investment targets are mainly

exchange rate at the time the medium-term business plan was formulated in

new store openings and IT investments. We are making IT investments for2021 is applied in the plan for the current period, operating revenue would be

operational improvements as we pursue business expansion by opening new

JPY 616.0 billion and operating profit would be JPY 44.6 billion, representing

stores. For shareholder returns, we will make long-term, stable profit distributions,achievement rates of 88% and 59%, respectively, well below the targets.

taking balance sheet stability into consideration. With respect to dividends,

The main factor in this underperformance was that sales per store did

we decide on the appropriate level of dividends each fiscal year, targeting a

not reach projections in the domestic business or the mainland China

consolidated payout ratio of 30%. In FY2024/8, we are projecting annual

business. In response, we will focus on enhancing the value of our products.

dividends per share of JPY 40, for a dividend payout ratio of 32%, as weWith respect to the medium-term business plan, many issues still

improve profitability with operating revenue generated through new store

remain in terms of performance. We take that seriously, but are making
steady progress in areas such as expanding and enhancing our businessover the medium to long term based on our corporate purpose. For store
openings, we achieved a net increase of 69 stores in Japan in FY2023/8. We
intend to open more stores with a focus on 600 tsubo stores, and areplanning a net increase of 64 stores in FY2024/8, as we continue to expand
our store network. We are also aggressively opening new stores outside

openings and the recovery of the operating gross profit margin.

Allocation of Investments■ Store investments ■ Software investments ■ Other investments(Billion JPY)

40

36.6

30

26.3
18.9

20

Japan. We are planning a net increase of 58 stores in East Asia, including
mainland China, and 25 stores in Southeast Asia and Oceania—areas where10

we are looking to accelerate the pace of store openings in the next fiscal year0and beyond. In Europe, we plan to close four unprofitable stores, and will
work to improve the earnings base.

Maintaining a Strong Financial Structure
We are focusing on maintaining a strong financial structure and maximizing
cash flow through our core businesses. We will make investments in store
openings with an eye on business expansion in Japan and overseas, and IT
investments to raise the level of our operations. Investments will be fundedwithin the scope of cash flow. In addition, we will work to provide stableshareholder returns after securing sufficient liquidity on hand. Our goal is tomaintain liquidity on hand equivalent to 2 to 3 months of sales. As for liquidity
on hand at August 31, 2023, we held cash and deposits of JPY 115.0 billion,
including borrowings of approximately JPY 50.0 billion. Even using our expected
operating revenue of JPY 640.0 billion in the FY2024/8 as the standard, liquidity
on hand exceeded two months of sales, so we believe it is at an appropriate level
Total assets as of August 31, 2023 were JPY 453.7 billion, an increaseof JPY 54.3 billion from a year earlier. This was mainly because property, plantand equipment increased JPY 23.0 billion to JPY 160.3 billion due tobusiness expansion associated with new store openings, and cash anddeposits increased JPY 24.8 billion to JPY 115.0 billion. Inventories stood at
JPY 133.2 billion. Despite a significant increase in the number of stores, wewere able to limit the increase in inventories to JPY 3.7 billion compared with

0.4

17.6

6.7
0.1

8.8

7.8

9.6

9.6

2021/82022/8(Billion JPY)

24.7

19.3

2024/8 (Plan)

2023/82021/8

1.8

10.0

0.2

2022/82023/8Cash flows from operating activities

61.4

23.3

56.5

Cash flows from investing activities(13.5)(16.6)(22.1)Cash flows from financing activities(15.1)(58.6)(11.2)

Further Strengthening Profitability
Store openings are generally proceeding as planned, and we are also
expanding store floor space. I think there is room to grow sales further bytaking advantage of the greater floor space. In order to improve asset
efficiency and capital efficiency, we use ROA (based on ordinary profit) andROE as key indicators, and have set targets of 15% for each of them. ROA
will be the key indicator for inventory and investments in store opening as we
continue to expand our business. For both ROA and ROE, we are notpursuing short-term improvements, but aim to maintain them at levels above
the cost of capital (in a sustainable way) over the long term by improving the
profitability of our core business.
As I mentioned at the beginning, the Ryohin Keikaku Group practices
management that incorporates the views of a wide range of stakeholders,
including investors, based on “public interest and people-centered
management.” We will continue to connect that policy to sustainableimprovement of our corporate value through proactive disclosure andenhancement of communication with stakeholders.
MUJI REPORT 2023

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37 MUJI REPORT 2023

Ryohin Keikaku’s
Business Strategies
Ryohin Keikaku’s business strategies are inextricably linked toits ESG strategies.
As a group that contributes globally to creating “a truthfuland sustainable life for all,” Ryohin Keikaku develops its products,
services and business based on four material issues.

Our Four Material Issues
1. Build a Sustainable and Circular Society That Coexists
with Nature
Ryohin Keikaku’s Unique Product Development

Pages 39–40

ApparelPage 41

Household Goods

Page 42

Food

Page 43

Overseas Product Development

Page 44

Supply Chain Management

Pages 45–46

Raw Material Procurement

Page 47

Recovery and Recycling Initiatives

Page 48

Caring for the Environment

Page 49

Climate Change

Page 50

2. Address Local Challenges and Revitalize Regions
Store Strategy

Pages 51–52

Interview with a General Manager

Pages 53–54

Sustainable Community Design

Pages 55–56

3. Practice Business Activities in Which Each andEvery Diverse Individual Plays a Leading Role
Human Resource Development

Pages 57–58

Initiatives for Diversity & Inclusion

Pages 59–60

4. Realize Governance Aligned with Public Interest
and People-Centered Management
Working toward “Public Interest andPeople-Centered Management”

Pages 61–62

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Material Issue 1. Build a Sustainable and Circular Society That Coexists with Nature

Ryohin Keikaku’s Unique Product Development
Product Planning• Development of apparel, household goods andfood, and services essential to daily life
• All items are original products that minimize waste
by incorporating the three perspectives of selectionof materials, streamlining of processes and simplificationof packaging• Product planning from the consumer’s point of view
• Product development that makes the most of theessential qualities of natural materials• System for reflecting customer feedback in products(IDEA PARK) https://idea.muji.net/ (Japanese only)

Recycling and Effective Useof Resources• Proactive use of recycled materials• Recycling of resources as raw materials for new products• Shifting to products made from recycled materials
to reduce use of virgin plastics• Upcycling such as re-dying, reconditioning and reselling
clothing under the ReMUJI brand• Recycling non-reusable clothing as a raw material
for new products• Providing monthly furniture rental service• Sale of used items at the Mottainai Market, etc.

Raw Material Procurement• Production area and material development that leadto resolving local social issues• Selection of raw materials harvested and cultivatedin ways that do not harm the Earth, living things or
producers• Proactive use of recycled materials• Use of primary raw materials traceable to the source
as much as possible• Visits to check on raw material production areas

Recovery of Resources• Collecting various unwanted products from customers
at stores as resources
Main products collected for reuse as raw materials:• Polypropylene products (file boxes, etc.)• Polyethylene products (soft cases, etc.)• PET bottles (toning water bottles, etc.)• Paper hangers and hooks• Apparel and textile products“The More You Use Our Products, the Better the World Will Become” Will Be the Conceptbehind Ryohin Keikaku’s Product Development Going Forward
MUJI products are beneficial to people, and the more they become integrated in the daily lives of people around the world, themore they will reduce the burden on the environment and solve social issues. These are the types of products and services wewant to develop. However, this kind of product development cannot be done by Ryohin Keikaku alone. All of our stakeholders,
including suppliers, customers, local communities, governments and employees, who appreciate MUJI’s approach and productdevelopment philosophy, are free to participate in this process and share their opinions and ideas. This co-creation leads to
products with new value. MUJI intends to be a forum for this kind of open innovation. In addition, when our customers return

39 MUJI REPORT 2023

Business Strategies

Production• Ensuring production quality based on our own“Ryohin Standards”• Cooperation with production partners who share
our philosophy• Cooperative system with factories to appropriately
manage a wide variety of products

Feedback from Communities,
Society and Customers• Global environmental issues such as resource
depletion and climate change• Response to region-specific issues• Response to earthquakes and other disasters• Addressing issues such as Japan’s declining birthrate,
aging population and uneven population
distribution• Collaboration with national and regional governments• Lifestyle Organizing School program
https://www.ryohin-keikaku.jp/eng/sustainability/
co-worker/education/• Customer Service Center

Distribution• More efficient distribution by establishing centers inmajor production areas with functions that enableconsolidated transport of products purchased frommultiple countries/factories• Highly efficient distribution warehouse operations
based on the operation of distribution centers in Japanand overseas according to product characteristics• Expanded warehouses as bases for product recycling
and upcycling of items collected• Contribution to reducing environmental impact andsocial costs through joint delivery with partner companies

Sales/Services• Stores are community centers that have a positive
local impact• Approximately 1,200 stores in Japan and overseas
linked with our online store for in-store pickup of orders• Lineup of basic items essential for daily life including
apparel, household goods, and food, as well ascomprehensive lifestyle proposals• Sale by weight, water refill service, etc.
• Renovation and other space design services• MUJI SUPPORT (consultation counter for lifestyle
management)• 78.53 million downloads of the MUJI passport app• Sales of local specialty products/Shokoku Ryohin programused MUJI products to the store rather than throwing them away, they are recycled as raw materials for new products. Items thatwere previously incinerated as garbage become resources when brought back to MUJI. We want to work with our stakeholders
to build communities that enable society as a whole to lower its burden on the global environment, reduce consumption of natural
resources, recycle resources and generate innovation. We will conduct planning and development that thoroughly incorporate thisapproach in MUJI’s wide-ranging product lineup of items essential to daily life in the areas of apparel, household goods and food.

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Material Issue 1. Build a Sustainable and Circular Society That Coexists with Nature

ApparelBasic Policy and Strategy
We will return to the fundamentals of manufacturing—selection of materials, streamlining of processes and simplification of packaging—torenew our commitment to developing no-frills, quality products. This will include selecting materials that take the environment and producers
into consideration, minimizing waste in all processes, and providing customers with what they need, in the form they want. Our overall goal
is to offer a lineup of basic products at fair prices, created based on straightforward designs that offer just the right amount of comfort.
Based on the assumption that our products will be used for a long time, we will further strengthen recycling-related initiatives. We want
to give customers the peace of mind of knowing that their clothes may have a second life when it comes time for them to get new ones. As
for materials, our policy is to mainly use natural materials, and to switch from fossil-derived fibers to renewable materials.

Issues to Address• Progress is being made in strengthening our product lineup, but designs are still a mix of basic and trendy• Insufficient supply of products being delivered to/ordered from stores results in stockouts of mainstay products• Ensuring effective use of expanded apparel sales space at larger stores and addressing the issue of uneven productassortment at small and mid-sized stores• Declining number of customers despite an increase in the average amount spent per customer

Key Initiatives
Innovating Product Development System
We are enhancing the value of our products by clarifying the functions and roles of designers and merchandising specialists—people who
design the product mix and create product stories—and by shifting to an organizational structure that assigns leaders for each function androle. In addition, we have brought in an experienced professional with a track record of success outside the Company to head our design
operations, and will work to increase the overall sense of unity in apparel and the level of quality of individual items.

Clarifying and Fulfilling Roles in Each Category
We will clarify roles based on the intended use of products and price range, and ensure that they
fulfill their objective in each category.
For example, in the “core line” category, which includes items such as T-shirts and denim
clothing, we will maximize the potential of natural materials while raising the level of quality of about 60
popular mainstay products. We will improve the whole supply chain to ensure stable inventories
and appropriate prices. We will also develop products after clearly defining categories according
to intended product use and purpose, such as “clean casual,” “work and outdoor” or “sports.”

Expanding a Circular System for Clothing
We will give new value to clothes that are no longer needed by washing, dying and repairing them to promote the further expansion of
ReMUJI,* which promotes turning used clothes into new ones. By making more customers aware of our initiatives, we can increase theamount of clothes collected. In addition, improving the post-collection sorting process will help to boost the reuse rate. We also conduct
product development that utilizes synthetic fiber materials, with a focus on using 100% recycled materials.
* See page 48 for details.

Improving the Apparel Sales Floor Space
By enhancing store fixtures and raising their height, our product selection will better convey the appeal of MUJI apparel and accessories
even in smaller stores. We are also developing new apparel sales floors in 600 tsubo stores without being limited by past practices, using
MUJI Shinjuku Yasukuni Dori, a clothing specialty store, as a model. By making effective use of clothing specialty stores, we will increase
recognition of MUJI’s apparel among consumers.
Product
Showcase

Kapok, a Natural Material That Minimizes Demand on Water Resources

Kapok is a plant fiber made from the seed pods of the kapok tree. A tree that grows naturally in the tropical regionsof Southeast Asia, its strong resistance to pests means that it can be cultivated using almost no pesticides, andrequires almost no watering or fertilizers. Kapok trees can grow to great heights and continue to absorb carbon
dioxide. In addition, it is not necessary to cut down the tree to harvest the seed pods. The fiber collected from thefruit of this tree has long been used as filling for cushions and other items. The fiber has a hollow center, containing
a great deal of air, making it very light. In fact, it is one of the world’s lightest natural fibers.
MUJI has been using kapok since 2021, and has sold a variety of clothing made from this fiber including
shirts, pants, and the padding for outerwear. In the 2023 spring/summer season, we expanded the number of
items we offer to 17 in total. We will further expand series that use this material in the future.

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Household Goods
Basic Policy and Strategy
In the household goods business, we will review all existing products and redefine what MUJI should be in the coming era. Our aim is toenrich the lives of our customers through our products. We look to our ideology and philosophy in determining whether our products are
truly useful and necessary in daily life. For product development, our goal is to capture the top mindshare so that when people need aproduct for a specific purpose, they think of MUJI first. As such, it is critical that we enhance products essential to daily life, and effectively
convey the value of those products and the MUJI concept. Consideration for the environment and society is a fundamental prerequisite ofour product design and development. We will update our approach to creating MUJI products based on the establishment of three newconditions: They must be made to last, promote circularity and reduce environmental impact.

Issues to Address• Development of products that are MUJI products for a reason, with an eye on the future and lifestyles• Improving ability to communicate product concepts and ease of use• Better communication in reminding consumers that MUJI has the products they need in daily life
• Differentiation based on price competitiveness and product value

Key Initiatives
Refining Mainstay Products
We want to position MUJI household goods as a collection of reliable individual products that offer functionality and ease of use. To that end,
we will refine and further improve our mainstay products. In 2023, we carried out a major renewal of our skin care products for the first timesince they were launched. Improvements such as incorporating a rice bran extract compound that uses 100% natural ingredients and isgentle on the skin have raised the profile of our products, and enabled us to attract new customers. We even changed the bottle to one
made of 100% recycled plastic. In addition, we are making product improvements in response to feedback from customers. Examples
include making floor mops lighter, adding larger sizes for frequently used products, and enhancing the basic functions of utensils.

Making Environmental Consideration a Fundamental Prerequisite of Product Design
Recognizing that the manufacturing retailer model has an adverse impact on the natural environment, we willfurther strengthen product development by making consideration for the environment a fundamental prerequisite.
1. Made to last: Break-resistant designs, repairability, and looks that won’t soon go out of style
2. Promote circularity: Selection of materials that can be recycled, use of innovative methods to eliminate
waste, and creation of a system that covers collection to recycling
3. Reduce environmental impact: Selection of materials that take the environment into consideration andare easy to transport/handle
We are approaching new product development with the above policies as a main focus. In addition,
we are further enhancing the system and implementation framework for our recycling initiatives with thegoal of collecting all the plastic products we sell.

Expanding Offerings of Frequently Used Products
As one way to enhance convenience for customers, we will expand and improve products that are essential to daily life and require
restocking or replacing in a timely manner. Specifically, we will expand our offerings of daily necessities and consumables, such as cleaning
supplies, kitchen utensils, towels and slippers, and make improvements in ways that reflect customer feedback. We will narrow down ourrange of large products and durable goods to basic items, and will expand our lineup of sofas, storage units and lightweight furniture(products that are a familiar part of daily life), making them convenient, compact, easy to use, and compatible to any lifestyle.
Product
Showcase

A Mattress Redesigned to Ensure Long-term Use

MUJI’s bed mattress, a long-selling hit product, was given a full redesign in 2023. In addition to promoting
a good night’s sleep, we thought about how to make the mattress last a long time, and about disposal
when the time comes to replace it. The coils and cushioning material inside the mattress were redesigned
to be separable, allowing for long-term continued use of the mattress, even while making partial repairs.
Mattress with Legs, which was launched in 1991, was also redesigned so that the stainless steel
frame, coil unit, and side fabric can be detached, making partial repairs possible. This helps to minimize
waste. Packing the coil unit in a compression roll and changing the steel frame made it easier to assemble
and reduced the logistics burden. It is also possible to carry the mattress through narrow entrances andstairways. Going forward, we will continue to improve existing products and develop new products andservices from the perspectives of consideration for the environment and the benefits they offer consumers.
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Material Issue 1. Build a Sustainable and Circular Society That Coexists with Nature

Food
Basic Policy and Strategy
We will harness the potential of food to develop products and services that solve social issues, achieve the top mindshare, and bring people
together and connect them. Our goal is to increase food sales to 30% of total sales in 2030. To achieve that, we will not just increase producttypes. We will also create product lineups in each category that embody MUJI’s unique style and concept. We will also form internal andexternal teams to optimize the value chain up to the raw material procurement stage, and work with other departments to realize circular
design. In many regions, agriculture is the main industry, and the food business will play a major part in our localization efforts in such regions.
Food will also play a leading role in connecting MUJI with customers by utilizing local ingredients and creating communication spaces.

Issues to Address• Delayed development of new mainstay products that can join the ranks of existing products such as curry and baumkuchen• Adapting sales floors so that they convey elements linked to product appeal, including freshness, temperature and aroma• Ability to offer products and services in line with social changes and issues, as well as local lifestyles• Ability to create food products that contribute to local communities

Key Initiatives
Enhancing Mainstay Products
We will make improvements to current mainstay products by incorporating aspects of local foodcultures and customer feedback, and develop new mainstay products. We are evolving our retortpouch curry into a series that fits perfectly into daily life, including by expanding varieties, reviewing
the manufacturing process to reduce costs, and developing microwavable products. In response tocomments that our baumkuchen was too large and high in calories, we have launched a smaller size
to attract new customers. The new pasta series we launched in fall 2023 is being promoted as a new
mainstay product that lets people enjoy the authentic flavors of the world’s great cuisines at home.
We will continue to develop this series by adding items such as fresh pasta noodles and sauces.

Expanding Seasonal and Theme-Based Products
We will make it more enjoyable for customers to come to our stores by expanding seasonal and theme-based products. Health and gifts are
the two themes we are focusing on. For health, we are pivoting to the idea of health maintenance. We are developing products that featureseasonal ingredients and are designed to keep the body warm, products that facilitate the preparation of nutritious meals, and confectioneries
that use nutritious ingredients. For the theme of gifts, we will create more opportunities for people to connect with each other through food.

Making Sales Floor Improvements and Creating Communication Spaces
Making improvements to store fixtures and shelf layouts will lead to more lively sales floors that will make customers want to select foodproducts. In addition, we will take advantage of our in-store and dining out services to create lively communication spaces where people
can gather to experience our products and services. The style of service offered will be tailored to the size and needs of each store, ranging
from unstaffed coffee stands to staffed ice cream stands, as well as cafés and diners. We will provide places for communication among thevarious people who engage with MUJI through food. At each store, the menus and food offerings will be developed to make the most of theconnections with farmers and businesses in the area.

Implementing Initiatives That Consider the Environment and Producers
As we become more involved in raw material sourcing, we will strengthen partnerships with farms and companies that show consideration
for the environment and producers. Coffee is a good example. We source excellent beans that are small yet flavorful from a plantation in
Brazil that is active in tree planting and watershed preservation. Representatives from Ryohin Keikaku went to the plantation and checked
not only the product quality, but also factors such as working conditions. We will maintain our commitment to checking the actual producton-site and considering producers in our product development.

