Adastria : FY2023/02 1Q Presentation Material

FY 2023/02 1st Quarter

Financial Results

July 8, 2022

Table of Contents

・Consolidated Income Statement -Summary	4
・Adastria non-consolidated Income Statement	6
・Product Promotion Initiatives	7
・Online Business	8
・Improve recognition by promoting own EC site	9
・Progress on Strategy to Open Own EC site ".st"	10
・Overseas Business	11

・Situation in each Overseas Region	12
・Consolidated Balance Sheet	13
・Number of Stores	14
・New Stores	15
・Sustainability Management Initiatives	16
・Responses to the Current Business Climate	17
・FY2023/02 Consolidated Forecast (Re-posting)	18

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Consolidated Income Statement

The Accounting Standard for The New Revenue Recognition is applied from FY2023/02.			Millions of yen
		FY2022/02 1Q			FY2023/02 1Q
		Results				Results
				Ratio			Ratio	YoY
Net sales	46,387		100.0%	58,006	100.0%	125.0%
	Adastria(Non-consolidated)	39,918		86.1%	48,540	83.7%	121.6%
	Domestic subsidiaries *1	4,145		8.9%	4,268	7.4%	103.0%
	Overseas subsidiaries *2	3,068		6.6%	3,983	6.9%	129.8%
	Zetton (Food & Beverage Subsidiary)	-		-	1,943	3.4%	-
Gross profit	26,382		56.9%	33,303	57.4%	126.2%
SG&A expenses	25,757		55.5%	28,729	49.5%	111.5%
	Advertising & promotion	2,308		5.0%	2,175	3.8%	94.2%
	Personnel	9,152		19.7%	10,313	17.8%	112.7%
	Rent & depreciation *3	9,005		19.4%	10,206	17.6%	113.3%
	Amortization of goodwill	14		0.0%	51	0.1%	347.5%
	Others	5,276		11.4%	5,983	10.3%	113.4%
Operating profit	624		1.3%	4,574	7.9%	732.1%
	Adastria(non-consolidated)	487		1.1%	4,171	7.2%	855.1%
	Domestic subsidiaries *1	- 94		-	64	0.1%	-
	Overseas subsidiaries *2	- 21		-	96	0.2%	-
	Adastria Logistics	128		0.3%	116	0.2%	90.8%
	Zetton (Food & Beverage Subsidiary) *4	-		-	114	0.2%	-
Ordinary profit	961		2.1%	4,926	8.5%	512.5%
Net income attributable to owners of the parent	269		0.6%	3,313	5.7%	1227.5%
EBITDA	2,091		4.5%	6,357	11.0%	304.0%
	Depreciation and amortization	1,451		3.1%	1,731	3.0%	119.3%
	Amortization of goodwill	14		0.0%	51	0.1%	347.5%

	*1：Domestic subsidiaries are the sum of four domestic subsidiaries: BUZZWIT Co.,Ltd., ELEMENT RULE Co., Ltd., Adastria eat Creations Co.,Ltd., ADOORLINK Co., Ltd.(Period Feb. to Apr. )
	*2：Overseas subsidiaries are the sum of overseas subsidiaries: Hong Kong, Mainland China, Taiwan, USA.(Period Jan. to Mar.)
	*3：Rent & depreciation costs are the sum of Rent expenses, Lease expenses and Depreciation.
3	*4：Operating profit of Zetton, Inc. is shown after consolidation adjustments.

Consolidated Income Statement - Summary (1)

• Summary: Sales and earnings higher than planned due to sales recovery and cost controls
• Net sales: 58.0 billion yen (+25.0% YoY)

・Parent company:	Up 21.6% as apparel demand for going out recovered due to easing of pandemic restrictions; promotions
	also contributed to sales.
	Strong sales of major products of GLOBAL WORK and of LAKOLE, as more stores were opened,
	contributed to sales growth.
・Domestic subsidiaries:	Up 3% YoY. Strong sales of high-end brands raised earnings of ELEMENT RULE.
	Sales at the EC company BUZZWIT were unchanged due to the recovery of sales at physical stores.
・Overseas subsidiaries:	Up 29.8%; new brands were launched in Taiwan and USA sales and earnings increased because of
	strength in the wholesale sector; sales up in mainland China as new stores contributed to growth but
	earnings down due to the COVID-19; sales and earnings down in Hong Kong because of the pandemic.

・Food and beverage business: Higher earnings at newly consolidated Zetton, Inc.; the business climate is slowly returning to normal.

Effect of the new revenue	Consolidated sales: -637 million yen (-1.4% YoY conversion)
recognition accounting standard
Increase due to M&A	Consolidated sales: +1,943 million yen (+4.2% YoY conversion)

• Gross profit margin: 57.4% (+0.5p YoY)

• Negative effects of foreign exchange rates and the high cost of materials, but the gross profit margin in the apparel and other merchandise business was down only 0.2 pct. point from one year earlier due to supplying the products at the right times, prices and volumes and holding down discount sales.

Effect of the new revenue	Gross profit margin: -0.4%
recognition accounting standard
Effect of higher food and	Gross profit margin: +0.7%
beverage business sales

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Consolidated Income Statement - Summary (2)

• SG&A expense ratio: 49.5% (-6.0pYoY)

・Advertising & promotions:	3.8% (-1.2p YoY) (-0.13 billion yen YoY)
・Personnel:	Decreased due to the application of revenue recognition accounting standard
17.8% (-1.9p YoY) (+1.16 billion yen YoY)
・Rent & depreciation:	Higher salaries and bonuses as stores returned to normal operating
17.6% (-1.8p YoY) (+1.2 billion yen YoY)
・Other:	Higher rent due to higher sales; includes 40 million yen increase in depreciation because of Zetton PPA*
10.3% (-1.1p YoY) (+0.7 billion yen YoY)
		Higher credit card fees, delivery expenses, electricity fees and other expenses
	Effect of the new revenue	SG&A expenses: -605 million yen (SG&A expenses ratio: -0.5%)
	recognition accounting standard
	Increase due to M&A	SG&A expenses: +1,464 million yen (SG&A expenses ratio: +0.8%)
	(including amortization)

• Operating profit: 4.5 billion yen (+3.94 billion yen YoY)

・Operating income ratio:

7.9%, EBITDA margin: 11.0%

• Ordinary profit: 4.9 billion yen (+3.96 billion yen YoY)

・ Non-operating income:	Subsidy income of 129 million yen for shortened operating hours and other measures for safety during the
	pandemic, employment adjustment subsidy of 50 million yen and foreign exchange gains of 274 million yen
・Non-operating expenses:	Derivative valuation loss of 106 million yen involving the termination of operations in South Korea

• Net income attributable to owners of the parent 3.3 billion yen (+3.04 billion yen YoY)

*PPA (Purchase Price Allocation): Purchase price allocation is the allocation of the cost of acquiring a company based on fair values of all assets and liabilities of the acquired company.

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