Adastria : FY2024/02 3Q Presentation Material has been posted.

FY2024/02 3rd Quarter

Financial Results

December 29, 2023

Table of Contents

• Consolidated Income Statement Summary	4	•	Progress with the Multi-brand Strategy	12
• Adastria and Major Domestic Subsidiaries	6		in Taiwan
•
	Income Statement		Consolidated Balance Sheet	13
•	Product Promotion Activities	7	•	Number of Stores	14
•	Online Business（Domestic）	8	•	Policy Concerning Store Opening Plan	15
•	E-Commerce Activities	9	•	FY2024/02 Consolidated Forecast	16
•	Overseas Business	11		(Unchanged)
• Responses to the Current Business Climate
			17

2

Consolidated Income Statement

Millions of yen

			FY2023/02 3Q					FY2024/02 3Q
		Nine Months Ended	Three Months Ended	Nine Months Ended			Three Months Ended
			Ratio		Ratio		Ratio		YoY			Ratio	YoY
Net sales	177,026	100.0%	64,448	100.0%	203,252	100.0%		114.8%		70,355	100.0%		109.2%
	Adastria(Non-consolidated)	144,913	81.9%	52,575	81.6%	161,683	79.5%		111.6%		55,072	78.3%		104.7%
	Domestic subsidiaries *1*2	14,942	8.4%	5,529	8.6%	18,422	9.1%		123.3%		6,930	9.9%		125.3%
	Overseas subsidiaries *3	12,528	7.1%	4,762	7.4%	16,667	8.2%		133.0%		5,980	8.5%		125.6%
	zetton (Food & Beverage Subsidiary) *4	7,303	4.1%	2,616	4.1%	9,788	4.8%		134.0%		3,578	5.1%		136.8%
Gross profit	99,787	56.4%	37,007	57.4%	115,324	56.7%		115.6%		40,462	57.5%		109.3%
SG&A expenses	88,622	50.1%	31,412	48.7%	99,017	48.7%		111.7%		34,467	49.0%		109.7%
	Advertising & promotion	6,060	3.4%	2,333	3.6%	6,527	3.2%		107.7%		2,565	3.6%		109.9%
	Personnel	32,105	18.1%	10,993	17.1%	36,216	17.8%		112.8%		12,298	17.5%		111.9%
	Rent & depreciation *5	31,685	17.9%	11,258	17.5%	34,861	17.2%		110.0%		12,231	17.4%		108.6%
	Amortization of goodwill	191	0.1%	69	0.1%	168	0.1%		88.1%		55	0.1%		79.4%
	Others	18,580	10.5%	6,756	10.5%	21,244	10.5%		114.3%		7,317	10.4%		108.3%
Operating profit	11,165	6.3%	5,594	8.7%	16,306	8.0%		146.0%		5,994	8.5%		107.1%
	Adastria(non-consolidated)	9,948	5.6%	5,352	8.3%	14,504	7.1%		145.8%		5,219	7.4%		97.5%
	Domestic subsidiaries *1*2	405	0.2%	214	0.3%	583	0.3%		144.0%		464	0.7%		216.3%
	Overseas subsidiaries *3	218	0.1%	58	0.1%	790	0.4%		361.0%		136	0.2%		231.6%
	Adastria Logistics	148	0.1%	- 16	-	77	0.0%		52.1%		7	0.0%		-
	zetton (Food & Beverage Subsidiary) *4	485	0.3%	2	0.0%	362	0.2%		74.6%		156	0.2%		7770.3%
Ordinary profit	11,805	6.7%	5,648	8.8%	16,708	8.2%		141.5%		6,068	8.6%		107.5%
Net income attributable to owners of the parent	7,616	4.3%	3,722	5.8%	11,541	5.7%		151.5%		4,447	6.3%		119.5%
EBITDA	17,116	9.7%	7,708	12.0%	22,970	11.3%		134.2%		8,381	11.9%		108.7%
	Depreciation and amortization	5,760	3.3%	2,043	3.2%	6,495	3.2%		112.8%		2,331	3.3%		114.1%
	Amortization of goodwill	191	0.1%	69	0.1%	168	0.1%		88.1%		55	0.1%		79.4%

*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., Gate Win Co., Ltd.

*2：Due to change in financial year, Feb-Oct (FY2023/02 3Q) and Mar-Nov (FY2024/02 3Q)

*3：Overseas subsidiaries are the sum of overseas subsidiaries: Hong Kong, Mainland China, Taiwan, Thailand, USA.(Period Jan. to Sep.2023)

*4：Operating profit of zetton, inc. is shown after consolidation adjustments. Due to change in financial year, Mar-Nov (FY2023/02 3Q) and Feb-Oct (FY2024/02 3Q)

*5：Rent & depreciation costs are the sum of Rent expenses, Lease expenses and Depreciation.