Highlight

Expanding Local Production for Local Consumption to Support Community Revitalization:
Café&Meal MUJI Minnaminosato (Kamogawa, Chiba Prefecture)

Based on the concept “Satoyama vegetables are sweet,” Café&Meal MUJI Minnaminosato reopened in spring
2023 as a café that can be used as a place for both working and relaxing. It features a revamped menu thatmakes liberal use of local ingredients and brings out their full flavor. The café has also started the “Kamogawa
Citizens Discount” program, which makes the entire menu available to local residents at special prices so thatthey can enjoy the pleasures of locally grown produce. At the adjacent farmers’ market, freshly harvested fruits
and vegetables grown by more than 200 producers are lined up, with around 60 different items typically for saleon any given day. We will continue working toward community revitalization through the Café&Meal businessunder the mantra of “local production for local consumption.”

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Overseas Product Development
Ryohin Keikaku has a global production system in place, and carries out product development tailored to the needs of each country andregion. We are bolstering product development in mainland China and Southeast Asia, and while there may be differences in lifestyles,
regulations and demand, we will provide products and services that address social issues in those regions.

Mainland China

Fleece Series Made of 100% Recycled Material
At Ryohin Keikaku, we are committed to product development that emphasizes recycling
throughout the Group. In mainland China, we developed and launched the Recycled Fleece
Series, in which all materials—fabric, buttons and fasteners—use 100% recycled raw materials
that are global recycled standard (GRS)* certified.
The materials, including the fabric and sewing thread, are made by converting collecteddiscarded plastic bottles into pellets, and spinning them into fiber. Even the fasteners andsmall parts are made from recycled materials, and when the product is sold, it is given to theconsumer in simple, plastic-free packaging to make maximum use of finite resources. We willcontinue to look for ways to recycle and circulate the Earth’s resources and to reduce waste.
* An international, voluntary standard established with the goal of increasing use of recycled materials.

Southeast Asia

Effectively Utilizing Resources to Develop Rubberwood Products
The sap and natural rubber of the rubber tree are used as raw materials. This tree is commonly found in tropical regions. The woodof the rubber tree (rubberwood) was not typically considered suitable for use as a wood for furniture, such as tables, beds andbookshelves, due to its thin structure. Therefore, after sap could no longer be collected from the tree, the wood was mainly used forfuel and other simple applications, and was not given another significant purpose. In recent years, the technology for drying woodhas improved, making it easier to process rubberwood into laminate. As a result, the value of rubberwood
as lumber has increased.
In Vietnam, a timber legality verification system was introduced in 2016, which made it illegal toharvest natural trees without authorization. Because of that, planting and the use of rubberwood, acacia
and other trees is being encouraged. The range of rubberwood products, which benefit society in termsof effective use of resources and environmental preservation, is now being expanded to include small
wooden accessories as well as furniture.
In Southeast Asia, since FY2023/8 Ryohin Keikaku has been stepping up development of wooden
furniture products that use rubberwood, including beds, chests and racks. The wood we use is takenfrom trees around 30 years old that have stopped producing latex at natural rubber plantations in
Vietnam. This is one way we help to make effective use of resources.

Southeast Asia

A Product That Emerged from Local Life: Baskets Made from Packing Bands
After the Vietnam War, when Vietnam was still quite poor, people in the south of the country who were looking for ways to supplement theirincome would collect the polypropylene bands used in the packaging of goods sent from overseas. The bands were typically discarded inlarge quantities. They would then weave these bands into wicker basket bags and sell them. Even today, such bags are widely used in daily
life for shopping, carrying farm tools, and other purposes because they are durable and water-resistant, and can be washed off if they get dirty.
Learning from techniques used in Vietnam, the Polypropylene Packing Band Hand-Woven Basket sold by MUJI is hand-woven
using the packing bands used for bundling packages. We further took the environment into consideration by adopting polypropylene
handles made from partially recycled raw materials, and by making individual parts(including the handles from a single material) easy to recycle after the bag is no longer
needed. Now sold in Southeast Asia and in Japan, the bags have received a positive
response from customers in Japan, who appreciate them for their stylish appearance,
their versatility due to light weight, and the fact that they do become misshapen.
We will continue to develop products and services that have been inspired by the
lives of people and wisdom gleaned from various countries around the world.
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Material Issue 1. Build a Sustainable and Circular Society That Coexists with Nature

Supply Chain Management
Ryohin Keikaku outsources manufacturing and production for all of the products it handles to production partners. The cooperation ofbusiness partners is also vital in the transportation and management of products. Therefore, we ensure ethical and transparent supply chain
management, consistent with Ryohin Keikaku’s core value of “contributing to society and people.” Going forward, we will strengthen
cooperation with partners and further develop and evolve our global production system into one that contributes to maximizing sales andprofit as a Group. In addition, we will attempt new approaches to manufacturing, and further increase our product development andproduction capabilities as a manufacturing retailer committed to creating a circular society.

Strengthening the Production System
Progress of the Medium-term Business Plan
Ryohin Keikaku has been taking steps to strengthen its production system as it seeks “to complete the finest and most unrivaled
product lines essential to daily life and the procurement and production system for these products.” As one of the first steps, we havesystematized business processes and restructured our product development system, and are now undertaking work in-house that waspreviously outsourced to trading companies. In addition, we have expanded the production bases that support our production network
globally, and are currently adding human resources to optimize their operating efficiency. We are also strengthening our global productdevelopment and collaboration framework, and recently held our first joint product development conference across different regions. From an
ESG perspective, we developed a new program to enable plastic recycling, and reinforced the risk management system in areas including
traceability, human rights and environmental due diligence, and overseas product compliance.

Issues to Address• Expansion and upgrading of production bases, and improvement of conditions in terms of human resources andoperational efficiency to support that effort• Improvement of product development schedules and product development from a global perspective• Minimizing costs in the overall supply chain• Structural improvements in the areas of raw material purchasing and risk management

Future Direction and Key Initiatives
We will evolve toward a global product development system in 2030 to maximize sales and profit. In addition, we want to be “a front runnerof ESG management,” and will grow sustainably and establish a production system that takes society and the environment into account.
Key initiatives to accomplish these goals are as follows.

1) Further minimization of costs
We will reorganize in-house production operations and work to centralize management, as well as promote further in-house adoption ofvarious functions. By visualizing production capacity and promoting production leveling as well as carefully managing development andschedules, we can eliminate waste and reduce costs. We will become more involved in the processes of raw material procurement
and purchasing, and review our cost structure and various standards.

2) Achieve sustainable growth
We plan to create a product development system tailored to the needs of each region, and establish a global production system unique
to Ryohin Keikaku through expansion of production bases and the strengthening of partnerships with suppliers. To improve theefficiency of business operations, we will speed up digitalization and strengthen compliance with overseas regulations and systems.

3) Become a front runner of ESG management
We have launched a project to lessen our impact on the environment. Efforts include working to reduce greenhouse gas emissions
in the supply chain, promoting the appropriate use of water resources, managing waste and chemical substances, and further
expanding the use of materials that take the environment into consideration. In addition, we will increase supply chain transparency,
establish a global audit system that includes raw material procurement, and enhance information disclosure. Furthermore, to realize
a circular society, we will develop products with the entire product life cycle in mind, including post-use. We will also expand initiatives
related to repair, reuse and recycling.

Respecting Human Rights
Ryohin Keikaku understands that the entire supply chain for its business activities can have a direct or indirect negative impact on humanrights, and recognizes the importance of its responsibility to respect human rights. Based on this awareness, Ryohin Keikaku supports andcomplies with the United Nations Guiding Principles on Business and Human Rights and other international standards for respecting humanrights, and strives to fulfill its responsibility in that regard. We participate in external initiatives related to human rights risks. In 2016, we joined
the Better Work Programme, a partnership program under the auspices of the International Labour Organization (ILO) and the International
Finance Corporation (IFC), a member of the World Bank Group.

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Procurement Based on Code of Conduct for Production Partners
Based on its Code of Conduct for Production Partners, Ryohin Keikaku shares with its partners (including production partner factories) its
policies on the work environment, respecting human rights, and consideration for the environment in the supply chain as a whole, and asks
for compliance. We are also taking steps to ensure that human rights are respected. This code of conduct is distributed (available in Japanese,
English and Chinese) to all the production partners who handle our production worldwide. We request all partners to whom we outsource
production to sign a pledge to comply with the code of conduct, and contract only with those who do so.
Ryohin Keikaku Code of Conduct for Production Partners ▶https://www.ryohin-keikaku.jp/eng/sustainability/supply-chain/code-of-conduct/

Human Rights Policy
Ryohin Keikaku recognizes that in order to achieve its corporate
purpose—a truthful and sustainable life for all—it is crucial that thehuman rights of all people are protected and respected. We havebeen implementing human rights initiatives based on our Group
Compliance Code of Conduct and our Code of Conduct for Production
Partners. In December 2022, we formulated the Ryohin Keikaku
Human Rights Policy with the commitment of senior management
and the approval of the Board of Directors.
Ryohin Keikaku Human Rights Policy ▶https://www.ryohin-keikaku.jp/eng/sustainability/
supply-chain/humanrights/

Assessment of Respect for Human Rights

Internal Framework for Respecting Human Rights
Responsible Division/Committee

Main Themes

Compliance and Risk
Management Committee

Human rights in general (audits of Group
Compliance Code of Conduct, Code of
Conduct for Production Partners, etc.)

Occupational Safety & HealthCommittee

Occupational safety and health

Human Resources Division andRisk Management Division

Elimination of employee discriminationand harassment; ensuring fair wages andreasonable working hours; providing
contact point for reporting, whistleblowing
or consultation by employees; etc.

IT Services Division andRisk Management Division

Privacy (including personal information)

Production Division, Risk
Management Division andCorporate Planning Division

Human rights in the supply chain

Ryohin Keikaku is conducting a full-scale review of the human rights due diligence process in the supply chain. With the help of an externalorganization, we are taking a fresh approach to how we assess human rights risks in our supply chain, formulating and implementing anaction plan to prevent or mitigate risks, monitoring risk-related items, and conducting in-house training on human rights. We also plan tofurther strengthen human rights-related disclosure.
In addition, as part of efforts to promote our human rights policy, we will collaborate with external organizations to improve working
environments, reinforce the internal auditing system, and encourage and support business partners in their own audits.
▶See page 72 for details.

Monitoring of Production Partner Factories
Main Assessment Items
Ryohin Keikaku utilizes a third-party organization to conduct regularon-site audits of its production partner factories based on the Code of
Conduct for Production Partners. The audits cover 13 categories forevaluation, including human rights infringement, working environments
and environmental conservation. A detailed checklist has been establishedfor each category, covering 199 items in total. We also share the resultsof the audits with production partner factories and work together withthem to make improvements in the case of any non-compliant items.

Category
Child labor
Forced labor
Employment contracts
Health and safety
Freedom of association
Discrimination
Disciplinary actions
Working hours
Wages and compensation
Environment
Monitoring of compliance
EthicsProcurement management

Checklist Items
Is there an effective procedure for confirming
the age of employees when they are hired towork in the factory?
Are any employees subjected to illegal
withholding of wages, or required to pay
training expenses, employment agency fees,
tool expenses, uniform costs, or other nonmonetary payments with similar monetary value?
Are employees able to take time off when they
are ill or pregnant if they submit a doctor’scertificate or note?
Is there any evidence of forced, penal, bonded,indentured or trafficked labor?

Assessment Results in FY2023/8
In FY2023/8, we conducted on-site audits of a total of 116 factories, comprising 73 Tier 1 factories and 43 Tier 2 factories. The results were as follows.
A assessment at 4 factories; B assessment at 66 factories; C assessment at 21 factories; D assessment at 13 factories; and E
assessment at 12 factories.

Factories with no non-compliant items receive an A assessment. For factories with D and E assessments, we plan to conduct afollow-up audit in FY2024/8.
Non-compliant items of E assessment factories included locked emergency exits, unsatisfactory safety measures due to fire
extinguishers and evacuation routes being blocked by objects, and inadequate management of working hours. We have agreed on
improvement plans for all of these factories and are confirming the completion of improvements.
Results of Monitoring of Production Partner Factories ▶https://www.ryohin-keikaku.jp/sustainability/supply-chain/monitoring/pdf/20240228_monitoring_material_fy2023_eng.pdf

Disclosure of List of Production Partners
We believe that increasing transparency in the entire supply chain is our responsibility to stakeholders. To realize appropriate working
environments, we are increasing transparency and disclosing our list of production partners.
List of Production Partners ▶https://www.ryohin-keikaku.jp/eng/sustainability/supply-chain/partners/

MUJI REPORT 2023

46

Material Issue 1. Build a Sustainable and Circular Society That Coexists with Nature

Raw Material Procurement
Selection of Materials
To enhance the value of its products, one of its core themes, Ryohin Keikaku will use inspiration gained from the wisdom of people all over
the world to develop materials. We will focus on the impact on the environment, harmony with nature and the creation of industry in the
production areas. We will also continue to pursue the possibilities of new materials by going to the actual locations and learning from people’s
daily lives and the production areas. We select materials that are produced in an ethical way and with consideration of their impact on thenatural environment, animal welfare and society. By procuring more of these types of materials, we can contribute to the creation of a circular,
ecological and sustainable society.
Raw material procurement ▶https://www.ryohin-keikaku.jp/eng/sustainability/activities/material/

Six Core Themes and Examples of Materials We Use
We are working on the following six core themes as measures to develop products that apply inspiration gained from the wisdom of people
all over the world and pursue the possibilities of materials.
1) Product development that applies inspiration gained
from the wisdom of people all over the world

2) Industrialization of production areas

Vietnamese Bamboo

Mongolian Cashmere

Bamboo grows very quickly and is available at a low price. It is also durable
and resistant to moisture. Because of these attributes, it is an indispensable
material that is widely used in Vietnam, including in houses, bridges, hats andother accessories, agricultural water wheels, and more. Since a large volume
can be produced in a short period of time, the use of bamboo contributes tothe conservation of forests. MUJI took notice of the sustainability, durability
and beauty of bamboo, as well as handicraft traditions, and is developing
various products made from the material,
including storage items and lightweightfurniture. Taking lessons from life in Vietnam,
we will connect the potential of bamboo
to new product development.

In Mongolia, desertification is a serious problem. When buying raw wool, we
pay a premium to fund environmental countermeasures, and make mediumto long-term purchases of cashmere wool at fixed prices. We believe thiswill reduce excessive fluctuations in cashmere wool prices and support
producers in earning a stable income. Our expenditures for environmental
countermeasures include covering thecost of surveys to determine the status
and causes of desertification in the areas
where we purchase raw wool. There areplans to use funds for planting trees andrepairing wells in the future.

3) Materials and industries developed to address issues in
production areas

4) Utilization of unused resources

Cotton Thread Recycled from Textile Waste

Indonesian Kapok

Making comfortable clothes that fit the contours of the body from a square
sheet of fabric inevitably results in textile scraps that cannot be used up
even if creativity is pushed to the limit. The rate of scraps generated isroughly 15%, the equivalent to one article of clothing for every sevenmade. Instead of disposing of these textile scraps,
MUJI is repurposing them as material for new
products. In addition to cutting costs, this also
reduces waste, which is a major issue in theapparel supply chain. In FY2023/8, the textile
waste generated in manufacturing of MUJI
products was reduced by 66 tons.

Kapok trees require almost no pesticides, fertilizers or watering, and it is notnecessary to cut down the tree to harvest the seed pods. As a result, they cancontinue to absorb large amounts of CO2 as they grow to great heights andlive to be more than 70 years old. Because the fibers of the tree’s seed pods
were considered too short to be used for thread, they have mainly been usedas filling for pillows, stuffed toys and similar items, as well as the padding in life
jackets. In recent years, however, new technology has made it possible to spinyarn from kapok fiber, and it is attracting interest as a lightweight and comfortable
natural fiber that has low environmental impact. On the island of Java in Indonesia,
our supply source for kapok, trees are being
planted about 5 meters apart, and grownin close to natural conditions. In FY2023/8,
the volume of kapok fiber handled by Ryohin
Keikaku reached 168 tons.

5) Use of functional materials6) Use of materials that transcend product categories

Lyocell

Warm Cotton

Lyocell is a fiber made from cellulose extracted from the pulp of the eucalyptus
tree. Ryohin Keikaku procures lyocell produced through an eco-conscious
process that includes using sustainably sourced wood as the raw material,
and recovering and reusing more than 99% of the water and solvents usedin the manufacturing process. Its excellent moisture absorbability makes
the fabric highly breathable, and it feels naturally cool and silky smooth on
the skin, even on sweltering summer days. Because of these qualities, it iscommonly used in bedding, innerwear
and pajamas to keep users comfortablein the heat of summer.

By using a special technique during the raw cotton stage of the process toincrease the number of molecules that bind with sweat and moisture, wecreated the Warm Cotton series of innerwear. This series takes the natural
moisture absorbency and heat generating qualities of cotton to an even higher
level. As the molecular structure has been altered, absorbency and heatgeneration are not diminished even after repeated washing, and these qualities
are a semi-permanent aspect of the product. We are expanding the productcategories that use this material to include
bedding such as box sheets and comforter
covers, as well as socks. We will develop
this series as a way to stay warmer andmore comfortable during the cold season.

47 MUJI REPORT 2023

Business Strategies

Recovery and Recycling Initiatives
MUJI CYCLE

Product Collection

Ryohin Keikaku is seeking to build a sustainable and circular society that coexists withnature. To move closer to achieving a society in which it is easier to circulate precious
natural resources, MUJI collects some of its products that are no longer needed from
customers at its stores, and then reuses or recycles them as reused products or recycled
raw materials. In product development going forward, we will not only work to reduce
our use of resources, but will incorporate circular design principles based on resource
recycling into our products.

Reuse

Recycling

Collected
products

Products
brought in

For more details ▶https://www.muji.com/hk-en/campaign/cycle/

MUJI stores

Recycled raw
materials

Recycled
products
Factory

Reuse Initiatives
ReMUJI

Mottainai Market

ReMUJI was launched in 2015 as
an initiative to promote reuse of
apparel products. Main products
include re-dyed clothes, in which
items that are no longer needed
are re-dyed in indigo or black;
Tsunagaru fuku, which are items that have been remade by connecting
different clothing items together; and Arainaoshita fuku, which arecarefully washed second-hand clothes. In FY2023/8, we increased
the reuse rate by changing the collection and sorting methods,
and more clothes were collected thanks to the cooperation of
more customers. This led to more stores selling ReMUJI products.
Through the ReMUJI program, which gives collected clothes
a second life by slightly modifying them, we reduce waste andcirculate resources while encouraging customers to care about
their clothes and wear them for a long time.

Some things are too good tolet go to waste. That’s the idea
behind Mottainai Market, where
shoppers can find used items
that are still very usable, like-new
and used furniture, and otherproducts at bargain prices. Used items are mainly furniture that wasused as part of MUJI’s monthly rental service, and then resold after
making repairs such as replacement of worn-out parts. Like-new
items are products that were scratched during transport, or thatwere returned unused because of customer preferences.
In addition, we also sell non-standard household goods andapparel that did not clear the guidelines for regular products.
Mottainai Market is available in MUJI’s physical stores as well as
through the online store. It promotes reuse while also offering
furniture and other goods that can be put to use in daily life.

