Onward : Consolidated Financial Results for the Six Months Ended August 31, 2023

Consolidated Financial Results

for the Six Months Ended August 31, 2023

[Japanese GAAP]

October 5, 2023

Company name: Onward Holdings Co., Ltd.

Stock exchange listing: Tokyo Stock Exchange

Securities code: 8016

URL: https://www.onward-hd.co.jp/en/

Representative: Michinobu Yasumoto, President and CEO

Contact: Osamu Sato, Managing Director in charge of Finance, Accounting, Investor Relations

Phone: [phone]

Scheduled date of filing quarterly securities report: October 13, 2023

Scheduled date of commencing dividend payments: -

Availability of supplementary materials on quarterly financial results: Available

Schedule of quarterly financial results briefing session: Scheduled (for institutional investors, securities analysts, and the press)

(Amounts of less than one million yen are rounded down.)

1. Consolidated Performance for the Six Months Ended August 31, 2023 (March 1, 2023 - August 31, 2023)

(1) Consolidated Operating Results (cumulative)	(% indicates changes from the previous corresponding period.)
	Net sales		Operating profit		Recurring profit	Profit attributable to
			owners of parent
Six months ended	Million yen	%	Million yen	%	Million yen	%	Million yen	%
August 31, 2023	90,411	10.0		5,022	-	4,412	574.1	2,862	501.1
August 31, 2022	82,166	1.7		193	-	654	-	476	(93.6)
(Notes) 1. Comprehensive income: Six months ended August 31, 2023: 1,848 million yen [(70.8)%]
		Six months ended August 31, 2022: 6,340 million yen [(35.6)%]

2. The year-on-year change rate of operating profit for the six months ended August 31, 2023 exceeded 1,000%, and is therefore indicated as "-."

	Basic earnings	Diluted earnings
	per share		per share
Six months ended		Yen		Yen
August 31, 2023		21.09		21.07
August 31, 2022		3.51		3.51
(Reference) EBITDA	(operating profit + depreciation and amortization):
	Six months ended August 31, 2023: 7,390 million yen [160.4%]
	Six months ended August 31, 2022: 2,838 million yen [-%]
(2) Consolidated Financial Position
		Total assets	Net assets	Shareholders' equity ratio
As of August 31, 2023		Million yen		Million yen	%
	160,772	80,029	46.5
As of February 28, 2023		159,198	85,073	47.0

(Reference) Shareholders' equity: As of August 31, 2023: 74,823 million yen As of February 28, 2023: 74,747 million yen

2. Dividends

				Annual dividends per share
		1st quarter-end	2nd quarter-end	3rd quarter-end	Year-end	Total
Fiscal year ended		Yen		Yen		Yen	Yen	Yen
	-		-		-	12.00		12.00
February 28, 2023
Fiscal year ending		-		-
February 29, 2024
Fiscal year ending						-	17.00		17.00
February 29, 2024 (Forecast)
(Note) Revision to the forecast	for dividends announced most recently: Yes

3. Consolidated Performance Forecast for the Fiscal Year Ending February 29, 2024 (March 1, 2023 - February 29, 2024)

(% indicates changes from the previous corresponding period.)

	Net sales		Operating profit	Recurring profit	Profit attributable to Basic earnings
		owners of parent	per share
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	189,211	7.5	11,022	111.4	10,012	88.2	5,462	78.4	40.25

(Note) Revision to the performance forecast announced most recently: Yes (Reference) EBITDA (operating profit + depreciation and amortization):

Full year ending February 29, 2024 (forecast): 16,100 million yen [55.2%]

Full year ended February 28, 2023: 10,373 million yen [165.0%]

* Notes:

(1) Changes in significant subsidiaries during the period under review (changes in specified subsidiaries resulting in changes in scope of consolidation): None

Newly included: - (Company name:)

Excluded: - (Company name:)

(2) Application of special accounting methods for the preparation of quarterly consolidated financial statements: None

(3) Changes in accounting policies, changes in accounting estimates, and restatement

1) Changes in accounting policies due to revisions to accounting standards and other regulations: Yes

2) Changes in accounting policies other than 1) above: None

3) Changes in accounting estimates: None

4) Restatement: None

(4) Total number of issued shares (common stock)

1)	Total number of issued shares at the end of the period (including treasury shares):
	As of August 31, 2023:	157,921,669 shares
	As of February 28, 2023:	157,921,669 shares
2)	Total number of treasury shares at the end of the period:
	As of August 31, 2023:	22,204,814 shares
	As of February 28, 2023:	22,204,488 shares
3) Average number of shares outstanding during the period:
	Six months ended August 31, 2023:	135,717,046 shares
	Six months ended August 31, 2022:	135,633,704 shares