3

Consolidated Income Statement - 3Q Summary (1)

Summary

Net sales

Parent company

Negative impact of late summer heat and mild winter, but 3Q performance was somewhat above the revised plan due to numerous initiatives

70.3 billion yen (+9.2% YoY)

• Up 4.7% YoY because of accurate responses to late summer heat, mild winter and other weather conditions and price revisions due to merchandise with substantial added value.
• Major sources of sales growth were "niko and …" resulting from success of selling furniture and other various categories of products and the "LAKOLE", which is opening many stores.

Domestic subsidiaries	• Up 25.3% YoY because of the fiscal year change; increased about 5% after excluding the effect
	of this change.
Overseas subsidiaries	• Up 25.6% YoY; In Mainland China, despite the slow pace of recovery, new stores increased
	sales and reduced losses. Hong Kong rebounded from the 2022 pandemic downturn and new
	and existing stores generated sales and earnings growth in Taiwan. U.S. sales and earnings
	decreased due to a slowdown of the wholesale business.
Food and beverage business	• Up 29.4% YoY; sales and earnings increased because of the recovery of the business climate in
	Japan and the fiscal year change.

Gross profit margin 57.5% (+0.1p YoY)

• The negative effect of the yen's weakness was offset by price revisions as the value of merchandise was increased and by limiting discounting.
• An improvement in the gross profit margin of the overseas business was another reason for the small increase.

*BUZZWIT Co., Ltd., ELEMENT RULE Co., Ltd., Adastria eat Creations Co., Ltd., ADOORLINK Co., Ltd., Gate Win Co., Ltd. and zetton, inc. changed their fiscal year end in FY2023/02. *3Q comparisons are Aug-Oct (FY2023/02) and Sep-Nov (FY2024/02) for all of these companies except zetton and Sep-Nov (FY2023/02) and Aug-Oct (FY2024/02) for zetton. *OPEN AND NATURAL Inc. was absorbed by BUZZWIT Co., Ltd. on July 1, 2023.

4

Consolidated Income Statement - 3Q Summary (2)

SG&A expense ratio	49.0% (+0.3p YoY)
Advertising & promotions ・3.6% (+0.0p YoY) (+230 million yen YoY)
		Product promotions increased; Part of the advertising that was not run in the first half of the year was done
Personnel		・17.5% (+0.4p YoY) (+1,300 million yen YoY)
		Increased employee remuneration, more recruiting activities due to the labor shortage, more hours worked
		because of sales growth, increase in bonuses
Rent & depreciation	・17.4% (-0.1p YoY) (+970 million yen YoY)
		Decreased as a pct. of sales due to sales growth, although variable rent increased
Others		・ 10.4% (-0.1p YoY) (+560 million yen YoY)
		Credit card fees, outsourcing-related expenses, travel expenses and other expenses increased, but total other
		expenses were a lower pct. of sales due to sales growth
	5.9 billion yen (+7.1% YoY)
Operating profit

Operating income ratio 8.5%, EBITDA margin 11.9% Change in fiscal year of subsidiaries in Japan +600 million yen

	6.0 billion yen (+7.5% YoY)
Ordinary profit

Non-operatingincome ・Foreign exchange gains of 90 million yen

Net income	4.4 billion yen (+19.5% YoY)
attributable to
owners of the parent

Extraordinary losses・Impairment of store assets of 70 million yen

*BUZZWIT Co., Ltd., ELEMENT RULE Co., Ltd., Adastria eat Creations Co., Ltd., ADOORLINK Co., Ltd., Gate Win Co., Ltd. and zetton, inc. changed their fiscal year end in FY2023/02. *3Q comparisons are Aug-Oct (FY2023/02) and Sep-Nov (FY2024/02) for all of these companies except zetton and Sep-Nov (FY2023/02) and Aug-Oct (FY2024/02) for zetton. *OPEN AND NATURAL Inc. was absorbed by BUZZWIT Co., Ltd. on July 1, 2023.