For more details ▶https://www.muji.com/jp/re-muji/ (Japanese only)

For more details ▶https://www.ryohin-keikaku.jp/eng/sustainability/environment/

https://www.ryohin-keikaku.jp/eng/sustainability/environment/waste/

waste/

Recycling Initiatives
In July 2020, Ryohin Keikaku started collecting used toning water and moisturizing milk bottles, My Bottle for Water reusable bottles andother bottles for recycling. Besides helping to reduce plastic waste, this initiative has led to reducing the need for new petroleum-based raw
materials through the recycling of collected bottles into polyester raw materials.
In February 2023, we also greatly expanded the range of MUJI plastic products that we accept for collection, further strengthening ourefforts to promote recycling. Stores all over Japan1 began collection of plastic storage items, dust boxes, stools and other items that are nolonger needed. A total of 251 items2 are now eligible for collection (as of August 31, 2023). Of the plastic products collected, those thatmeet standards are resold as used items, and those that do not meet standards are crushed, washed and then returned for use as recycled
raw materials. Currently, we are developing a program to recycle more of these raw materials into MUJI plastic products.
Eligible Items

Volume of Plastic Products Collected• Storage items and other household goods made of polypropylene
or polyethylene(kg)
25,000• PET bottles, including toning water, moisturizing milk, and booster
essence lotion bottles

15,000• My Bottle for Water reusable bottles
Product Development Using Recycled Raw Materials
MUJI is actively developing products that use recycled raw materials.
We also use some virgin raw materials to maintain safety and ensure quality.

21,88420,00010,000
5,000
0

729

1,130

2021/82022/82023/83

1. Number of stores collecting items: 492 (As of August 31, 2023)
2. Limited to items sold in MUJI stores or the online store as of August 31, 2023
3. The number grew substantially in FY2023/8 because we expanded the rangeof plastic products eligible for collection in February 2023.

MUJI REPORT 2023

48

Material Issue 1. Build a Sustainable and Circular Society That Coexists with Nature

Caring for the Environment
Calculation and Reduction of Greenhouse Gas Emissions
Ryohin Keikaku is aiming for a 50% reduction in the Group’s Scope 1 and 2 emissions by FY2030/8 (compared with FY2021/8). To achieve
this goal, we will analyze carbon tax liabilities in 2030 and the impact from future store expansions. Based on this analysis, we will formulate
and implement a greenhouse gas (GHG) emissions reduction plan. In FY2023/8, we calculated Scope 1, 2 and 3 emissions for the wholeGroup in accordance with the GHG Protocol, a GHG emissions calculation guideline commonly used worldwide. Of the GHG emissions in
FY2021/8, the base year, we obtained third-party verification for Scope 1 and 2 emissions and for Scope 3 category 1 emissions. We arealso working to obtain third-party verification of emissions for FY2023/8.
Steps we have taken to reduce emissions include installing rooftop solar panels at seven stores in Japan, using renewable diesel fuel in the
MUJI SUPPORT home delivery service, utilizing ferries for domestic long-distance transport,
optimizing the number of deliveries to stores, increasing load efficiency by improving
packaging, and expanding cooperation with shipping companies working on decarbonization.
Starting in FY2023/8, we joined the CDP Supply Chain Program, and are cooperating withproduction partners to calculate and reduce GHG emissions in the supply chain.
Looking ahead, we will further refine calculation methods for the GHG emissions of theGroup, and work to reduce those emissions.
For more details ▶https://www.ryohin-keikaku.jp/eng/sustainability/environment/climate-change/

MUJI Hakusan Kitayasuda

Sustainable Water Resource Management
Initiatives
Ryohin Keikaku has established a basic policy regarding water resources,
and conducted a survey of the water risks in relation to its own operatingbases and major suppliers. For the survey, we used Aqueduct, a tool
provided by the World Resources Institute (WRI) to determine water risks
based on latitude and longitude. In FY2023/8, we also responded to the
CDP* water security questionnaire for the first time, and confirmed theissues we need to address.
In the future, we will continue to enhance our understanding of theactual conditions with a focus on production partner factories in highwater-risk areas and work to make improvements.
For more details ▶https://www.ryohin-keikaku.jp/eng/sustainability/environment/water/* CDP is an NGO based in the United Kingdom that runs a global disclosure system.
For more details ▶https://www.cdp.net/en/

Water Usage
Water usage(m3)
150,000

143,779

141,141

147,783

147,783

Wastewater

144,429

144,429

100,000

50,00002021/82022/82023/8

Scope of aggregation: MUJI stores, Café&Meal MUJI, IDÉE, headquarters,
distribution centers, and campsites in Japan
Note: Some estimates are included

Biodiversity
Initiatives
Under its basic approach to biodiversity, Ryohin Keikaku has set the goal of using sustainably sourced materials for all products that use
palm oil, wood/paper and cotton sold domestically by 2050. In FY2023/8, we conducted a survey of our usage of palm oil, wood/paperand cotton as major materials. For palm oil, we became a member of the Japan Sustainable Palm Oil Network (JaSPON) in December
2023, and are now gathering information and taking steps toward sourcing certified palm oil in the future. We are also working toward ourgoal of using 100% sustainable wood and paper by 2030, and are promoting the use of certified timber (FSC, PEFC and SGEC), and othernon-certified materials such as recycled wood.
For more details ▶https://www.ryohin-keikaku.jp/eng/sustainability/environment/biodiversity/

Chemical Management
Initiatives
Ryohin Keikaku is committed to environmentally and socially sustainable product development, and in June 2023 became a member of the
Apparel and Footwear International RSL Management Group (AFIRM), an organization that works to reduce the use and impact of harmful
substances in the global apparel and footwear supply chain. Accordingly, we require internal departments and all production partners tocomply with the MUJI Product Restricted Substances List, which adds our own standards for textile products to the AFIRM Restricted
Substance List (RSL). We will ensure compliance in actual operations by conducting random tests of products based on the standards.
In the future, we will also take steps to create and disclose a list of product-related restricted substances for household goods. Throughour involvement with AFIRM, we will monitor industry trends and the actions of other companies, and make timely updates to the RSL basedon this information.
For more details ▶https://www.ryohin-keikaku.jp/eng/sustainability/environment/chemical/

49 MUJI REPORT 2023

Business Strategies

Climate Change
Ryohin Keikaku recognizes the importance of the Task Force on Climate-related Financial Disclosures (TCFD). We will continue to identify
the impact of climate-related risks and opportunities on our business, formulate and implement strategies and enhance information
disclosure in line with the TCFD framework.
For more details ▶https://www.ryohin-keikaku.jp/eng/sustainability/environment/climate-change/

Disclosure Based on TCFD Recommendations
Categories

Governance

Key Points of Initiatives• The Board of Directors receives reports twice a year from the secretariat of the ESG Management Committee, which meets
monthly. The Board also monitors the status of the committee’s activities, holds discussions and provides guidance.
• In FY2022/8, we introduced a restricted stock compensation system for directors (excluding outside directors).

Strategy• We work to identify factors that could impact our business, and then implement action plans after qualitatively and quantitatively
evaluating the size of the impact based on criteria such as importance to business strategy. We also look at financial impact interms of revenue and costs, and the relevant time frame.

RiskManagement• The Compliance and Risk Management Committee, which oversees Group-wide risks as part of the risk assessment process,assesses probable exposure to risks at least once a year based on their significance and likelihood of occurrence.

Metrics andObjectives• In the medium-term business plan, our goal is to design all products based on an ESG perspective. As a key initiative, we areworking to launch businesses and products that create a positive social impact, with reuse and recycling as the central theme.

Scenario Analysis
Ryohin Keikaku conducted a scenario analysis of the risks and opportunities presented by climate change, based on the premise that
reducing risks and expanding opportunities is essential for sustainably increasing both corporate and social value.
Risks and Opportunities in 2030 under the 1.5°C Scenario

Carbon Taxes

FossilResource Price
Fluctuations• We expect a large financial impact from rising energy costs.
• We estimate that our electricity consumption will increase byapproximately 5.3 times through 2030 as our business grows
if we do not take steps to reduce it.
• We expect a medium financial impact from rising plastic raw
material prices.
* Based on our reference scenarios, we assumed that the unit price ofplastic raw materials in 2030 will be 1.3 times the price in FY2021/8,
and that the ratio of recycled materials to total plastic materials we
procure will be 60%.

More Stringent
Regulation of
Plastics andMarketFluctuations

Policies and Actions for Transition Risks and Opportunities• Visualize Group-wide emissions and formulate a reduction
roadmap to reduce GHG emissions. In Japan, reduce• We expect carbon tax liabilities to have a large financial impact.
emissions through measures such as introducing renewable• We estimate that our GHG emissions (Scope 1 and 2 total)energy at stores and distribution bases and installing solar
will increase by about 2.7 times through 2030 as our businesspower generation systems for facility use.
grows if we do not implement initiatives to reduce them.
• Visualize GHG emissions throughout the supply chain with aview to reducing Scope 3 GHG emissions.
• Reduce the use of energy derived from fossil resources bylowering electricity consumption through the conservation ofenergy and introduction of renewable energy.
• Work with suppliers to help them conserve energy and initiate
the use of renewable energy among other means to mitigate
increases in production costs.
• Reduce the use of fossil resource-derived plastics, andreduce the weight of products and packaging materials.
• Transition from fossil resource-derived materials to recycledmaterials and alternative materials.

* Based on our reference scenarios, we assumed a 20% reduction in
products made with plastics derived from fossil resources, and a 60%
ratio of recycled materials to total plastic materials we procure.

• Given the projected increase in demand for sustainableproducts and services, promote the use of environmentally
responsible materials and product development.
• Promote recycling of our own products, and transition fromfossil resource-derived materials to recycled raw materials.
• Structure sustainable systems that include commercializing
secondary distribution in order to promote reuse.

Physical Risks and Opportunities in 2050 under the 4°C Scenario

Policies and Actions for Physical Risks and Opportunities• We expect a large financial impact from decrease in sales of
products made with plastics derived from fossil resources.
• We expect a large financial impact from increased sales of
products made with recycled plastics.

• We expect that 2 main business sites in Japan and 11 overseas• Implement countermeasures for flooding at stores, distribution
will experience damage from flooding or storm surge.
centers, and supplier production sites with high hazard risk.
Damage Caused• In terms of exposure to significant impact, our analysis coveredby Natural• Fulfill our responsibilities and contribute to local communities
sites including stores, distribution centers and supplier production
Disastersby quickly reopening stores in affected areas and deliveringsites in the countries and regions where we operate, based onnecessary supplies.
metrics including revenue, inventory value and procurement volume.
Note: We referenced several scenarios, including the Stated Policies Scenario (STEPS) and the Sustainable Development Scenario (SDS) from the World Energy
Outlook of the International Energy Agency (IEA); the Intergovernmental Panel on Climate Change, IPCC RCP 8.5; and the Global Ambition policy scenariopresented in the Global Plastics Outlook Policy Scenarios to 2060 presented by the OECD.
We have set financial impact as follows:• Large: ¥10 billion ≤ revenue; ¥1 billion ≤ cost
• Medium: ¥1 billion ≤ revenue < ¥10 billion; ¥100 million ≤ cost < ¥1 billion• Small: revenue < ¥1 billion; cost < ¥100 million
MUJI REPORT 2023

50

Material Issue 2: Address Local Challenges and Revitalize Regions

Store Strategy
Based on its two missions, Ryohin Keikaku is committed to creating a community-based business model to support the basic aspects ofdaily life throughout Japan. By developing various sales channels to comprehensively support daily life in each region, and by providing
products, services and stores tailored to local needs through independent store management centered on people, we want our stores tobecome community centers that are an essential part of their areas.

Store Opening Strategy and Sales Channel Development
We will carry out store openings throughout Japan with stores of 600 tsubo (approx. 2,000 m2) next to supermarkets as the standard,aiming for one store per 100,000 people. We will further strengthen development of new sales channels, such as sales in convenience
stores and a home delivery service. We will also promote sales inside healthcare facilities and a vending machine business.

Progress of the Medium-term Business Plan
Store openings in FY2023/8 generally proceeded according to plan, with 75 store openings in Japan and 65 outside Japan, primarily inmainland China, Taiwan and Thailand. In FY2024/8, we will continue to open stores where we can be profitable, mainly in residential areas.
We plan to open 75 stores in Japan, and 96 stores outside Japan, mostly in mainland China and in Southeast Asia, a growth region.
Looking further ahead to FY2026/8, we will continue to open stores in mainland China and speed up the pace of openings in Southeast
Asia, aiming for a net increase of 70 stores per year in Japan and mainland China and 50 stores per year in other regions.

Store Opening Plan and Progress
Number of Stores in Japan and Overseas*

Results for 2022/8

Results for 2023/8

2024/82026/8

1,072

1,188

1,331

1,750

* Excluding overseas licensed stores, Café&Meal MUJI and IDÉE

Partnership with Lawson
In May 2022, we teamed up with Lawson, Inc. to begin sales of MUJI products at Lawson convenience stores. As of August 31, 2023, MUJI
products are available at approximately 12,600 Lawson stores in all 47 prefectures of Japan. About 200 MUJI items for daily life are offeredon dedicated shelves, including toning water, stationery items, clothing, retort pouch curry and confectioneries. By making MUJI products
available at Lawson stores, which are committed to “Creating Happiness and Harmony in Our Communities,” we are bringing lifestyleessentials to every corner of Japan.

Collaboration with Co-op Home Delivery Services
We have been expanding collaboration with consumers’ co-operatives (co-ops), starting with CO-OP Sapporo in March 2022. We began
supplying our products to Tokai CO-OP in October 2023, and to COOP Tohoku in November 2023. MUJI products can now be purchased
through the home delivery services of the three co-ops in the Tokai region in central Japan that are supplied by Tokai CO-OP, and the eight
co-ops in the Tohoku region that are supplied by COOP Tohoku. Through this collaboration, we are able to provide daily necessities tocustomers who live in hilly and mountainous areas of these regions, which in turn will help to improve the infrastructure essential for daily life
there. We will continue to collaborate with co-op home delivery services, and plan to establish a nationwide network in the near future.

Supply of Products to Supermarkets
Sales of MUJI products in supermarkets began with sales at Okinawa-based supermarket chain SAN-A in 2021 (8 stores as of August 2023).
In addition, in September 2023, we began supplying products to Albis Co., Ltd., which operates supermarkets in three prefectures in the
Hokuriku region and two prefectures in the Tokai region. MUJI products are sold at five Albis stores as of September 30, 2023.

Special Feature

New Retail Business Format: MUJI 500
Ryohin Keikaku is developing a new business model based on the floor space of stores. The newformat, called MUJI 500, was rolled out in September 2022. We are opening MUJI 500 stores inlocations that are easily accessible in daily life—inside train stations, underground shopping
centers at train stations and downtown areas—taking advantage of the compact sales floor
space compared with typical MUJI stores. There are 30 MUJI 500 stores as of August 31, 2023.
Offering mainly daily necessities and consumer goods priced at 500 yen or less, thesestores sell everyday products such as detergents and cleaning supplies, kitchen consumables, hygiene products, stationery items,
batteries, skin care products, underwear and socks, food products such as soup and curry, and cookies and other confectioneries.
By focusing on daily necessities, these stores make it easy to rediscover appealing products that tend to get lost among the othermerchandise in larger stores—one reason they have received a positive response from customers. We will continue to enhance ourlineup of daily necessities, and evolve our approach to product development and sales.

51 MUJI REPORT 2023

Business Strategies

Strengthening Independent Store Management
Ryohin Keikaku is promoting the evolution of MUJI stores throughout Japan as local community centers. To achieve that, it is important forevery store staff member to think about what they can do to be of benefit to the customers right in front of them, and act on it. Putting people
at the heart of our business and promoting the autonomous growth of staff will lead to high-quality and independent store management for
local customers. This will be a driving force for sustainable business growth.

Achievements and Issues
Maintain an Organizational Culture of Acting Proactively and Independently
To foster a proactive culture at stores, the monthly store managers’ meeting has evolved from a forum to share information to a place fordiscussion, and we have introduced a Company app through which employees can post things they have noticed in their stores in a timely
manner. With these and other initiatives, we have created a system that enables issues at individual stores to be taken up by the whole
Company and resolved more quickly. To address the substantial workload on stores that receive frequent business guidance from headquarters,
we will continue working to reduce unnecessary instructions.

Securing and Developing Human Resources
We are improving employment conditions by increasing the hourly wages of store staff, aggressively hiring local employees, and enhancing
store employee training programs to support independent store management. However, securing the necessary human resources andupgrading personnel systems to support store expansion, both in Japan and overseas, are ongoing challenges that we need to address,
including in regions where recruiting is difficult for a variety of reasons.

Improvement of Sales per Square Meter
As one measure to increase sales per square meter at our stores, we will share examples of successful initiatives taken proactively by employees
throughout the entire Company. In FY2023/8, to improve sales per square meter at standard 600 tsubo stores—an urgent issue at Ryohin
Keikaku—we took advantage of the larger sales floor space to enhance displays of comprehensive lifestyle solutions, reorganized product categories
according to the intended use, and revamped sales floor layouts. In addition, we enhanced measures to attract customers using tabloid newspapers,
television and other media; launched specialty stores; and took other steps to strengthen communication about the value of our products.

Solidifying Store Foundations
To make the customer experience at MUJI stores even better, we expanded introduction of self-checkout registers, and enhanced the customer
consultation service. We also worked to solidify the foundation of store operations with measures such as refining daily operating procedures,
implementing a system for individual store sales and inventory planning, and renewing computers and communication devices. On the other hand,community center model stores are facing challenges in balancing commercial viability and social impact, and improving the profit structure is necessary.

Key Initiatives
Promotion of Independent Store Management
After ensuring that it covers all the basics of customer satisfaction as a retail business, each store will be operated based on the idea of taking
the perspective of local customers. We aim to create the conditions for independent store management by using business plans put together
by store staff on their own initiative. By standardizing basic tasks across divisional boundaries, we can support store employees in planningand promoting independent store management. We will also strengthen the framework for discussing the direction of the Company, including
product development and business process improvement, based on feedback from stores.

Strengthening 600 tsubo Stores
We will place priority on improving the profitability of 600 tsubo stores, which offer a complete
selection of products used in daily life, and will be our standard store format going forward.
In particular, we will work to create more emotionally engaging displays by effectively utilizing
the uniqueness of MUJI in that it has apparel, household goods and food products available
in one place. In the past, merchandise has been grouped according to product category orindividual product to create a sense of unity on sales floors. The problem is that as the floor
space becomes more spread out, the impression it creates tends to be less vibrant andmore mechanical. Therefore, by creating emotionally engaging displays that evoke the reallife situation in which products will be used, and by grouping related products by theme, we can develop sales floors that make the productstory easy to understand, and convey excitement that makes customers want to physically interact with products. Through communicationthat conveys the appeal of products in multiple ways, we will also encourage customers to browse around the various departments in stores.

Evolution into Community Centers
We want MUJI stores to serve as local community centers—places where residents can actively participate in community revitalization. First,
we will create model stores in our priority regions—Chiba, Kyoto, Nara, Hiroshima and the Shinetsu area—and work to develop regional
specialty products and resolve local issues in collaboration with local business owners and governments.
In addition, we will enhance services involving customer participation and communication, such as MUJI CYCLE1 and MUJI SUPPORT,2
to create reasons for people to visit our stores and deepen the customer experience.
1. See page 48 for details.
2. A consultation service offered by MUJI for customers. Services are being expanded from lifestyle advice on interior decoration, tidying up, and so on, to consultation on office spacedesign, fashion coordination, and more.

MUJI REPORT 2023

52

Material Issue 2: Address Local Challenges and Revitalize Regions

Interview with a General Manager

The first MUJI specialty clothing store has opened in Shinjuku. It will
embody the new essence of MUJI and explore the possibilities of clothing.
Mariko Oguri
General Manager of Western Japan (General Manager of Shinjuku Business Division as of August 2023), Store Management Group

Taking on New Projects in the Shinjuku
Business Division
Since joining Ryohin Keikaku after I graduated from university, I havebeen involved in store management, including as a store manager
and area manager, and later spent about a decade at headquarters
as part of the PR Division and in other positions. I then returned tosales as the store manager of MUJI Seiyu Ogikubo, right when ourstores were changing in line with the “Second Founding.”
Around that time, I was splitting my time between helping plan

overlooked in our stores was that the design of the space did notadequately highlight clothing and because we carry so many items.
MUJI Shinjuku Yasukuni Dori specializes in apparel, and we arechallenging ourselves to find ways to create sales spaces that show
the value of our clothing in the most attractive way.
1. Now MUJI Shinjuku Yasukuni Dori

Pursuing the Possibilities of MUJI ApparelIn principle, MUJI stores are designed to create a calm, peaceful

the renovation of MUJI Shinjuku (opened in 2008) into a clothing

environment based on wood, metal and earth materials. At MUJI

specialty store, the first of its kind for Ryohin Keikaku, and working as

Shinjuku Yasukuni Dori, though, we wanted to create the optimal

the store manager of MUJI Seiyu Ogikubo. After that, I was appointed

environment for viewing the colors and textures, design and stylingto the position of full-time general manager of the Shinjuku Businessof the clothing itself, so we thoroughly considered every element

Division. We are promoting localization in the city under a new

down to the lighting, furniture and fixtures, mannequins, walls and floors,

approach of narrowing the category focus of stores and working

and even the material used in the ceilings. In addition to using recycledwith other stores in the Shinjuku area, including MUJI Shinjuku

aluminum in some of the merchandise shelves, we also adopted

Yasukuni Dori, a clothing specialty store, and MUJI Shinjuku Dori,digital floor maps, neon signs and many other features to make ita household goods and food specialty store that was renovated at

fun for customers to look for, find and try on the clothing items.