• These quarterly consolidated financial results are outside the scope of quarterly review by certified public accountants or an audit firm.
• Explanation of the proper use of performance forecast and other notes
• • The performance outlook and other forward-looking statements herein are based on information currently available to the Company and certain assumptions that have been deemed reasonable. Actual performance may differ significantly from these forecasts due to a wide range of factors. For conditions used as the assumptions for the performance forecast and notes on the use of performance forecast, please refer to "1. Qualitative Information on Quarterly Financial Results for the Period under Review (3) Explanation of Consolidated Performance Forecast and Other Forward-looking Information" on page 3 of the Attachments.

Note:

This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

Table of Contents - Attachments
1. Qualitative Information on Quarterly Financial Results for the Period under Review	2
(1)	Explanation of Operating Results	2
(2)	Explanation of Financial Position	3
(3)	Explanation of Consolidated Performance Forecast and Other Forward-looking Information	3
2. Quarterly Consolidated Financial Statements and Principal Notes	4
(1)	Quarterly Consolidated Balance Sheets	4
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income	6
	Quarterly Consolidated Statements of Income	6
	Quarterly Consolidated Statements of Comprehensive Income	7
(3)	Quarterly Consolidated Statements of Cash Flows	8
(4)	Notes to Quarterly Consolidated Financial Statements	9
	(Uncertainties of entity's ability to continue as going concern)	9
	(Notes when there are significant changes in amounts of shareholders' equity)	9
	(Changes in accounting policies)	9
	(Additional information)	9
	(Segment information, etc.)	10
	(Significant events after reporting period)	11

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1. Qualitative Information on Quarterly Financial Results for the Period under Review

(1) Explanation of Operating Results

In the six months ended August 31, 2023, the Japanese economy was on a gradual recovery track as socioeconomic activity normalized, with COVID-19 downgraded to a Class 5 infectious disease and the accompanying easing of border restrictions. However, the outlook remains uncertain, due to the impact of the protracted Russia-Ukraine conflict and the rise in domestic prices caused by soaring raw material and energy prices attributed to a weak yen, among other factors, on consumer sentiment and corporate activity.

Under these circumstances, the number of customers visiting physical and online stores steadily increased due to the expanded use of "Click & Try", the OMO (Online Merges with Offline) service of Onward Kashiyama Co., Ltd. and the improved accuracy of our marketing measures utilizing social media. As a result, net sales grew significantly. In addition, the gross profit margin continued to increase owing to the remarkable results of the global business reforms and increased efficiency of the product supply chain. Meanwhile, the SG&A ratio declined markedly, mainly thanks to improvement in sales efficiency through the development of multi-brand stores.

As a result of the above, consolidated net sales were 90,411 million yen (+10.0% year-on-year), consolidated operating profit was 5,022 million yen (26.0 times the year-ago figure), consolidated recurring profit was 4,412 million yen (+574.1% year-on-year), and profit attributable to owners of parent was 2,862 million yen (+501.1% year-on-year).

The Onward Group is accelerating growth by reinforcing and expanding its business base through the development of new businesses and M&As. In doing so, the Group has adopted EBITDA (operating profit + depreciation and amortization) as a key performance indicator to facilitate earnings comparisons between companies regardless of differences in accounting standards.

In the six months ended August 31, 2023, EBITDA was 7,390 million yen (+160.4% year-on-year).

Results by segment were as follows.

[Apparel Business]

In the domestic business, to celebrate the 30th anniversary of the launch of Nijyusanku, a core brand of Onward Kashiyama Co., Ltd., the Company appointed brand ambassadors and distributed the fashion movie, 30TH SPECIAL FASHION SHOW PARIS TO TOKYO, via a dedicated website, and pushed forward with initiatives aimed at achieving further growth. Sales of new brands such as "KASHIYAMA" and "UNFILO" were also strong.

Overseas, sales expanded in Europe, the Americas, and Asia, and increased utilization of the Dalian factory contributed to improved profitability.

As a result, the Apparel Business reported higher sales and moved into the black, generating substantial profits.

[Lifestyle Business]

Chacott Co., Ltd., which operates a wellness business, posted higher sales owing to increased demand for ballet- related goods on the back of a recovery in external events and growth of the cosmetics business. Performance at Creative Yoko Co., Ltd., a subsidiary engaged in a pet and home life business, continued holding firm, thanks to the success of new store opening initiatives. Yamato Co., Ltd., which operates a gift catalog business, also continued to perform well.

As a result, sales and profit increased in the Lifestyle Business.

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