1

the same time.
MUJI has a broad lineup of apparel, household goods andWe think of the store as the largest forum for engaging withcustomers, and the store staff also play a very important part in thatfood products. However, in looking at purchasing trends, what

approach. For a clothing specialty store, it is imperative for sales staff

stood out to us was that customers were buying only in specificto have broad, in-depth knowledge about clothing and the skill to offer

categories—for example, they would buy only skin care products,

coordinated styling proposals. That is why we recruit and selector only food. The core customer base for apparel in particular wasdedicated visual merchandising staff2 from MUJI employees throughout

women in their 40s and 50s, and we were not able to fully convey

Japan. We also appointed visual merchandising professionals fromthe appeal of our products to the younger generation and otheroverseas, who keep store displays looking fresh while honing theirdemographics. We recognized that the reason for apparel being

specialized skills, including on-the-job training in styling and sales floor

53 MUJI REPORT 2023

事業戦略

design. Another prominent feature is the more than 60 mannequins

Ryohin Keikaku carries authentic apparel that people of all

located throughout the store. Torso only mannequins had previously

ages, genders and races can wear and enjoy for a long time, but

been the norm in stores. The number of full-body mannequins has

we are also selective about the materials we use, and develop andbeen greatly increased, making it possible to display coordinatedsell items that set us apart from the competition. Our natural color

outfits plus accessories. This has contributed greatly to sales. With

cashmere sweaters, which were launched in October 2023, arethe coordinated mannequin outfits at MUJI Shinjuku Yasukuni Dori

only available at two stores, one of which is MUJI Shinjuku Yasukuni

serving as models for stores across Japan, we are leading efforts

Dori, and our online store. For the cashmere used in these sweaters,

to maximize the appeal of MUJI apparel, and are playing a role inthe cost of environmental measures is accounted for in raw material

spreading this approach to all stores.

prices, and we use the funds for environmental protection and

In addition, we find staff members from nearby stores who haveafforestation projects in cooperation with local governments in Mongolia,

an interest in clothing and give them intensive training to upgrade

where the cashmere is produced. The cashmere is finished in its true,

their skills. This helps to increase their motivation, and that is reflectednatural color and texture, undyed and unbleached, and is woven tightly

in sales. The staff themselves enjoy wearing MUJI clothing, andto keep its shape while maintaining its soft feel. The sweaters havepass along the knowledge they gain from doing so to customers.

been a big hit with customers. Ryohin Keikaku, in its quest to realize

Being a part of a new challenge has boosted their motivation, anda “a truthful and sustainable life for all,” develops apparel that helps

they are working hard to promote sales every day. Ryohin Keikaku

reduce environmental burden and solves the social issues facing

has adopted “Put people at the heart of our business and view profit

people and the environment in production areas. MUJI Shinjuku

as an outcome, not the goal” as a slogan, and it has become clear

Yasukuni Dori embodies that philosophy and is playing a leading role.

that putting people at the center of everything has really changed
the way we do business, and is leading to growth in profits.
2. Staff members who utilize creative displays and other design elements to evoke
the different seasons and make suggestions for improvements.

A Place That Expresses the Appeal of the
Shinjuku Area
The Shinjuku area, which includes Shinjuku Station, the world’s
busiest train station, is an attractive market with many visitors fromother countries. The store’s entry rate increased remarkably after itreopened with a wider entrance. Almost all of the products it carries
are the same as those found in other MUJI stores, but because of thecreativity in how they are presented, many customers are once again
discovering the appeal of our products, and we are receiving comments
like “I had no idea MUJI had clothes like this!” To ensure that MUJI
apparel remains the preferred choice of customers, we will continue
to improve our sales floors, customer service, and other services.
We want to spread these activities from Shinjuku to the whole world.

A Store for Enjoying Clothing, and Thinking
about the Future
Our store concept is connecting clothing, goods and people to the
future. In carrying out the renovation, the theme was “zero waste.”
We focused on separation and reutilization of industrial waste
generated during the renovation, and aimed to recirculate resources
by using furniture and fixtures made from recycled and reusedmaterials, even going as far as using recycled tiles on the floors.
We are proud to have the largest range of ReMUJI products,
in which collected used garments are transformed into new clothes
by making slight modifications. In particular, our Tsunagaru fuku, a line

Based on our wish to contribute to the area, we are also
promoting an initiative called “SHINJUKU to GO.” We have createdshop cards with store recommendations selected based on MUJI’s
unique perspective from among the countless shops in the Shinjuku
area, and usually have cards for 80 to 100 shops available in ourstore. The response has been very positive, and we can hardly print
the cards fast enough. As many of the shops we recommend use
MUJI products, customers can also see how easy those products
are to use by stopping in. I will continue to promote locally rooted
activities together with the store manager and staff to help maintainthe vitality of the Shinjuku area.

of used clothing that has been refreshed and combined with otherclothing, has been well-received by customers, and is a key driver ofsales at this store. We also offer clothing made from materials that are
generated in the production process, such as cloth scraps as well as
previously unusable yarn, etc. The second floor contains a recycling
station, where we collect not just clothes, but any textile product sold by
MUJI that has finished serving its purpose, as well as plastic products,
paper hangers used in merchandise displays, and even surplus foodfrom households (as part of food drives). Together with customers,
we want to think about a society in which resources will continue tobe recycled in an almost effortless way well into the future.

MUJI REPORT 2023

54

Material Issue 2: Address Local Challenges and Revitalize Regions

Sustainable Community Design
Ryohin Keikaku is building a platform for realizing a truthful and sustainable society in eachregion. Our stores will support the foundations of daily life as community centers, and seek
to be an integral part of the regions in which they operate. We are engaged in a variety of
projects throughout Japan, both in our stores and in the community at large, and by helping
to address local challenges and revitalize regions we will design sustainable communities.
To drive these initiatives forward, we established the Social Good Business Division, andbased on our role as a company that is essential in supporting social common capital,* Ryohin
Keikaku aims to create a system for realizing public good and mutual assistance in society
and a situation where the economy, culture and the environment are organically connected.

Realizing a Truthful and Sustainable Society

Social Good Business Division

Platform for realizing a truthfuland sustainable society
Role of stores

Stores as community centers* Social common capital: The concept that the natural environment and social institutions are capital that make it possible for all people in a country or a specific region to lead a prosperous
economically stable life and to maintain an appealing, stable and sustainable society.

Childcare Support: Passing Down Natural, Historical and Cultural Resources

MUJI with a Library Inside
MUJI Yoshizuya Kani, a unique store that also features a public library, opened in November 2023
in Kani, Gifu Prefecture. Typical libraries expect people to be quiet, which makes it difficult forpeople to go there with small children. As a first step to solving that problem, this store set up alibrary in the store where people who want to read aloud with their children can feel free to stopin and spend time. In addition to a selection of books that children can enjoy alone or with theirparents, the library features a display of the Himawari-go, the mobile library that served as thecity’s library for many years, as a symbol. We aim to make this a store that people of all ages
who feel attached to the city will want to visit.

Communities: Connecting People, Connecting Communities

Community Market Event
MUJI holds a variety of events, including talks featuring prominent people in the region, exhibitions,and workshops given by the staff of MUJI and senior employees. One such event is the Community
Market, which is held on an irregular basis at MUJI stores throughout Japan, based on the concept
of “connecting people, connecting communities.” The event generates a great deal of excitement
every time it is held. Community Market is a limited-time, market-style event developed andoperated together with people from the local community. The exact content differs depending on
the store, but it may include stalls selling local foods, specialty products and handicrafts, a children’s
clothing exchange event, workshops, and more.
By holding events that bring together people of all generations in cooperation with local residents, in a form that is suited to eachspecific region, we transform MUJI stores into community centers where people can rediscover what makes their community special
and feel more connected to it.

Culture and the Arts: Future Lives Connected to the Past

ATELIER MUJI and Art Events
ATELIER MUJI is an activity that began with the concept of “a workshop where you can go backto the basics of life and find hints for moving forward into the future.” As a reflection of Ryohin
Keikaku’s vision of creating cultural crossroads, we organize various events on themes such as
art and design, and hold exhibitions at the gallery inside MUJI Ginza as well as online.
In 2023, Life in Art* “TOKYO MODERNISM 2023” was held for the second time. At thegallery in MUJI Ginza, the Japanese modern exhibit included various chairs created in Japan. At
the adjacent MUJI HOTEL GINZA, galleries and vintage shops from across Japan were featured,and guest rooms were used for exhibitions and sales of vintage furniture and products. We will continue to provide opportunities forpeople to encounter culture and art, learn about the background through communication, and enrich lives in the future.
* Life in Art is a project to spread art (culture) based on the theme of everyday art. It was started in 2011 by the interior brand IDÉE.
For more details ▶https://atelier.muji.com/jp-en/

55 MUJI REPORT 2023

Business Strategies

Health and Safety: Supporting the Physical and Mental Health of Local Residents

Healthcare Centers
Ryohin Keikaku has initiated the Healthcare Center Project as part of its commitment to resolving
the social issues of maintaining mental and physical health, preventing illness, extending healthy
life expectancy, eliminating health disparities, supporting health maintenance in areas with limited
medical services, and preventing social isolation. Healthcare Centers are open in three stores* asof November 30, 2023, and we plan to expand the project to more stores to support the physicaland mental well-being of local residents. Users have access to a personal medical logbook as wellas measuring instruments including a blood pressure monitor and body composition analyzer. In
addition, a pharmacist, nurse, registered dietician, physical therapist and other specialists are available for consultation free of charge.
Going beyond health maintenance, these centers hold a variety of events and activities that help build connections among local residents.
These activities include physical exercise classes, yoga, leisurely walking tours, dementia prevention events, parent-and-child baby
massage sessions, diet seminars, and a traditional Chinese medicine course. We are also working on health-related product development.
In November 2023, we launched seven traditional Chinese medicine items for problems and symptoms that affect women, such as cold
sensitivity, menstrual pain and menopausal disorders. We also expect to launch the Digital Health Center project in spring 2024, andthis will support health management and health consultations via an app. Using in-store and online channels in collaboration withgovernments and local healthcare facilities, we will accelerate efforts to ensure that local residents can seamlessly obtain services that
support health maintenance, healthcare and nursing care, and community connections, regardless of where they live.
* MUJI Naoetsu, MUJI Hiroshima Alpark and MUJI Youme Terrace Gion

Development of Launching Points for Community Activities: New Lifestyle Proposals

MUJI BASE Kamogawa: Old Folk House Renovation
While Japan’s population is concentrated in the Tokyo metropolitan area, the growing number ofabandoned traditional folk houses (kominka) throughout the country and the survival of local
culture have become social issues. With the acceleration of work style diversification brought onby the COVID-19 pandemic, lifestyles that are not tied to one place are now possible. In that
context, MUJI BASE Kamogawa in Chiba Prefecture opened in August 2023 as a facility that
supports local revitalization and proposes a new way of living, effectively utilizing an idle property
as a medium- to long-term stay facility.
The entire renovated 100-year old house is available for stays of two nights or longer. Based on the theme of “food and agriculture,”
MUJI BASE Kamogawa collaborates with local business owners to give guests the chance to experience the Kamogawa way of life
while learning about farming from local growers. We want to develop MUJI BASE facilities throughout Japan to let guests experience
Ryohin Keikaku’s concept of “a truthful and sustainable life for all,” and offer new lifestyle possibilities that creates a sense of attachment
to places outside of people’s usual surroundings.
For more details ▶https://www.muji.com/jp/ja/special-feature/mujibase/kamogawa-en/

Frameworks for Local Mutual Assistance: Collaboration with National and Local Governments

ITSUMO MOSHIMO“Always ready for emergencies”—that is the concept behind ITSUMO MOSHIMO, a project aimed
at raising the disaster awareness of society as a whole by incorporating preparedness into everyday
life. As part of the project, we are conducting educational activities that are open to everyone,from children to adults, including disaster prevention workshops and events held in collaboration
with local governments. We want to make familiar daily necessities and food products a part ofdisaster preparedness. By connecting communities, businesses and governments without any
boundaries, we are helping to enhance the disaster preparedness of the whole region.
ITSUMO MOSHIMO is also being expanded to Group companies outside Japan. In August 2023, MUJI Taiwan held an exhibition
showing how MUJI products can be part of preparedness in daily life, and a class in which participants of a wide range of ages practiced
responding to earthquakes and other disasters, administering first aid and using a fire extinguisher.
We also formed agreements with the cities of Fukuyama in Hiroshima Prefecture and Nishinomiya in Hyogo Prefecture, under which
predetermined stores will sell designated products upon request by the local governments in the event of a disaster. By selling and managing these
items as regular products (channel inventory) during normal times, goods that have expiration dates can be kept in stock while automaticallyrolling them over when necessary. In addition, we will help to secure space for storing disaster stockpiles and simplify management operations.
For more details ▶https://www.muji.com/jp/ja/special-feature/other/itsumomoshimo/ (Japanese only)

MUJI REPORT 2023

56

Material Issue 3: Practice Business Activities in Which Each and Every Diverse
Individual Plays a Leading Role

Human Resource Development
Creating Organizations and Developing Human Resources to Practice “Public
Interest and People-Centered Management”
Based on its core value of contributing to society and people, Ryohin Keikaku places employees with a sense of ownership in leading roles,
where they take the initiative to pursue “a truthful and sustainable life for all” in which the activities of individual employees and stakeholders
benefit the public interest. We define this management approach as “public interest and people-centered management.”
For Ryohin Keikaku, the greatest form of management capital is its employees who practice “public interest and people-centered
management.” Development of human resources and the creation of organizations is the cornerstone of our management strategy. As such,
we are recruiting and developing human resources and creating organizations in line with our six pillars of human resource development.

Six Pillars of Human Resource Development and Key Initiatives
1. Recruit and develop employees who have the ambition to embody Ryohin Keikaku’s corporate purpose and values
The hiring of new university graduates and mid-career professionals to support Ryohin Keikaku’s future is proceeding as planned. We intend to
significantly increase hiring of new graduates to support stores we will open in Japan and overseas. In every country and region where we operate,
we will prepare for future growth by stepping up recruitment of management andRecruiting Results
store manager candidates who are knowledgeable about the region to lead on-site
2021/82022/82023/8
Number of new
operations. We have also partnered with external organizations in developing training
28
103
142
university graduate hires
programs to ensure managers have a deep understanding of the MUJI corporate
Mid-career hires
38
105
224
Ratio of mid-career hires
purpose and the specialized skills needed to contribute to the community, and began
57.6%
50.5%
61.2%
to total new hires
an eight-week program for leaders who are active in their respective regions.
Note: Ryohin Keikaku Co., Ltd. only

2. Foster a healthy corporate culture in which diverse employees can show their individuality, think independently
and act on their own initiative
We conducted our own engagement survey to assess the degree to which employees share Ryohin Keikaku’s corporate purpose and two
missions, and are able to take action to realize them. Management, divisions and stores have established forums for discussing the issues
identified in the survey. We have formulated and implemented action plans for the whole Company as well as divisions and stores. In
addition, 180 people (as of August 31, 2023), have participated in the Leadership Talent Development Session, a forum for dialogue anddiscussion on Ryohin Keikaku’s ideal form of management. We will further develop this session on a Company-wide basis.

3. Create a working environment where employees can be themselves, realize physical and mental well-being andcontinue to work with peace of mind
Ryohin Keikaku has a variety of systems in place to ensure it is a company that is attractive to job seekers, and one that people want tostay with for a long time. We have expanded eligibility and subsidies for comprehensive health screenings and gynecological exams topromote the health of employees. In addition, we are pursuing even greater flexibility in work style options, including the introduction of aflextime system with no core hours, and will also consider other support measures for various life events. In FY2023/8, we implemented awage increase of 6% on average across the Company.

4. Train and assign leaders capable of bringing out the individuality and potential of diverse employees andmaximizing organizational performance
The Human Resources Committee discusses the development and promotion of leadership candidates who will shape the Company’s
future. It is currently deliberating on the method of cultivating individual leaders and domestic and overseas job rotations. Management iscommitted to fast-tracking candidates by identifying the strengths of each individual and determining issues to be addressed. We also
conduct a store manager training program to support new store openings in Japan and overseas and provide on-the-job training so thateach person can effectively learn the necessary business skills. In addition, we have introduced a mentoring system to support store
managers and a program in which headquarters members actively offer support by connecting face-to-face with store employees.

5. Develop and establish education and training systems to support the needs of employees who want to learn andgrow through their careers
We have revised the Company-wide education system, reorganized training systems
for each grade from newly hired employees to top executives, and greatly expanded
training programs featuring guest lecturers. Among our new initiatives are programs to
support self-directed career development, including regular study sessions for employees
to learn about the work and current activities of people in other divisions, workshops
where employees think about their own career path, an overseas training program,and a Company-wide job posting program. We will remain committed to providing anenvironment in which employees can develop their own careers independently andcontinue to grow and learn.

57 MUJI REPORT 2023

A training program in action

Business Strategies

6. Establish and operate a personnel system to support employees’ sense of participation and willingness to takeon challenges

Medium termLong term
Short term
We have established a grade system that ensures employees’ growth and(3 years)(upon retirement)
achievements are reflected in their compensation earlier than in the previous
J-ESOP
E-Shipsystem. Discussions are taking place in the Evaluation and Training Conference
Fixed salary
Challenge
to ensure that performance evaluations are done fairly, and we have also begun+
Shareholding
Shareholding
expectation
association
association
Annual bonus
points*monitoring whether adequate feedback is being given to individual employees.
The employee stock ownership plan (J-ESOP) and the trust-type
employee stock incentive plan (E-Ship), which were introduced to foster a sense of ownership
Number of Employees in Employee
Shareholding Associationand managerial awareness, are currently offered only in Japan, but we are preparing to
make them available to employees outside of Japan as well.
2021/81,848* Challenge expectation points: Points that can be converted to shares of the Company’s stock upon retirement are awarded
to employees who take on challenges at a high level, regardless of their membership in the shareholding association.

2022/82,6262023/82,623

Human Resource Training and Development Strategy
Issues to Address
In Japan, the working-age population (15 to 64 years old) was 74 million as of 2023, but is projected to decline to 70 million by 2030.* Thisis expected to make recruiting more difficult every year, and workplaces with poor work environments and unattractive companies may not
make it in the recruiting market. The companies of choice will be those that are rewarding places to work, are utilizing automation and AI todrive efficient productivity improvements, and are able to make full use of the resulting margins to allow for self-actualization. In Japan, wemust prepare to actively hire people of foreign nationalities, housewives/househusbands and students. We recognize that further change
will be necessary as a company that can maintain employees’ work motivation and personal health, provide long-term employment, andaccommodate diverse work-life balance needs.
* Source: Population Projections for Japan (2023 revision) published by the National Institute of Population and Social Security Research

Three New Strategies
Securing human resources and improving and maintaining the work environment are essential for future corporate growth. We will strive to create
an environment where employees can devote themselves to their work with peace of mind, align themselves with the Company’s direction,and enjoy doing their jobs. This will result in the creation of more proactive employees who take the initiative as well as a higher level of engagement.
1. We will establish an environment in which each and every employee can embody Ryohin Keikaku’s corporate purpose and two missions, takecharge of their own career development, and enjoy achieving their own goals.
2. To create a vibrant organization, we will recruit the people necessary to support new store openings in Japan and overseas, provide management
training to develop future managerial talent and headquarters and overseas personnel, and aggressively promote fast tracking and promotion to
key positions. In particular, we will enhance the development of systems to create a positive environment for store personnel.
3. We will maintain a workplace environment that offers rewards such as work-style flexibility, long-term employment, support for life events, and asystem for asset building for retirement. We want employees to feel that working for Ryohin Keikaku will lead to lifelong peace of mind, and help
bring out the vitality of each individual.

Key Measures
Recruitment • We will build a system that enables us to make use of regional networks to recruit people who deeply understand Ryohin Keikaku’s
corporate purpose. We will actively hire new university graduates, people who have worked one or two years after graduation andlocal employees, as well as promote employees from within the Company based on our store opening strategy and workforce plans.
• We will attract high-caliber talent and aggressively recruit professionals in various fields. We want these people to lead store operations,store openings, product development, material development, resource recycling initiatives, logistics, business development, IoT andtechnology.

Training• Executives and division general managers have already participated in the Leadership Talent Development Session, a forum fordiscussing Ryohin Keikaku’s desired corporate culture, organizational climate and approach to work. We will further expand thisinitiative to include all Company employees.
• By instilling the ideas of quality control and industrial engineering throughout the Company, and encouraging employees to review
and further evolve their work processes, we will develop a corporate culture of proactivity and taking the initiative.

Systems• To foster a mindset of taking on challenges among employees, we will revise the performance-based bonus system and consider
further expanding use of trust-type stock incentive plans.
• We will establish an environment and design systems to enable diverse employees to flourish, regardless of their age, birthplace,nationality or gender. In addition, we will build a framework to support employees in developing their careers and achieving their goals.
MUJI REPORT 2023

58

Material Issue 3: Practice Business Activities in Which Each and Every Diverse
Individual Plays a Leading Role

Initiatives for Diversity & Inclusion
Recruitment and Employment
In its employment activities, Ryohin Keikaku makes sure to understand the customs of thecountries and regions in which it does business. We also make sure to comply with the laws
and regulations of those countries and regions.
In addition, Ryohin Keikaku publishes the MUJI Employee Handbook in three languages(Japanese, English and Chinese) as a way to present its employment and labor policies andthe Group Compliance Code of Conduct. To ensure that all employees understand its content,
explanations and training are provided to all employees when they join the Company.
1. We aim to achieve lasting happiness for MUJI employees.
2. We strive to ensure the mental and physical comfort, enrichment and professional growthof our employees.
3. We respect the individuality, human rights and privacy of our employees. We work to eliminate
discrimination and do not tolerate harassment of any kind.
4. We respect gender, nationality, ethnicity and religious diversity, learn from our differences,and help each other grow.

Number of Employees (Ryohin Keikaku Group)
Employees

Non-regular employees*

24,00020,795

18,16319,009

9,281

9,834

8,882

9,175

10,0742021/82022/82023/816,00010,721

8,000

0* Average number of employees per year based on aneight-hour workday calculation method

Average Number of Employees* Using theChildcare System
372

400

296

300

227

200
100

Work-Life Balance Proposals
We have systems that allow employees to choose from a variety of work styles in order to findbalance between work and life events such as childbirth, childcare and nursing care. Thesesystems include childcare and nursing care leave, a shorter working hour system, and a familycare system, and can be used by all employees regardless of gender. We have also offered abalanced four-day workweek system since May 2021.
Eligibility for the childcare system, which permits employees who are raising children towork shorter hours, was expanded to partner employees in November 2021, and the applicable
period was extended from “until the age of 3” to “until completion of the 4th grade of elementary
school.” These are some of the ways in which we are creating an environment where employees
can work with peace of mind. In September 2022, we introduced a flextime system with nocore hours for headquarters employees. This allows for high flexibility in work arrangements,
and through work style options to accommodate various needs employees are able to improvetheir self-management skills as well as their efficiency and productivity.

02021/82022/82023/8* Including partner employees
Note: Ryohin Keikaku Co., Ltd. only

Approach to Working Hours
Conventional Work System
9:00

11:30 12:30

18:00

Break
Work from 9:00 a.m. to 6:00 p.m. as a general rule

Flextime System (Super flextime with no core hours)
5:00

22:00

Break
Time period in which employees can arrive and leave at any time

Employment of People with Disabilities
Ryohin Keikaku began hiring individuals with disabilities in Japan in 2000. In 2009, we launchedthe Heartful Project to promote the “sustainable happiness of co-workers,” “self-development
through mutual trust and cooperation” and “expansion and stabilization of employment at stores”
for those with disabilities. We have also established a support system that includes employment
management and guidance tailored to the characteristics and individuality of each person andan evaluation-based step-up system to help people with disabilities reach their full potential.
Using the “Second Founding” as an opportunity to take root in local society, our stores will
promote the Heartful Project together with local communities and move forward with people
with disabilities to create places in which they can make the best use of their skills.

Ratio of Employees with Disabilities
(%)

4.5

3.69

3.41

3.23

3.0
1.5
0

2021/82022/82023/8

Note: Ryohin Keikaku Co., Ltd. only

Special Feature

An Employment Environment That Facilitates Taking Childcare Leave
As part of our efforts to make Ryohin Keikaku a great place to work, we have improved various
systems, established a consultation contact point, and updated our childbirth and parenting
guidebook to help employees take childcare leave that suits their needs, regardless of gender.
In October 2022, we amended three systems. The amendments included loosening
the conditions for taking childcare leave, establishing paternity leave, and enabling childcare
leave to be split into parts. Paternity leave is available in several different patterns, according
to the employee’s family circumstances. One such example is postpartum support-type
leave in which the start of leave coincides with the birth of the child. There is also a batonpassing option in which paternity leave is timed to coincide with the partner’s return to work.
As a result, the percentage of men taking paternity leave has been increasing every year.

59 MUJI REPORT 2023

Percentage of Employees Taking Childcare
Leave
(%)

150

Female

105.8
100

Male

141.6
102.9
59.0

50

9.3
0

2021/821.4
2022/82023/8

Note: Figures are calculated in accordance with the new
calculation method of the Ministry of Health, Labourand Welfare.

Business Strategies

Diversity Committee
Ryohin Keikaku launched the Diversity Committee as a Company-wide committee in FY2022/8, recognizing the critical importance of having anenvironment in which diversity is respected, regardless of gender, age, nationality, or other characteristics, and where diverse human resources
can thrive, balance work and life events, and remain motivated. Chaired by the director in charge of the Human Resource Development Division,
this committee is tasked with promoting change, including by devising strategies and systems for building an organization and corporate culturethat can make the most of diversity of people, values and lifestyles, and by proposing ideas for transformation.
The committee investigated in-house problems and issues by conducting interviews and through questionnaires. It identified “promoting theparticipation and advancement of women in the workplace” as a topic of high urgency and priority. Therefore, the Company narrowed its focus tothis theme in FY2023/8. Female directors and women working in stores also participate in the monthly meetings of this committee, where they
help identify issues and develop strategies for improvement.

Promotion of Participation and Advancement of Women in the Workplace
One of the reasons that Ryohin Keikaku is promoting the participation and advancement of
women in the workplace is that female employees have a higher turnover rate than male
employees, and as a result, the percentage of women in managerial positions is low. In orderto ensure that all employees have an equal opportunity to succeed, we believe it is urgent
that we become a company where women are encouraged to have a long career and thrivewith a sense of security. That is why we are creating an environment that takes into accountvarious lifestyle changes, and the need to balance work with childcare, nursing care, disease
treatment, and other life events.

Results for FY2023/81
Ratio of female managers at the deputy
manager level and above: 27.8%
Ratio of female directors: 37.5%2
Ratio of female employees: 54.8%
1. Ryohin Keikaku Co., Ltd. only
2. As of November 23, 2023

Initiatives
Career Workshop for Women in Their Twenties
Through interviews, we found that many younger female employees are worried about theirlong-term career development and advancement. To help them manage their own careers
and raise their motivation to work, we conducted career development training for female
employees in their twenties. The aim is not just to help them envision their career path, but toalso make it more actionable by also looking at actual issues and potential biases, and thento create opportunities for making changes in behavior.

Career workshop

Support for Working Mothers
One of the current issues we face is that only a small number of the female employees who are raising children are employed as store managers.
There is a reason behind that. Until now, being able to work full-time and work late shifts was a requirement for promotion to store manager,
which made it difficult for working mothers to take on that position. From now on, we must create an environment in which all employees with thedesire and ability can take on any position they aspire to, and shift to a culture that enables talented people to thrive.
In FY2023/8, we conducted a questionnaire and interviews of current store managers who are working mothers and working mothers who
aspire to be promoted to store manager to better understand the actual situation. We have implemented improvement measures that reflect thesystematic and awareness problems that were discovered, and made promotion-related and system reforms. As a result, 10 women have been
newly promoted to the positions of store manager and manager. To further promote the success of working mothers, we will continue to assessand develop each person’s business skills, and create support systems.

Special Feature

Interview with a Working Mother and Store Manager
I joined Ryohin Keikaku in 2009, and have built a career as a store manager. When I first returned to work aftermaternity leave, I did not hold this position, but once my child’s health became stable, I again thought I would like tochallenge myself as a store manager. After numerous interviews with people in the Human Resources (HR) Division,
managers and executive officers, I became the store manager of MUJI Tokyo Midtown in 2023.
In working as a store manager, I was able to clearly communicate my preferences, including the area I work in,which days and hours I work, the extent of sales promotion activities at the facility where the store is located, and a
Yuki Shiraki
desire for a computer for personal use. Almost all of my wishes were taken into consideration, and now I am also able
Store Manager
to take on the challenge of advancing my career in a very positive environment. I regularly have talks with my boss and
MUJI Tokyo Midtown
people in the HR Division, and I feel I am being supported in maintaining work-life balance. At the same time, I also feelthe importance of having a solid foundation in place for store operations that make diverse work styles possible,
including securing adequate staffing, fostering a climate of understanding, and having an advanced human resource development system.
Currently, Ryohin Keikaku is actively working to create a positive work environment for all employees. In addition to working mothers, there
are other employees facing a variety of other life situations, including working fathers and caregivers for family members. As for me, making sure
my voice is heard by the Company and helping to further improve the environment have led to the job satisfaction I enjoy now.
MUJI REPORT 2023

60

Material Issue 4: Realize Governance Aligned with Public Interest and People-CenteredManagement

Working toward “Public Interest and People-CenteredManagement”
Customers

We promote the practice of “public interest and people-centered management,” where each of
our employees has a sense of ownership and takes a leading role in our business activities that
contribute to the public interest. These activities include those held at locally rooted stores, andalso ones promoted by each employee together with customers, local communities and business
partners. By engaging in constructive dialogue with stakeholders and reflecting their opinions andrequests in our business activities, we strive to make a positive impact on society.

Business
partners

Employees

Local
communities
and society

Shareholders
and investors
Governments

Stakeholder engagement ▶https://www.ryohin-keikaku.jp/eng/sustainability/muji-sustainability/stakeholder-engagement/

Strengthening Internal Communications
In order to realize “public interest and people-centered management,” it is necessary for employees to participate in management, andmake suggestions to the Company while working in unison with managers. To foster a sense of ownership in each employee, we are sharing
information about management and increasing opportunities for communication between management and employees. Starting in FY2023/8,
we have worked to strengthen communication between stores and headquarters, and between general employees and management, toimprove employees’ engagement and sense of involvement in management.

Company-wide Meetings
To achieve these goals, Ryohin Keikaku holds Company-wide
meetings in various forms as opportunities to share the Company’s
philosophy, business condition and daily business activities as
it works toward its ideal structure.

Good Meeting venue

Name of
Meeting

Meeting
Frequency

Main
ParticipantsContent

Good Meeting
venue

Twice ayear

All Group
employees

Message from management, presentationof semi-annual initiatives of the wholeGroup, recognition of products andemployees, presentation of good practices

MUJI Dialogue
venue

Once amonth

All employees

Message from management and Q&A
sessionStore managers
meeting

Once amonthStore Sales
Division employees(store manager
level and higher)

Discussion and information-sharing onsales strategies

Employeemeetings

Once amonth

Headquarters
employees

Introduction of the work and initiativesof each division and presentations by
the people in charge

Store managers meeting

Internal IR
To effectively practice “public interest and people-centered management,” we believe it is important to build an appropriate shareholder
composition with well-balanced ownership among domestic investors, overseas investors, and individual/employee shareholders. As such,
we are actively engaged in IR both inside and outside the Company. Measures to strengthen our internal IR activities include encouraging
online participation in employees’ shareholder meetings and holding financial results briefings specifically for employees.

Redesign of In-house Newsletter
We made changes to the in-house newsletter in order to instill a sense of ownership in Company activities,
including activities based on ESG management, and to increase employee engagement. Previously, we
distributed videos and articles on the Company’s activities, new product information, and other subjects
through the in-house portal site. In August 2023, we began issuing printed newsletters and distributing
them to stores to better ensure the information reaches store staff throughout Japan. A great deal of
information related to ESG management is published on the front page, including the progress of reuse
and recycling efforts, and local activities.

Printed edition of MUJI NEWS (in-housenewsletter)

Team ESG Activities
To foster a Company-wide awareness of being a front runner in ESG management, we have enhanced ourefforts to publicize Ryohin Keikaku’s ESG material issues, targets and initiatives in forums such as the
MUJI Dialogue venue and employee meetings. In July 2023, we launched Team ESG, a group of volunteers
who are very interested in the topic of sustainability. All interested employees, including partner employees,
are welcome to participate no matter which department or region they work in. As of December 31, 2023,
approximately 150 people have joined the team.
In online meetings, Team ESG holds study sessions and engages in discussions on major themes
and good practices in the Company related to ESG management. Members are also active on the message
board and in area cleanup activities to build connections between participants.

61 MUJI REPORT 2023

Arigato Cleanup (cleanup activity aroundthe former headquarters building)Business Strategies

Strengthening Engagement with Shareholders and Investors
Ryohin Keikaku’s IR program promotes constructive dialogue with domestic and foreign shareholders and other investors, with the goal ofsustainable growth and long-term enhancement of corporate value. The opinions obtained through dialogue with shareholders and investors
are fed back to management and the Board of Directors, ensuring those ideas are reflected in Ryohin Keikaku’s business activities.

Engagement with Shareholders at the General Meeting
To encourage the participation of more shareholders, we hold the General
Meeting of Shareholders on a public holiday, and a separate Shareholders’Meeting after the general meeting to further deepen direct communication
with shareholders. The combined in-person and online attendance was about
800 people in 2022 and 950 in 2023. As part of efforts to build relationships
with shareholders, we have introduced a shareholder benefit program in whichshareholders who own at least 100 shares (one lot) receive a 5% discountby presenting their Shareholder Card when shopping at MUJI stores.

Shareholders’ Meeting after the
General Meeting of Shareholders

Shareholder Card

Engagement with Individual Shareholders and Investors
Ryohin Keikaku holds store-based Shareholders’ Meetings in small groups to provide an opportunity for individual shareholders to speak
directly with executives and store managers. We are also working to enhance disclosure to individual investors in ways such as posting
videos of Shareholders’ Meetings on the Ryohin Keikaku website. In addition, we regularly conduct Company presentations for individual
investors, and are increasing contact points.
Results for FY2023/8• Shareholders’ Meetings in stores: 7 meetings with a total of 133 participants
We hold Shareholders’ Meetings at stores throughout Japan to explain to shareholders the direction inwhich Ryohin Keikaku is moving and initiatives at stores. This helps to deepen understanding of ourbusiness activities, and the questions and comments we receive from shareholders on store operations,our product lineup and other matters are reflected in the Company’s management.
Shareholders’ Meeting held at a store• Seminars for individual investors: 2

Engagement with Analysts and Institutional Investors
Ryohin Keikaku’s president and the director in charge of IR participate in financial results briefings, and hold small-scale meetings for analysts
and institutional investors on a regular basis. In addition, the director in charge of IR and the IR officer conduct interviews that cover topics
such as ESG issues, and interviews with the executive in charge of shareholder voting. The views of investors obtained through this dialogue
are regularly reported to the management team. We also hold small-scale meetings between outside directors and domestic and overseas
shareholders and institutional investors, and post a summary of the Q&A session on our website. To improve the quality of non-financial
information, we are taking steps to promote better understanding of our business, including through product exhibitions, store tours, anddialogue exchanges about MUJI REPORT, our integrated report.
Results for FY2023/8• Individual IR meetings: 325• Dialogue between outside directors and institutional investors: In August 2023, as we did in 2022, we helda small-scale meeting between 11 representatives of 11 domestic and overseas organizations (institutional
investors) and two outside directors of Ryohin Keikaku. A lively discussion took place on topics that included
the state of the Board of Directors and the progress and challenges of the medium-term business plan.
• Dialogue with the executive in charge of shareholder voting: 13 companies that are major shareholders
Dialogue between outside directors and• Product exhibitions: 2 times
shareholders (institutional investors)• Store tours: 2 times• MUJI REPORT dialogue exchanges: 2 times

IR Email Distribution Service (Japanese Only)
We send out IR information to everyone who has registered for our IR email distribution service, including informationon the Shareholders’ Meeting and other events held exclusively for shareholders, as well as the latest news.

MUJI REPORT 2023

62

Basic Information

Directors and Corporate Auditors (As of November 23, 2023)
The Ryohin Keikaku Group redefined its corporate purpose as creation of “a truthful and sustainable life for all” with the goal of
creating a better world 100 years from now. With that in mind, the Group has set two themes in developing its business: “to be a partof people’s daily necessities” and “to take root in local society.” In order to achieve these objectives, we will select directors andcorporate auditors who have the appropriate experience and knowledge and who will increase the diversity of the Board of Directors
and Board of Auditors. In doing so, we will promote candidates from inside the Company and bring in people from outside.
Ratio of Outside Directors
to All Directors

Ratio of Female Directors
to All Directors

5/8

62.5%

3/8

37.5%

Current position

Attendance atmeetings of the Boardof Directors(FY2023/8)

Masaaki Kanai

Chairman &Representative
Director

16/16(100％)

111,160 shares/ Mr. Kanai has been involved in management as a director for many years and has been
performing a central role in the expansion and growth of the Company and its business.
23 years, 6 months He is expected to continue contributing to the enhancement of corporate value.

Nobuo Domae

President &Representative
Director

16/16(100％)

86,200 shares/ Mr. Domae has extensive experience and broad knowledge as a management
executive at various companies, and is expected to continue playing a central role
4 years, 6 months in the Company’s “Second Founding.”

Satoshi Shimizu

Executive Vice
President &Director

16/16(100％)

Mr. Shimizu has extensive experience in the areas of products and stores, and is
6,600 shares/
expected to play a central role in the globalization that is part of the Company’s
8 years, 6 months “Second Founding.”

Masayoshi
Yagyu

Outside Director(Independent)

16/16(100％)Mr. Yagyu has extensive experience and broad insight as a corporate manager. He is
2,700 shares/
expected to function appropriately in his role as an outside director in areas such as
7 years, 6 months supervising business execution.

Atsushi
Yoshikawa

Outside Director(Independent)

16/16(100％)Mr. Yoshikawa is expected to draw on his extensive experience and broad insight as
4,000 shares/
a corporate manager to continue contributing as an outside director to the sustained
5 years, 6 months growth and increased corporate value of the Company.

Kumi Ito

Outside Director(Independent)

13/131(100％)

500 shares/
1 year

Ms. Ito has deep insight into management related to digital technology andhealthcare from her experience as an outside director at several companies. We
expect Ms. Ito to provide valuable suggestions and advice.

Yuriko Kato

Outside Director(Independent)

13/131(100％)

0 shares/
1 year

Ms. Kato is expected to give valuable suggestions and advice as she has expert
knowledge in agricultural and digital businesses. She also has deep insight into
corporate management based on her experience as an entrepreneur and as an
outside director at several companies.

MayukaYamazakiOutside Director(Independent)

13/131(100％)

0 shares/
1 yearMs. Yamazaki is expected to give valuable suggestions and advice from various pointsof view. She has experience at an international post-graduate business school and as
an outside director at several rapidly growing start-up companies. She is also wellversed in traditional culture and art as a practitioner of Japanese flower arrangement.

Kei Suzuki

Full-time
Corporate Auditor

16/16(100％)

39,300 shares/
2 years

Mr. Suzuki has served the Company as general manager of the Household Division, andas a director and executive officer he has held important positions in overseeing overseas
business management, the HR & General Affairs Division, legal affairs and intellectual
property, and the Internal Audit Office. Based on his deep insight into Ryohin Keikaku’s
business, we expect him to function appropriately as a full-time corporate auditor.

KosukeYamaneFull-time Outside
Corporate Auditor(Independent)

13/132(100％)

0 shares/
1 year

As a full-time outside corporate auditor, Mr. Yamane is expected to audit operations
based on his wide-ranging knowledge in the fields of accounting, finance, andinformation systems, based on his extensive experience in important positions
related to public relations, investor relations, finance and information strategy.

Jun Arai

OutsideCorporate Auditor(Independent)

15/16
(94％)

OutsideOutsideName

OutsideMaoko Kikuchi Corporate Auditor(Independent)ー3

Number of shares
owned/Numberof years in office

Reason for appointment

Mr. Arai has extensive experience as a manager at multiple companies and a wide
2,300 shares/
range of knowledge in accounting, finance, and corporate governance. He is
3 years, 6 months expected to function appropriately as an outside corporate auditor.

0 shares/
Newly appointed

Ms. Kikuchi has experience working at the Japan Fair Trade Commission and other public
institutions, and as a public prosecutor in the Ministry of Justice. She has also served as
an attorney both in Japan and overseas in areas including corporate legal affairs. She has
also held the positions of outside director and standing outside Audit & Supervisory Board
member, and is expected to function appropriately as an outside corporate auditor as she
can be expected to audit operations based on her wide-ranging knowledge.

1. For Kumi Ito, Yuriko Kato and Mayuka Yamazaki, the number of meetings held and attendance at Board of Directors meetings are after their appointment as directors on November 23, 2022.
2. For Kosuke Yamane, the number of meetings held and attendance at Board of Directors meetings are after his appointment as a corporate auditor on November 23, 2022.
3. Maoko Kikuchi was appointed at the General Meeting of Shareholders held on November 23, 2023.

63 MUJI REPORT 2023

Basic Information

Prerequisite

Competency
Overall corporate
management

The Board of Directors needs to make decisions after engaging in frank discussions of medium- to long-term strategies. We have therefore
selected diverse knowledge of corporate management that is not limited to a particular industry as a prerequisite.

Operations

Stores are central to our business, and effective operations and expansion are crucial to our competitiveness. We have therefore selected
knowledge about operations in the retail, distribution and manufacturing industries as a prerequisite.

Business entrepreneurshipand social entrepreneurship

We have selected knowledge about business entrepreneurship and social entrepreneurship as a prerequisite for achieving our corporate purpose.

Technology

We aim to create services that make good use of technology as a tool and to improve convenience for our stakeholders. We have therefore
selected knowledge about digital and technology management as a prerequisite.

International mindset

Achieving our corporate purpose requires us to contribute to various countries and regions around the world through store development andproduct manufacturing. We have therefore selected knowledge that includes experience in an international environment as a prerequisite.

Humanities and the arts

We have selected understanding of the culture and history of the countries and regions we serve and knowledge of the arts and design as
prerequisites for achieving our corporate purpose.

Sustainability and diversity

We position achieving sustainability and diversity at the core of our business activities in order to achieve our corporate purpose. We have therefore
selected an understanding of social issues such as sustainability and diversity and a strong desire to address those issues as prerequisites.

Administration and risk
management

We have selected knowledge of personnel and labor affairs, finance, legal affairs and risk management as a prerequisite for achieving our corporate
purpose.

Overallcorporate
management

Operations

Business
entrepreneurshipand social
entrepreneurship

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

Technology

International
mindsetHumanities Sustainability
and the arts and diversity

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

・Outside Director and Audit andSupervisory Committee Member,
Members Co., Ltd.

〇

◎

〇

〇

・President & Representative Director,
MUJI HOUSE Co., Ltd.
・Outside Director, Monex Group, Inc.
・Scholarship Director, CO-OP Sapporo

〇

◎

〇

・Outside Director, Chubu ElectricPower Grid Co., Inc.

〇

〇

◎

・Director and Member of Audit andSupervisory Committee, AssetManagement One Co., Ltd.

〇

〇

〇

〇

〇

〇

〇

〇

〇

・President & Representative Director,
M2 Labo. Inc.
・President & Representative Director,
Vegibus Inc.
・Outside Director, Shizuoka Gas Co., Ltd.

〇

〇

〇

〇

・Outside Director and Audit andSupervisory Committee Member,
M3, Inc.
・Outside Director, RENOVA Inc.

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

・Outside Director, SOMPO Holdings, Inc.
・Outside Director, Fuji Furukawa
Engineering & Construction Co., Ltd.
・Outside Director, True Data Inc.
・Executive Director, Tsukuba University
・Managing Partner, Office KITO GK〇〇

Concurrent positions

〇

〇

〇

Board ofAuditors〇〇〇

Nomination Remuneration
Advisory
Advisory
Committee
Committee〇〇〇

Meetings and Committees
Board ofDirectors〇〇〇

Administration
and riskmanagement

〇

〇

〇

◎

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

・Outside Director, Sumitomo Mitsui
DS Asset Management Company,
Limited〇・Outside Director, MITSUI-SOKO
HOLDINGS Co., Ltd.
・Outside Director, Hitachi Construction
Machinery Co., Ltd.
・Managing Partner, Compass
International Law Office

〇

〇

〇

〇

Notes: 1. The above does not encompass all of the experience and knowledge possessed by the officers. Only the major aspects are presented.
2. ◎ Indicates the chairperson of each meeting or committee.

MUJI REPORT 2023

64

Basic Information

Corporate Governance
Basic Policy
The creation of a highly transparent management system is a high priority based on our belief that establishing an effective management
structure and internal control system and improving corporate governance will lead to continuous improvement of corporate value. In
addition, we strive to maintain and develop good relationships with all stakeholders (shareholders, customers, employees, society, andpartner companies), and to proactively disclose information in a timely manner.

Corporate Governance System
General Meeting of Shareholders
Appointment & Dismissal

2

1

Board of Auditors

Board of Directors
Three insidedirectors

One inside corporate auditor
Audit

Three outside corporate
auditors (of which, one isa woman)AdviceCoordination

Five outside directors(of which, three are
women)

Coordination

Coordination

Nomination Advisory Committee

Five outside directors(of which, three are
women)

Two insidedirectors

Executive Advisory Committee

Advice4

3 Remuneration Advisory Committee
Audit

5
AdviceTwo insidedirectors

Five outside directors(of which, three are
women)

Appointment, Dismissal & Supervision

6

Coordination

Internal Audit Office

ReportChairman & Representative Director
President & Representative Director

Advisory Board

Accounting Auditor

Management Executive Meeting
ESG Management Committee
Business Process Standardization Committee
Executive Officers

Internal Audit
Accounting
Audit

Compliance and Risk Management Committee
Report7

Helpline
Consultation

Each Division and Group Company(As of November 23, 2023)

Activities During FY2023/8
１

Board of Directors

Number of meetings: 16
Attendance rate: 99%

2

Board of Auditors

Number of meetings: 17
Attendance rate: 99%

Objectives

Objectives

Makes statutory resolutions on important matters related to medium- tolong-term management, and matters stipulated by laws, regulations andthe Articles of Incorporation. Supervises the execution of duties by executive
directors and executive officers.

Audits the general execution of duties by directors from the perspectivesof legality and appropriateness. Prevents or corrects fraudulent acts, andviolations of laws, regulations, and the Articles of Incorporation.

Main Topics Discussed and Related Activities

In order to accurately understand the status of management, the Board ofAuditors participates in meetings of the Board of Directors and other important
meetings; interviews directors, executive officers, and managers of subsidiaries;
and conducts inspections of business sites. In addition, the Board of Auditors
cooperates with the accounting auditor and the Internal Audit Office tounderstand the status of business and internal control; holds regular meetings
with representative directors and outside directors; and raises issues andmakes recommendations regarding important Group-wide issues based on
the results of audits.

The Executive Advisory Committee, which is composed of members of
the Board of Directors, convenes regularly to discuss important themes
multiple times before making resolutions at Board of Directors meetings.
With respect to FY2023/8, agenda items discussed and resolved included
those related to the medium-term business plan, compliance and risk
reports, reports and assessments of ESG initiatives, the engagement
survey, and the headquarters relocation.

65 MUJI REPORT 2023

Main Topics Discussed and Related Activities

Basic Information

3

Remuneration Advisory
Committee

4

Number of meetings: 8
Attendance rate: 100%

Nomination Advisory
Committee

Number of meetings: 10
Attendance rate: 100%

Objectives

Objectives

Reports to the Board of Directors and the Board of Auditors regarding
issues including compensation for directors, auditors and executive officers.

Reports to the Board of Directors and Board of Auditors on issues including
the appointment and dismissal of directors, auditors and executive officers.

Main Topics Discussed and Related Activities

Main Topics Discussed and Related Activities

The committee held discussions on ESG evaluation for restricted stockcompensation, revision of the executive officer system, and other matters.

The committee held discussions on executive officer personnel, nominationof director and auditor candidates, and other matters.

5

Executive Advisory
Committee

This committee is composed of members of the Board of Directors, and is a forum for discussion and exchange of opinions
on medium- and long-term management strategies as well as a forum for ensuring adequate prior discussion of agenda items
at Board meetings.

6

Internal Audit Office

The Internal Audit Office, which currently comprises eight members, conducts internal audits. This office audits the status ofcompliance with internal rules and manuals at stores and headquarters, and the appropriateness and effectiveness of overallbusiness activities and procedures. Audit results are reported to the Board of Directors and the Board of Auditors.

7

Accounting Auditor

As for financial audits, we have created an environment that facilitates fair auditing with a team comprising two certified public
accountants (Mr. Hirotaka Nakata and Mr. Yosuke Sato), 11 certified public accountants who provide assistance, and 15 othermembers associated with KPMG AZSA LLC.

Transition to a Stronger Corporate Governance System
2002/2

2004/2…

2018/2

2019/2

2020/2
2020/8*2021/8Introduced outside director system
Institutional
Design2022/82023/8

Appointed a majority of outside directors

Remuneration Advisory Committee established
Nomination Advisory Committee established

Changed term of directors from two years to one year
Directors &Executive
Officers

Disclosed skills matrix
Introduced executive officer system

Changed contract type of executive officers from mandate contract to service contract
Elected a senior executive officer

Corporate
Governance
Report andAssessment of
Effectiveness

Issued Corporate Governance Report
Began assessment of effectiveness of Board of Directors (survey format)

Conducted interviews for assessment of Board’s effectiveness

Revised officer remuneration system (inside directors)
Officer
Remuneration

Introduced restricted stock compensation system
Increased ratio of performance-linked compensation* The Company changed its fiscal year end to August 31 as of the fiscal year ended August 31, 2020. For convenience, 2020/2 and 2020/8 are presented together in the above chart.

MUJI REPORT 2023

66

Assessment of Effectiveness of the Board of Directors
The Board of Directors conducted an analysis and assessment of the Board’s effectiveness based on the corporate governance policy set
by the Company. The results of that assessment are summarized below.
Summary of Assessment Process(1) The Board of Directors set the following evaluation categories it believes are necessary for assessment of the Board’s effectiveness and conducted a survey ofand interviews with directors and corporate auditors.
<Evaluation categories in the questionnaire>① Composition of the Board of Directors② Operation of the Board of Directors③ Enhancement of discussions at Board of Directors meetings④ System supporting the Board of Directors⑤ Enhancement of relationship with shareholders and other stakeholders⑥ Other comments(2) The Board secretariat summarized the results of its assessment of directors and corporate auditors based on the above questionnaire responses and interviews.
(3) Based on these results, the Board held discussions on each issue.
Results of the Assessment(1) Summary of scores<Average score for each category>
Assessment scores are set on a scale of 1 to 5, with “1” meaning improvement necessary, “3” meaning the minimum necessary level, and “5” meaning adequate.
① Composition of the Board of Directors (Average score: 4.4) (Previous assessment: 3.4)
② Operation of the Board of Directors (Average score: 3.4) (Previous assessment: 3.4)
③ Enhancement of discussions at Board of Directors meetings (Average score: 3.6) (Previous assessment: 3.6)
④ System supporting the Board of Directors (Average score: 3.7) (Previous assessment: 3.2)
⑤ Enhancement of relationship with shareholders and other stakeholders (Average score: 3.8) (Previous assessment: 3.5)
(2) Summary of assessment results
The results of the questionnaire and interviews above showed that the Board of Directors is evaluated as exceeding the minimum necessary level for the mostpart. While the diversity of the Board improved, we identified issues related to monitoring of execution and information sharing with outside directors.
Future Initiatives
Based on the issues identified through the effectiveness assessment of the Board of Directors, we will work on the following measures to further enhance theBoard’s effectiveness.
・Improving the monitoring function with thorough follow-up reports of the progress of medium-term business plan measures and other important matters・Having discussions regarding the next medium-term business plan with a view toward 2030 and 2040
・Enhancing information sharing with outside directors
・Expanding communication opportunities with stakeholders and enhancing disclosure

Policy for Appointment and Dismissal of Directors
Policy for Appointment of Officers
In nominating directors, the Nomination Advisory Committee, of which independent outside directors make up the majority, discusses eachcandidate’s qualifications, taking into consideration their previous experience, accomplishments, ability to execute tasks, and character, andreports its recommendations to the Board of Directors. In addition, when nominating outside director candidates, we select management
professionals who have experience, accomplishments, and knowledge in their respective fields. The nomination is discussed by the
Nomination Advisory Committee, taking into consideration the candidate’s ability to provide opinions and judgments that will contribute toenhancement of the Company’s medium- to long-term corporate value, and is then reported to the Board of Directors.

Number and Term of Directors
The Company’s Articles of Incorporation stipulate that the number of directors shall be no more than 11. For the term of directors, a proposal
to shorten the term from two years to one year was approved at the General Meeting of Shareholders held in November 2021, for the
purpose of clarifying the management responsibilities of directors and creating a management structure that enables us to respond quickly
to changes in the business environment.

Support and Training Policy for Outside Directors and Outside Corporate Auditors
Support System for Outside Directors and Outside Corporate Auditors
There is no specific person or division in charge of the support system for outside directors and outside corporate auditors, but the
Corporate Planning Division provides information, including distributing the agenda of Board of Directors meetings in advance, and theGeneral Affairs Division assists outside auditors in the execution of their duties.
In FY2022/8, we began holding executive sessions that involve informal interviews with executive officers in order to improveinformation sharing with outside directors. In addition, we have enhanced support for the smooth operation of the Board of Directors byintroducing a cloud-based Board management tool to improve the security of confidential information and enhance overall efficiency.

Training Policy
We encourage directors and corporate auditors to learn about matters such as the responsibilities, duties and legal risks of officers, and to workon self-improvement such as acquiring business knowledge of the operations they supervise. External training is also provided as necessary.

67 MUJI REPORT 2023

Basic Information

Executive Remuneration System
Policy for Determining Executive Remuneration
To enhance corporate value, remuneration of the Company’s directors consists of three types: payment of base compensation, which is a
fixed amount (according to the director’s position) within the total remuneration limits set by the General Meeting of Shareholders; paymentof performance-based bonuses as a short-term incentive linked to the Company’s performance; and non-monetary compensation as along-term incentive to continuously increase long-term corporate value and shareholder value.
Remuneration of outside directors and corporate auditors consists solely of base compensation, and there are no components thatfluctuate with performance. In addition, no executive retirement benefit system is available.
Compensation Structure and Components

Monetary compensation/
Base compensation

Summary

The base compensation of the Company’s directors is determined based on each director’s position, and by
the Board of Directors pursuant to the deliberations of the Remuneration Advisory Committee.

Monetary compensation/
Performance-based bonuses(Excluding outside directors and outside
corporate auditors)

Non-monetary compensation/
Restricted shares(Excluding outside directors and outside
corporate auditors)

The coefficient for determining bonuses is calculated (from the perspective of pursuing profit in core businesses)
by modifying the base bonus using the ratio of actual to planned consolidated operating profit. It ranges from
0% to 200%.
Non-monetary compensation is in the form of grants of restricted shares that vest upon retirement. Basegrants are determined in relation to achievements in areas such as ESG that have long-term significance, andvary from 30% to 100% according to director position.

Determination Process
Chaired by an outside director, the Remuneration Advisory Committee determines director compensation. The committee deliberates onmonetary and non-monetary compensation for each director individually, and is committed to transparency, validity and objectivity. Its
reports are referred to in Board resolutions. The Remuneration Advisory Committee consists of seven members, of which five are outside
directors. Having a majority of outside directors ensures thorough governance.

Ratio by Type of Compensation
The ratio of performance-linked compensation for directors of the Company increases the higher the position.
The ratio of base compensation, performance-based bonuses, and non-monetary compensation, etc., is shown in the table below
assuming 100% of the target is achieved.
In addition, short-term incentive performance-based bonuses range from 0% to 200%, depending on the level of achievement. The
percentage of long-term incentive non-monetary compensation varies from 30% to 100% depending on the level of target achievement.
Non-monetarycompensation

Monetary compensation

Representative Director

Base compensation 33.3%

Performance-based bonuses 33.3%

Restricted shares 33.3%
Non-monetarycompensation

Monetary compensation

Director

Base compensation 40%

Performance-based bonuses 40% Restricted shares 20%

Monetary compensation

Outside Director

Base compensation 100%

The amount for FY2023/8 is disclosed in the Securities Report (Japanese only). ▶https://ssl4.eir-parts.net/doc/7453/yuho_pdf/S100SBV6/00.pdf

About Cross-Shareholdings
Ryohin Keikaku’s policy is to sell cross-shareholdings in principle, and theBoard of Directors receives reports on the reduction of cross-shareholdings
every year.
In exercising voting rights of shares held as cross-shareholdings,
we vote appropriately after judging the pros and cons of each proposal.
We comprehensively examine factors such as whether the proposal
will contribute to enhancement of the investee company’s corporate
value, whether it will contribute to enhancement of the Ryohin Keikaku
Group’s sustainable growth and medium- to long-term corporate value,
and whether it conforms to the purpose of holding the shares.

Carrying value (Left scale)(Million JPY)

4,730

5,000
4,000
3,000

Number of stocks (Right scale)

3,791

3,792

5

5

(Stocks)

4,573

8
6
4

4

2,000
1,000
0

10

1,713
1

2020/2

2020/82021/82022/82023/84
20

MUJI REPORT 2023

68

Basic Information

Messages from Outside Officers

Masayoshi Yagyu
Outside Director

The Company has declared its “Second Founding,” announced the 2030 Vision and set out
key tasks for realizing related goals. This includes establishing a core product lineup andstrengthening the production and procurement system, as well as the creation of a corporate
culture of self motivation. These moves have helped to create a strong business foundation forachieving our goal of expanding the scope and scale of the supply chain in the growth
process, without changing Ryohin Keikaku’s concepts or failing to ensure efficient daily
operations. In the two years since the start of the “Second Founding,” the Company has
overcome difficulties and begun to see progress in various areas, such as improvement ofinternal systems and recruiting of external talent.
Regarding the Board of Directors, new members with diverse knowledge and experience
have been added. This has led to livelier, more multifaceted discussions, and we are steering
the Board toward addressing the challenges the Company faces. Among those challenges
are two infrastructure improvements that may hold the key to realizing its vision.
The first strategy involves strengthening procurement and production by fostering close
cooperation and continuous improvement with suppliers who understand and share Ryohin
Keikaku’s aspirations. This will include getting more deeply involved in production processes
in order to achieve these goals.
The second element is standardizing operations at headquarters and stores and developing
systems that will form the foundation of a corporate culture of self motivation. A true corporate
culture of self motivation that can support our business will not come from operations that depend
on tacit knowledge or a particular individual. Standardization and development of systems meansthat all associates will share the same approach in order to achieve the highest quality andefficiency. Individuality will not be lost as long as people involved in the process continue toimprove themselves. This standardization and development of systems are what will truly ensurethat people who are a part of a culture of self motivation are able to think and act freely.
As a member of the Board of Directors, I want to help build this foundation to help
realize the Company’s vision.

Atsushi Yoshikawa
Outside Director

69 MUJI REPORT 2023

Last year, I wrote that the challenge of the “Second Founding” was “at the point where thedrive wheels are very hard to move,” but I feel that those wheels have steadily begun gaining
traction in the past year.
The operating environment has improved significantly since the easing of the COVID-19
pandemic. Moreover, within the Company, the operating profit ratio improved through thesecond half of the period thanks to efforts to optimize inventory, aggressive control of logistics
costs, strengthening of the online sales environment, and other measures, combined with theintroduction of exciting new products and expansion of sales methods. Efforts to bolster
human resources, including from outside the Company, with a focus on headquarters staff,
generally proceeded as planned.
One issue is that even though the decision was made to raise prices in response to theexternal environment, the Company needs to further strengthen productivity in order toensure it can maintain fair prices. As for new store openings, the Company opened 75 storesin Japan and 65 stores overseas, but not all of these stores are growing their customer baseand sales as originally expected. The Company must continue to monitor its store opening
policy. The Company also needs to better manage business processes in Europe.
In the Remuneration Advisory Committee, we had extensive discussions on restricted
stock, a form of non-cash compensation. However, while there is definite progress toward theoriginal ESG-related targets, we do not think this movement is yet well established in the
Company, so we set the evaluation coefficient at 75%.
I will continue to oversee Ryohin Keikaku from a governance perspective as it continues
its “Second Founding.”

Basic Information

Kumi Ito
Outside Director

The past year has flown by since I joined team MUJI. I have worked in management at foreigncompanies and startups, and am currently active as an outside director at several companies
and as a director at a university, but I have never been contacted as much as I have since
being appointed an outside director of Ryohin Keikaku. That alone has made me keenly
aware of the appreciation and expectations people have for Ryohin Keikaku and MUJI, andthe weight of my responsibility.
Ryohin Keikaku, which has embarked on its “Second Founding,” has also changed thestructure of its Board of Directors, with three female outside directors joining the Board, myself
included. The environment here is conducive to a candid exchange of opinions. In addition tomeetings of the Board of Directors, the Nomination Advisory Committee and the Remuneration
Advisory Committee, I have various chances to talk with the other outside directors, senior
management, and people on the frontlines of business, including meetings with executive
officers and through store inspection tours. Everyone, myself included, enthusiastically shares
their views, and I often think, “Oh, I see what you mean!” during discussions.
On the other hand, I feel that there is a need to strengthen processes and systems tosuit a company of this size. Efforts such as IT improvements are already under way, and I would
like to keep an eye on their progress. I also think that the number of women in management
can be increased. Roughly 70% of new university graduate employees are women, so there
is a pipeline of candidates. Their continued professional development will be important.
All employees, from top executives to sales associates, are fans of MUJI and instinctively
understand what it should do for communities and people. As such, the corporate purpose isnaturally ingrained. As members of management, I believe it is important that we forge ahead
with strategies and action plans that give shape to people’s ideas.

Yuriko Kato
Outside Director

In the year since I was appointed, I think the biggest achievement is that management’s
thinking has changed dramatically. It takes conviction and strong management for a newleader to bring in fresh strategies and implement them. As an entrepreneur, I can assure youthat it is a whole lot easier to just build a new organization from scratch.
A year earlier, when I was first appointed, the atmosphere made it difficult for members ofmanagement, much less employees, to fully express themselves to President Domae, who is aclear-headed strategist. However, he humbly accepted the feedback of officers and employees,
and quickly sharpened his awareness and adjusted his behavior. He has enhanced open
management of meetings and increased opportunities for dialogue with employees, andcontinued working to really understand conditions on the frontlines. I feel that our cohesivenessas a team is improving.
I have also been very impressed by the managerial ability that allowed him to quickly
change business strategy while bouncing ideas off employees and the public under the difficult
circumstances of the “Second Founding” of a large company.
Recognizing that the MUJI concept and values were becoming forced, management
has begun building a system that respects the diversity of countries, regions and employees.
The Company is evolving into a creative group that fosters people’s well-being with a perspectivethat takes the entire planet into consideration. I am convinced that the challenge of taking
on a “Second Founding” will point the way to the manufacturing retailer business model ofthe future.

MUJI REPORT 2023

70

Mayuka Yamazaki
Outside Director

In the year since my association with Ryohin Keikaku began in autumn of 2022, I have seen
firsthand and in various settings how the Company is honestly trying to be a positive presence.
Amid a broad global trend of rethinking the emphasis on shareholder value and free-market
principles, and reexamining why companies exist (their purpose), more and more companies
are suddenly claiming to exist for society. But it is rare to find a company that has addressedthat question sincerely and conscientiously right from the beginning.
On the other hand, the past year has been one in which the people of Ryohin Keikaku
learned through trial and error how difficult it is for a company to try to be socially beneficial.
The definition of “beneficial” changes with the times. Organizations are now being required totransform their way of operating and doing business. There is no precedent to follow or correct
answer. Each person in the organization has to think for themselves, question things, andengage in dialogue with other members to move forward together. Based on survey results
showing that employee engagement is low, Ryohin Keikaku has recently shifted direction to apeople-centered policy that values members of the organization. I believe this will become theplatform for realizing Ryohin Keikaku’s intention of being a socially beneficial company.
Board of Directors meetings are a place where people with wonderfully varied backgrounds
and knowledge are able to frankly express their unique perspectives and opinions with a highdegree of psychological safety. In addition, outside directors are given ample opportunities todeepen their understanding of the Company and get feedback while maintaining their
independent viewpoints. This includes having opportunities to engage in dialogue with theexecutive team and direct communication with employees on the frontlines. I intend to findmore ways to contribute and give my wholehearted support to Ryohin Keikaku as it continues
to walk a path that no other company in the world can follow.

Message from an Outside Corporate Auditor

Kosuke Yamane
Full-time Outside Corporate Auditor

71 MUJI REPORT 2023

It has been a year since I was appointed as a full-time outside corporate auditor of Ryohin
Keikaku. I work hard to put my 40 years of experience at Komatsu Ltd. to use in the
Company’s growth. This is my first time working in the retail industry, but when it comes tomanufacturing, there are many elements that are the same. The engineering chain fromplanning and development to production and sales, the supply chain from material procurement
to delivery of products to customers, and the smooth flow of goods and information in thetwo chains are fundamental to strong manufacturing. We are currently insourcing someproduction work, and are in the process of getting more deeply involved in quality, cost anddelivery (QCD) operations at factories. The key to this is respecting and trusting suppliers as
business partners, and fostering a shared sense that we will grow together.
We are aiming to be a front runner in ESG management through our core business. The
use of natural materials and a recycling-oriented product lineup is our differentiation strategy,
and the goal is for all of our products and services to lead to a better environment and society.
The role played by outside officers in strengthening governance is substantial. I intend toenhance management transparency by offering different points of view that help stimulate
discussion in the Board of Directors and Board of Auditors.
I see the “Second Founding” as a way to reflect on the Company’s past to polish its
strengths and improve on areas of weaknesses. As an outside corporate auditor, I will do mybest to make the Company even stronger.

Basic Information

Risk Management and Compliance
Compliance and Risk Management Structure
Risk management is overseen by the Compliance and Risk

Board of Directors

Management Committee under the supervision of theReportingCompliance and Risk Management Committee
Personal information protection
Natural disaster risk
Domestic/overseas economic conditions
Human rights in supply chain, etc.
Reporting of individual risks

Each division

Domestic Group companies

Board of Directors. The committee, which is chaired by an
officer of the Company, meets regularly to gather informationon compliance and risks and to further discuss important
issues. Matters discussed by the Compliance and Risk
Management Committee are regularly reported to theBoard of Directors and are shared with directors andcorporate auditors.

Overseas Group companies

Business-Related Risks of Particular Significance
The Compliance and Risk Management Committee has prepared a risk management list to help each division recognize potential material
risks to the Group and to come up with ways to respond to them. The risk management list corresponds to Ryohin Keikaku’s operations
manual, ensuring that information on specific responses and measures is easily accessible. Each division regularly reviews risk-related
issues and updates the risk management list. In the review for FY2023/8, we increased the number of items in the risk management list
based on recent events and incidents, and are working on ways to respond to each item.
Material risks have been divided into three categories: compliance risks related to legal violations in the areas of occupational healthand safety and the supply chain; operational risks associated with information leaks and fraud; and financial and disclosure risks related totaxation and accounting. Ryohin Keikaku assesses potential material risks according to their significance and likelihood of manifestation.

Main Countermeasures Implemented in FY2023/8
Category

Compliance
Risks

Risk

Main Countermeasures

・Conduct ongoing monitoring of work schedules and overtime hours for store and headquarters
Occupational Healthemployees
・Assign dedicated safety management personnel to distribution centers to conduct on-site patrols,
and Safety
hold safety information sessions, and carry out risk assessments and hazard prediction training

Supply Chain
Operational
Risks

Information Leaks

Financial andDisclosure Risks

Taxation
Accounting

Fraud

・ Ensure the traceability of primary raw materials, conduct factory audits of key suppliers and disclose
list of suppliers・Establish information security and risk management teams to handle the protection of personal
information and to prevent external data breaches
・Create guidelines for payment and accounting process and ensure implementation
・Develop and manage framework to ensure thorough tax compliance, particularly as regards legal
requirements such as the new Japanese invoice system and transfer pricing taxation

Risk Management ▶https://www.ryohin-keikaku.jp/eng/sustainability/governance/risk/

Human Rights
Identifying and Assessing Possible Negative Impacts on Human Rights
In 2023, Ryohin Keikaku identified 22 human rights-related issues with the help of outside experts and by referencing international standards aswell as the results of factory audits and employee engagement surveys. We prioritized the issues identified by assessing their significance andlikelihood of impact on our operations and the supply chain, with reference to the United Nations Guiding Principles on Business and Human
Rights and the Organisation for Economic Co-operation and Development’s Due Diligence Guidance. We will formulate a roadmap for eachrelevant department and work with stakeholders to prevent and mitigate human rights risks. We will also regularly evaluate the effectiveness of
our initiatives, and continue to conduct reviews to identify and assess any negative impacts on human rights.

Priority Human Rights Issues
Company: H arassment (including harassment from customers); discrimination; gender rights; working hour management; and access to remedy
Supply Chain: Occupational health and safety; forced and child labor; discrimination; the environment; working hour management; genderrights; consumer safety and freedom of information; and harassment
Initiatives for Respecting Human Rights ▶Pages 45-46
Respecting Human Rights ▶https://www.ryohin-keikaku.jp/eng/sustainability/supply-chain/humanrights/

MUJI REPORT 2023

72

Quality
Ryohin Keikaku inspects each process of design, development, procurement and production based on the “Ryohin Standards,” and strives
to provide safe and secure products.
Approach to Quality ▶https://www.ryohin-keikaku.jp/eng/sustainability/activities/quality/

Initiatives for Quality Control
The “voices” (comments) of customers regarding our products are all registered in a dedicated database (“voice navigation system”), and theProduction Division, merchandising divisions and other related divisions cooperate and respond quickly in accordance with the content. By
enabling our business partners and factories to directly access the database to confirm the content, we have created an environment where
we can respond to quality problems quickly. In addition, the Production Division cooperates with external inspection organizations as needed.
The Production Division also leads weekly meetings to detect defects at an early stage as part of efforts to continuously improve quality.

Management Using the Restricted Substances List for Textile Products
During FY2023/8, we joined the Apparel and Footwear International RSL Management Group (AFIRM) as part of efforts to strengthen
management of chemical substances. AFIRM was established in 2004 by the Phylmar Group, a group of environmental, health and safety(EHS) and sustainability professionals. It is an international framework for managing the Restricted Substances List (RSL) in apparel andfootwear. We will eliminate chemical substances with potential effects on the human body, and strive for safe and reliable quality control.
For details ▶https://www.ryohin-keikaku.jp/eng/sustainability/environment/chemical/

Strengthening Food Safety Initiatives
Ryohin Keikaku has its own legally compliant standards called the “Ryohin Standards,” designates food additives for use and sets expiration
dates. We also select ingredients and devise processing and packaging methods to reduce the use of food additives.
Before launching a new product, we apply the “Ryohin Standards” to ensure rigorous quality control. This includes verifying whether productspecifications and content will safely maintain their integrity until the expiration date, and whether the cooking instructions are easy to understand.
In addition, we ensure that the food we provide through restaurants and ready-made meals also conforms to the “Ryohin Standards.”
In FY2023/8, we established the Food Safety Committee to reinforce the quality control system. We also conducted reviews of the“Ryohin Standards” and factory selection standards, and restructured the quality control and quality assurance system.
Responsibilities to Customers on Food ▶https://www.ryohin-keikaku.jp/eng/sustainability/activities/food/

Information Security and Protection of Personal Information
Ryohin Keikaku has formulated an Information Security Policy and a Privacy Policy to ensure it continues to earn the trust of its customers
and society by taking fundamental and sophisticated measures to protect the information assets entrusted to it by its customers and otherrelated parties, to maintain and improve its global corporate brand, and to comply with laws and regulations.
We strive to maintain and increase information security by complying with both policies, protecting information assets from various
threats, and handling them appropriately.
Information Security Policy ▶https://www.ryohin-keikaku.jp/eng/sustainability/governance/informationsecurity/
Privacy Policy ▶https://www.ryohin-keikaku.jp/eng/corporate/privacypolicy.html

Measures to Raise the Level of Information Security
In FY2023/8, we worked on creating systems compliant with the Information Security Management System (ISMS) and inaugurated theInformation Security Incident Response Team (MUJI-CSIRT). The goal of these measures is to establish a risk management system mainly
for the information security of the Ryohin Keikaku Group as a whole. To minimize risks, MUJI-CSIRT is charged with responding to andresolving cybersecurity incidents, making security improvements and conducting other related operations. Members responsible forpromoting initiatives are selected by each department to ensure a rapid and efficient response across all departments. We formally joined
the Nippon CSIRT Association in August 2023.

Management System
The Compliance and Risk Management Committee oversees information security for the Group as a whole. The committee has establishedthe IT Security Office and Personal Information Protection Office to accurately grasp the status of information security and to discuss andpromote countermeasures. The Personal Information Protection Office formulates rules and policies for personal information management
and manages the overall process. The IT Security Office builds, maintains and operates the IT infrastructure environment in compliance withrules and policies, and works for its continuous improvement. The IT Security Office reports on its activities to the Compliance and Risk
Management Committee, which meets four times a year, and the details of deliberations are reported to the Board of Directors at least twice

73 MUJI REPORT 2023

Basic Informationa year. In addition, each Group company appoints a person in charge of information security, and strives to strengthen and thoroughly
implement the information management system throughout the Group.

Board of Directors
President & Representative Director
Internal Audit Office
Responsible Executive
Executive Officer in charge of Overall Administration
Secretariat (Risk Management Division)

Compliance & Risk
Management Committee
Personal Information
Protection OfficeCountermeasure instruction/
monitoring

Responsible Executive
General Manager of the Risk
Management Division

IT Security OfficeGroupcompanies
ReportingResponsible Executive
General Manager of the IT
Services Division

MUJI-CSIRT
Each division

Information Security Training
We provide information security training to all officers and employees, andInformation Security e-Learning*

regularly conduct the following initiatives, which are effective for continuously
improving security literacy, assessing the level of understanding, and raisingawareness. By promoting awareness of security throughout our organization,
we aim to become a company that is resilient to cyber risks.
(1) C onduct an e-learning course on information security for all employees atleast twice a year
(2) Conduct training on targeted e-mail attacks for all employees twice a year(3) P rovide reminders prior to long vacations, and conduct awareness-raising
activities and follow-ups during daily work

Implemented

Training Theme

Participation
Rate

December
2022

Information security

80.5%

March
2023

Personal information
protection

77.5%

September
2023

Social media and stealthmarketing

87.0%* Ryohin Keikaku Co., Ltd. only

Compliance
Initiatives for Fostering Compliance Awareness
The Ryohin Keikaku Group Compliance Code of Conduct has been established to promote compliance with ethical standards and social
norms, laws and internal regulations through in-house training programs and awareness raising activities. Based on this code of conduct,anti-harassment training is conducted regularly for newly appointed managers to prevent harassment and improve management skills. In
FY2023/8, 450 employees participated in the training.
The Compliance and Risk Management Committee, which meets regularly, reviews the status of compliance with the Group
Compliance Code of Conduct, investigates any violations, identifies details and causes, and considers measures to prevent recurrence.
In addition, the Compliance and Risk Management Committee regularly verifies the effectiveness of the Group Compliance Code of
Conduct. No material compliance violations related to the business operations of the Group occurred in FY2023/8. The committee also
confirmed no political contributions were made. Fourteen other compliance violations occurred in FY2023/8. All Group companies were
notified of the incidents, and the importance of compliance was inculcated through in-house training and other measures.
Ryohin Keikaku Group Compliance Code of Conduct ▶https://www.ryohin-keikaku.jp/eng/sustainability/governance/compliance/

Internal Reporting System
We have established the Ryohin Keikaku Group Helpline to improve the effectiveness of the self-correction process, control reputationalrisks, ensure public trust and protect whistleblowers. The helpline prevents and detects legal violations, misconduct and harassment at an
early stage, and also adds to the compliance knowledge of officers and employees.
This helpline is available to all employees of Ryohin Keikaku and its domestic and overseas subsidiaries. This includes directors, employees(including contract employees, partner employees and part-time workers) and temporary employees. Anyone may make a report to thehelpline by telephone, email (including those using an anonymous system) or in person. Depending on the results of investigations, internal
procedures may be initiated as provided in the Rules of Employment, including the formulation of measures to prevent recurrence, theissuance of work orders and instructions, and disciplinary action and other personnel measures, as well as necessary external measures
such as press releases, media relations and criminal charges. A total of 184 requests for consultation were received in FY2023/8.

MUJI REPORT 2023

74

Basic Information

11-Year Summary
For more IR Information▶https://www.ryohin-keikaku.jp/eng/ir/

2013/2

2014/2

2015/2

2016/2

188,350

220,620

260,254

307,532(Domestic)—

171,923

182,701

198,449(Overseas)—

48,472

77,546109,080

Operating gross profit

87,376

101,665

122,831

150,451

Selling, general and administrative expenses

69,02480,74998,984116,012

Operating profit

18,351

20,916

23,84634,439

9.7

9.5

9.2

11.2

Ordinary profit

19,76023,047

26,60232,700Net income attributable to owners of parent

10,97017,096

16,623

21,718Cash flows from operating activities

13,17615,117

14,61926,133

Cash flows from investment activities(4,945)(17,842)(22,193)(8,647)

Cash flows from financing activities(2,540)(5,385)

11,377(6,520)Depreciation

3,186

4,179

4,887

6,816

Total assets

119,360

140,229

186,947

200,919

Net assets

96,050111,015

128,670

143,173Return on equity (ROE) (%)

12.5

17.0

14.3

16.4

Equity ratio (%)

78.3

76.9

67.0

69.4

Return on assets (ROA) (%)

17.8

17.8

16.3

16.9

Turnover of merchandise

—

3.73

3.10

2.89

Earnings per share (EPS) (JPY)

40.95

64.46

62.75

81.84

Net assets per share (BPS) (JPY)

Profit and Loss (Consolidated)
Operating income

Operating profit ratio (%)

Financial Position (Consolidated)

Key Performance Indicators(Included in consolidated key financial indicators)

Per-share Data

348.80407.19472.37524.79Dividends per share (JPY)

11.0

15.5

19.0

24.6

Dividend payout ratio (%)

26.9

24.0

30.3

30.1

Number of MUJI stores in Japan1

379

385

401

414

Number of MUJI stores overseas1

206

255

301

344

265,037

270,250

282,083

289,899

3,069

4,101

4,795

5,653

5,307

6,934

7,242

7,877

—

1,407

3,367

8,850

Other Data

Total sales floor space in Japan (m2)2
Number of regular employees
Number of non-regular employees

3

Downloads of MUJI passport app (thousand people)

4

1. Excluding Café&Meal MUJI and IDÉE
2. Total sales floor space of directly managed stores, licensed stores and Seiyu Co., Ltd.
3. Average number of employees per year based on an eight-hour workday calculation method
4. Registered members of external social media sites and various communication apps in Japan have been included from the fiscal year ended February 2019and from the fiscal year ended February 2020 for mainland China.
5. Due to the change in fiscal year, 2020/8 covers the six-month period from March 1 to August 31, 2020.
6. Number revised from MUJI REPORT 2022

75 MUJI REPORT 2023

Basic Information(Million JPY)

2017/2

2018/2

2019/2

2020/2

2020/852021/82022/82023/8333,281379,551

409,697438,713

179,392

453,689

496,171

581,412215,716

234,791

246,269

267,864

122,428

296,998

308,114342,829

117,563

144,758

163,425

170,846

56,961

156,691

188,057

238,583

165,861

191,819

211,380

217,628

83,694

222,334

234,356

271,549

127,583

146,532

166,636

181,248

82,821

179,887

201,582

238,41238,27845,28644,74336,380872

42,447

32,77333,137

11.5

11.9

10.9

8.3

0.5

9.4

6.6

5.7

38,582

45,98545,86136,377563

45,36937,21436,15625,831

30,11333,84523,253(16,917)33,90324,55822,052

19,742

46,982

23,68024,452(1,758)61,44723,35056,527(9,856)(14,290)(5,492)(31,435)(4,239)(13,538)(16,683)(22,106)(14,361)(21,759)(9,505)(11,467)

63,722(15,162)(58,647)(11,232)

7,543

8,644

9,867

17,622

10,35818,96922,01824,881

214,705

238,313258,309306,512

343,918

393,357

399,324

453,715

157,018

174,426

195,189

208,492

182,992

214,871244,852

267,446

17.7

18.6

18.8

11.8

(8.8)

17.3

10.8

8.7

71.3

71.3

73.8

66.6

52.4

53.9

60.5

58.1

18.6

20.3

18.4

12.8

0.2

12.3

9.4

8.5

2.55

2.55

2.44

2.28

1.87

2.19

2.22

2.36

97.50

114.70128.9288.47(64.32)128.90

93.24

83.51

579.18647.68725.83775.77684.94806.75915.93997.13

29.3

34.5

38.7

36.4

5.0

40.0

40.0

40.0

30.1

30.1

30.0

41.1

—

31.8

42.9

47.9

418

419

420

437

438

456

493

562

403

457

497

533

527

546

579

626

297,001

306,316

319,698

359,141

375,446

417,057

494,871628,133

6,992

8,128

9,137

9,615

9,046

8,882

9,175

10,074

9,203

9,254

8,050

9,281

9,834

10,721

12,28915,98349,38059,297

69,78078,527

10,233
6

21,128

10,825
6

44,746

6

MUJI REPORT 2023

76

Basic Information

ESG Data
2030 ESG Indices
Items

Key Performance Indicators

Initiatives in FY2022/8 (Figures Are as of August 31, 2022)

Initiatives in FY2023/8 (Figures Are as of August 31, 2023)

Percentage of packaging and materials forapparel, household goods and food productsthat do not use plastic (except when plastic
is required for hygiene, quality and safety)

Apparel: 74.8%
Household goods: 47.0%
Food products: Coffee beans, nuts and otheritems sold by weight at some stores

Apparel: 96.8%
Household goods: 64.7%
Food products: Recycled plastics and biomass
plastics used in some packaging

Total weight of plastic reduction (comparative
reduction of current versus previous plastic
packaging)

Apparel: 59ｔ
Household goods: U nder review
Food products: 251ｔ

Apparel: 104.8 t
Household goods: 60.7 t (Estimated reduction
resulting from the launch of refill
pouches for skin care products)
Food products: 292 t

Eliminate plastic inpackaging andvarious materials

100%

Design products forreuse and recycling

100%

Percentage of items designed with recycling
in mind (except when hygiene concerns
preclude recycling)

Household goods: 36.0%

Household goods: 52.1%

Reuse of plastic
products we collect100%

1. Total weight of collected plastic products
2. T otal weight of plastic collected for reuse(including products other than ours)

1.1,130 kg (PET bottles)
2. 1,130 kg

1. 2
 1,884 kg（PET bottles 2,298 kg, other plastic
products 19,591 kg）
2. 21,884 kg

Source socially andenvironmentally
responsible cotton1

100%

Percentage of socially and environmentally
responsible cotton used 2, 3

Apparel: 100%
Household goods: 87.4%

Apparel: 82.9%4
Household goods: 66.7%

Source animal-derived
materials from farms
practicing animal welfare 100%or using recycledmaterials

Percentage of materials sourced from farms
practicing animal welfare and use of recycled
animal-derived materials3

ApparelWool: 100％ certified non-mulesed wool
Down: 100% down certified to ensure animal welfare

ApparelWool: 99.9% certified non-mulesed wool
Down: 100% down certified to ensure animal welfareHousehold goods
Wool: 100% certified non-mulesed wool
Down: 100% down certified to ensure animal welfareHousehold goods
Wool: 100% certified non-mulesed wool
Down: 100% down certified to ensure animal welfare

Perform human rights
due diligence on
100％ 1. Number of audits conducted (annual)business partners,
disclosure 2. Breakdown of evaluation
traced back to raw
materials

Product manufacturers
1. 27 factories
2. A Assessment: 0 factories; B Assessment: 18
factories; C Assessment: 2 factories; D Assessment:
3 factories; E Assessment: 4 factories
The four E-rated factories indicated that they had
not formulated policies prohibiting child labor,
and that factory employees had to bear the costof medical examinations. We have agreed on
improvement plans for all of these factories andare confirming the implementation of improvements.

Product manufacturers
1. 73 factories
2. A Assessment: 2 factories; B Assessment: 36
factories; C Assessment: 18 factories; D Assessment:
8 factories; E Assessment: 9 factories
Material and raw material manufacturers
1. 43 factories
2. A Assessment: 2 factories; B Assessment: 30
factories; C Assessment: 3 factories; D Assessment:
5 factories; E Assessment: 3 factories

Material and raw material manufacturers
We started conducting audits of major material
manufacturers from FY2023/8. (We have alreadyconducted some due diligence. No significant
violations of law or Ryohin Keikaku’s Code of
Conduct were found.)Non-compliant items of E assessment factories
included locked emergency exits, unsatisfactory safetymeasures due to fire extinguishers and evacuationroutes being blocked by objects, and inadequate
management of working hours. We have agreed on
improvement plans for all of these factories and are
confirming the implementation of improvements.

List of major suppliers,
100％
List of major suppliers
traced back to raw
disclosurematerials

We began preparing to disclose a list of major
suppliers.

In March 2023, we disclosed the list of major factories
that produce MUJI apparel and textile products.
We are strengthening cooperation with our production
partners to expand the scope of disclosure, andare working toward disclosure of a list of major
factories and material and ingredient manufacturers
for household goods and food products.
List of Production Partners ▶https://www.
ryohin-keikaku.jp/eng/sustainability/supply-chain/partners/

Reduce Group GHG
emissions(Scope 1 and 2)

Total in Japan: 35,819 t-CO2e
16.1% increase compared with baseline year
Group total: 65,577 t-CO2e
10.8% increase compared with baseline year

Total in Japan: 40,378 t-CO2e
30.9% increase compared with baseline year
Group total: Under review
Increase compared with baseline year: Under review

50%
reduction

Scope 1 and 2 total (t-CO2e）
Baseline: 2021/8

100%

Number of stores and distribution centersthat use renewable energy (including
headquarters and campsites)

Equip stores (independent
store buildings) with100%
rooftop solar panels

Number of stores and distribution centerswith solar power generation equipment(excluding stores that cannot install solar
panels such as those in shopping malls)

We made plans to install and begin operation atseveral stores.

Demonstrate commitment todiversity and inclusion by
disclosing workforce compositionby age, gender and race

1. Average age (regular employees)
2. R atio of female regular employees inmanagerial positions (deputy manager
level and above)5
3. Ratio of female employees (regular employees)
4. Ratio of non-Japanese employees (regular
employees)
5. R atio of employees with disabilities(including non-regular employees)

1. 38.3 (Female: 36.9; Male: 40.0)
2. 20.7%
3. 55.6%
4. 1.3%5. 3.69%
Initiatives: Diversity Committee established

Ensure stores use
renewable energy

Installed in some stores and distribution centers
CO2 emissions were reduced by 1,322 t-CO2
through the introduction of renewable energy.

Installed in some stores and distribution centers
CO2 emissions were reduced by 1,578 t-CO2(including due to use of solar power)
We plan to begin using renewable energy with afocus on roadside stores.
Installed and began operation at 7 stores
CO2 emissions were reduced by 148 t-CO2

1. 38.4 (Female: 37.2; Male: 39.9)
2. 27.8%
3. 54.8%
4. 1.5%5. 3.23%

1. Starting in FY2023/8, we changed our target to “Source 100% socially and environmentally responsible cotton by 2030.”
2. Cotton that we have evaluated as socially and environmentally responsible includes GOTS, CmiA and GRS. We will be adding new indexes as appropriate.
3. Figures for the relevant fiscal year are based on materials used for products sold in the spring/summer and fall/winter seasons of each year.
4. A
 s a result of efforts to minimize the impact of COVID-19 on the supply chain and to promote stable sourcing of cotton, the percentage of organic cotton used decreased. Going forward, we willcontinue to increase our options in terms of socially and environmentally responsible cotton, not limited to organic cotton, to ensure stable sourcing.

77 MUJI REPORT 2023

Basic Information

Scope: Ryohin Keikaku Co., Ltd.
(As of August 31, 2023)

ESG Data
Items

Unit

Energy used

Environment

Renewable energy

Greenhouse gas emissions

Water
Waste generated

MWh

5,002

5,314

LP gas

MWh

213

333

Kerosene

MWh

331

332

Diesel fuel

MWh

18

17

Gasoline

MWh

52

36

Heat, steam and coolingMWh24,757

20,791

Electricity

MWh75,56087,684

Total

MWh105,933

114,507

Amount used

MWh

3,054

3,636

Ratio of renewable energy toenergy used

%

4.0

4.1

Scope 1

t-CO2e

1,110

1,187

Scope 2 (Market based)

t-CO2e34,70939,191

Scope 3t-CO2e1,059,355

1,198,241

Total

t-CO2e1,095,174

1,232,784

Hydrofluorocarbon (HFCs)

t-CO2e64

63

Water usagem3

147,783

144,429

Wastewaterm3

147,783

144,429

General wastet

12,25912,299Industrial waste

t

1,103

1,531

9,960

10,648

Female(%)

1,404 (55.6)

1,576 (54.8)

Male

(%)

1,123 (44.4)

1,298 (45.2)

2,527

2,874

Total
Number of non-regular employees
Managers (deputy manager level and above)5Society

Average age (regular employees)

7,433

7,774

Female(%)

36 (20.7)131 (27.8)

Male

(%)

138 (79.3)

340 (72.2)

Total

174

471

Female

36.9

37.2

Male

40.0

39.9

Total

38.3

38.4

(%)

7.8

7.9

(%)

9.4

8.8

FemaleAverage length of service (regular employees) Male
Total

8.5

8.3

5,930

6,202

Number of new university graduate hires

103

142

Number of mid-career hires

105

224

Average annual salary (regular employees)

Thousand JPY

Ratio of mid-career hires to total new hires

%

50.5

61.2

Voluntary turnover rate (regular employees)

%

8.25

7.34

Ratio of employees with disabilities

%

3.69

3.23

Female(%)

3 (37.5)

3 (37.5)

Male

(%)

5 (62.5)5 (62.5)

Directors

Total
Average number of years in office

Governance7

8

5 years, 7 months

6 years, 7 months

5

5

62.5

62.5

Times

16

16

%

99

99

Ryohin Keikaku Group Helpline
consultations

148

184

Number of employees participating inharassment training

206

450

Board of Directors

Number of outside directors

8%Outside directors

Compliance

FY2023/8

City gas

Number of employees
Number of regular employees

FY2022/8 6

Percentage of outside directors
Number of meetings
Average attendance rate

5. U
 ntil FY2022/8, only employees with executive titles such as “deputy manager” or “general manager” were considered managers. As of FY2023/8, employees whose job description and level of
responsibility are equivalent to that of “deputy manager” are also counted as managers, regardless of their job title or number of people in their team.
6. Some environmental data for FY2022/8 has been revised from MUJI REPORT 2022.
7. Figures are calculated based on the composition of officers after the annual shareholders’ meetings held on November 23, 2022 and November 23, 2023, respectively.
ESG Data Book ▶https://www.ryohin-keikaku.jp/eng/sustainability/muji-sustainability/number/

MUJI REPORT 2023

78

Basic Information

Stock Information (As of August 31, 2023)
Stock Overview
Total number of authorized shares: 1,123,120,000
Total number of issued shares: 280,780,000 shares
Number of shareholders: 157,917
Stock exchange listing: Tokyo Stock Exchange
Accounts settlement date: August 31
Ordinary General Meeting of Shareholders: Held in November each year
Administrator of the shareholder register: Sumitomo Mitsui Trust Bank, Limited

Distribution of Shareholders andNumber of Shares Held
Financial institutions: 94,700,247 shares
Securities companies: 20,197,755 shares
Other corporations in Japan: 20,874,219 shares
Corporations and individuals outside Japan: 86,168,479 shares
Individuals and others: 54,251,909 shares
Treasury shares: 4,587,391 shares

280,780,000
sharesCredit Rating Information
Long-term issuer rating: A+
Rating outlook: Stable
Rating agency: Japan Credit Rating Agency (JCR)

Major Shareholders (Top 10)
Shares Held (Thousands)

Shareholding Ratio (%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

Shareholder

41,416

14.99

Custody Bank of Japan, Ltd. (Trust Account)

25,108

9.09

Custody Bank of Japan, Ltd. (Trust Account E)

11,2244.06

Mitsubishi Corporation

10,783

3.90

Japan Securities Finance Co., Ltd.

7,763

2.81

MSIP CLIENT SECURITIES

6,478

2.34

SMBC Nikko Securities Inc.

5,895

2.13

BNP PARIBAS ARBITRAGE SNC

5,791

2.09

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

5,441

1.97

JP Morgan Securities Japan Co., Ltd.

4,614

1.67

Notes: 1. T he Company holds 4,587,391 shares of treasury stock, which are excluded from the list of major shareholders above. The 4,587,391 shares of treasury
stock do not include 11,224,047 shares held by Mizuho Trust & Banking Co., Ltd. and 342,500 shares held by Sumitomo Mitsui Trust Bank, Limited for astock benefit trust (J-ESOP) and 267,700 shares held by Nomura Trust & Banking Co., Ltd. for an employee shareholding incentive plan (E-SHIP).
2. The 11,224,047 shares held by the Custody Bank of Japan, Ltd. (Trust Account E) are for the purpose of a stock benefit trust (J-ESOP).
3. The shareholding ratio is calculated after deducting the 4,587,391 shares of treasury stock.

Dividend Payout Ratio
2017/2

Consolidated dividend payout ratio

30.1%

2018/2

30.1%

2019/2

2020/2

30.0%

41.1%

2020/82021/8—31.8%2022/842.9%2023/847.9%

Stock Price and Volume
(JPY)

5,000

Stock price (Left scale)(Thousand shares)

Volume (Right scale)

250,000

4,000

200,000

3,000

150,000

2,000

100,000

1,000

50,0000
2013/2

2014/2

2015/2

2016/2

2017/2

2018/2

2019/2

2020/2 2020/8

2021/82022/82023/80

The Company conducted a 10-for-1 share split of its common shares on September 1, 2019. The stock price and trading volume are calculated assuming that theshare split was conducted at the beginning of FY2011/2.

79 MUJI REPORT 2023

Basic Information

Corporate Information (As of August 31, 2023)
Company Name
Address

Ryohin Keikaku Co., Ltd.
4-26-3 Higashi-Ikebukuro, Toshima-ku, Tokyo, 170-8424
Note: Headquarters was relocated in February 2024.
New location: Sumitomo Fudosan Iidabashi First Building, 2-5-1 Koraku, Bunkyo-ku, Tokyo

June 1989 (registration: May 1979)
Establishment
JPY 6,766,250,000
Capital
Number of Employees 20,795 (including 10,721 non-regular employees and others; Ryohin Keikaku Group)
For more information, please refer to the Ryohin Keikaku website.

WebsiteIR Information

Sustainability Information

https://ryohin-keikaku.jp/eng/

https://ryohin-keikaku.jp/eng/ir/

https://ryohin-keikaku.jp/eng/sustainability/

External Evaluations

In June 2021, Ryohin Keikaku was selected for the first time for inclusion as a constituent of the FTSE4Good IndexSeries and the FTSE Blossom Japan Index, which are leading ESG investment indexes.
The FTSE4Good Index Series comprises companies selected by FTSE Russell of the U.K. For inclusionin the index, companies must demonstrate strong performance and meet various evaluation criteria in terms of
ESG practices. These criteria are made based on international standards including the United Nations Sustainable
Development Goals (SDGs). The FTSE Blossom Japan Index is a specialized ESG index focused on companies
listed in Japan.
These indices have become benchmarks for investors who place importance on corporate social responsibility
and sustainability. Japan’s Government Pension Investment Fund (GPIF), the world’s largest public pension fund, hasalso adopted the FTSE Blossom Japan Index as a benchmark for its ESG investment management.

Recognition from Society

Ryohin Keikaku Recognized in the Sustainable Brands Index 2023
Ryohin Keikaku ranked first overall for the second consecutive year in the Japan Sustainable Brands Index 2023,
an SDG-focused brand survey of consumers conducted by Sustainable Brands Japan. The results were announced
at the International Conference on Sustainable Brands 2024 Tokyo-Marunouchi event organized by Hakuten
Corporation. The aim of the survey is to review corporate sustainability efforts from a consumer perspective andto examine how consumers’ perceptions of companies influence their consumption and recommendation patterns.
Ryohin Keikaku will continue to contribute to the communities where it operates and remain useful to its customers.

Ryohin Keikaku Wins 2023 IR Award
Ryohin Keikaku received the “Most Liked!” IR Award in the 2023 IR Awards program sponsored by the Japan
Investor Relations Association (JIRA). This particular award was newly established in 2020 to mark the 25thyear of presenting the IR Awards. It is determined by a vote of companies that entered the IR Awards. The
category was established to share the proactive IR activities of award applicants and encourage best practices.
The theme for 2023 was “IR department initiatives for human resource training and empowerment.” Ryohin
Keikaku was one of 21 companies selected out of 199 companies that entered.

Participation in Initiatives

United Nations Global Compact
Since September 2013, Ryohin Keikaku has participated in the United Nations Global Compact. We conductbusiness in accordance with the Global Compact’s ten principles in the areas of protection of human rights, theelimination of unfair labor practices, environmental responsibility and the prevention of corruption.

Platform to Ensure the Ethical and Fair Treatment of Foreign Workers (JP-MIRAI)
Since May 2022, Ryohin Keikaku has participated in the JP-MIRAI platform, which is based on international
standards, and is working with other companies and institutions to improve the working and living conditions offoreign workers in Japan.

MUJI REPORT 2023

80