5

Adastria and Major Domestic Subsidiaries Income Statement

⚫ 【Adastria (Non-consolidated)】							Millions of yen
			FY2023/02 3Q			FY2024/02 3Q
			Nine Months	Three Months	Nine MonthsEnded			Three Months Ended
			Ended	Ended		YoY				YoY
	Net sales	144,913	52,575	161,683		111.6%		55,072	104.7%
		(Same stores YoY)	112.7%	109.0%	109.6%				104.2%
		GLOBAL WORK	33,455	11,868	38,178		114.1%		12,947	109.1%
		niko and...	21,930	7,488	24,671		112.5%		8,349	111.5%
		studio CLIP	15,074	5,220	16,670		110.6%		5,454	104.5%
		LOWRYS FARM	15,927	5,910	16,667		104.6%		5,526	93.5%
		LEPSIM	9,453	3,186	10,114		107.0%		3,378	106.0%
		JEANASiS	8,037	3,330	8,994		111.9%		3,314	99.5%
		BAYFLOW	7,554	2,708	7,912		104.7%		2,635	97.3%
		LAKOLE	5,682	2,141	7,886		138.8%		2,622	122.5%
	Gross profit	80,214	29,897	90,140		112.4%		31,248	104.5%
		Gross margin	55.4%	56.9%	55.8%		+0.4p		56.7%	- 0.1p
	SG&A expenses	70,266	24,544	75,636		107.6%		26,028	106.0%
		SG&A ratio	48.5%	46.7%	46.8%		- 1.7p		47.3%	+0.6p
	Operating profit	9,948	5,352	14,504		145.8%		5,219	97.5%
		Operating margin	6.9%	10.2%	9.0%		+2.1p		9.5%	- 0.7p
⚫ 【Major Domestic Subsidiaries】
	Net sales	BUZZWIT Co., Ltd.	6,855	2,769	9,166		133.7%		3,640	131.4%
		ELEMENT RULE Co., Ltd.	7,482	2,553	8,322		111.2%		3,011	117.9%

• Adastria (Non-consolidated) : Amortization of goodwill for FY2023/02 3Q：44 million yen, FY2024/02 3Q：None
• Adastria (Non-consolidated) : Net sales are shown before elimination of internal transactions.
• Sales of BUZZWIT Co., Ltd. include its consolidated subsidiary OPEN AND NATURAL, Inc. (2 companies merged in July 2023)

6

Product Promotion Activities

• Progress with the growth of core products of the brand "GLOBAL WORK"

• A new TV commercial for "MELTY KNIT", a popular fashion line with cumulative series sales of 1.8 million units.
• Continuing to featuring actress/model "Tsubasa Honda" in TV commercials; also producing benefits for branding.

A smooth feeling on the skin

Easy-care fabric (washable)

A large selection of apparel for men, children, mix-and-match and many other categories

7

Online Business（Domestic）

9.7%

Domestic net sales from online (Nine months) 50.9billion yen（+13.1% YoY）

• Domestic online business ratio: 28.3% (of which Own EC site: approx. 15.0%)
• Own EC site "Dot-ST" has about 17.1 million members (+1.6 million from the end of FY2023/02)

Billions of yen

30
	Sales of other EC site		42.8%
25	Sales of Adastria EC site
Total EC sales as pct. of total sales in Japan
	Ratio of Adastria EC site
20								30.8%	32.3%
								30.1%		29.9%				29.8%			30.0%
												28.8%
										28.5%		28.7%
							26.8%					27.2%		27.8%	27.0%
						26.4%
15			21.3%	22.0%	22.7%
	19.8%
	18.9%
								17.7%
								15.8%	16.7%		16.1%
10									15.5%	15.0%	15.0%	15.1%	14.8%		14.8%	15.7%
					13.9%	13.8%			14.7%
	10.0%		10.0%	10.8%
	8.5%
5
0
	FY2020/2				FY2021/2				FY2022/2				FY2023/2				FY2024/2
	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q	4Q	1Q	2Q	3Q

*FY2020/02, FY2021/02 non-consolidated sales and sales in BUZZWIT Co., Ltd. and ELEMENT RULE Co., Ltd. were included. *Starting in FY2022/02, sales of ADOORLINK Co., Ltd. was included.

*Starting in FY2023/02 2Q, sales of BUZZWIT Co., Ltd. include its consolidated subsidiary OPEN AND NATURAL, Inc. (2 companies merged in July 2023) and from 4Q, sales of Gate Win Co., Ltd. was included.

8

E-Commerce Activities (1)

• Promotions generate sales growth and attract more young people

• "Dot-STFes" campaign using TV commercials and loyalty points for customers equal to 20% of EC and physical store purchases.
• Attracting many new customers in younger age segments by using promotions featuring popular generation Z celebrities and a variety of influencers.

Promotion Activities	TV commercial
20% loyalty point distribution

Benefits between

October 25 and November 6

Registration of new	140,000 members
member
Amount of EC orders	+5% YoY

Limited collaboration event on "Dot ST"

More generation Z customers

Benefits between

October 1 and November 30

EC orders

by customers +18% YoY under age 29

9

E-Commerce Activities (2)

• More merchandise of other companies on "Dot-ST"

• On November 22, "Dot-ST" added a "P2 DOG and CAT" store, which specializes in products for pets. This is the eighth new store following the opening of "Dot-ST" to external companies.

• Launch of the "Dot-C" flea market website

• The website sells clothing that was worn by popular staff.
• Sales of this apparel builds strong ties with customers and contributes to progress involving sustainability.

As a lifestyle proposal, our staff post their own pets using the	Staff posted with their styling.
"P2 DOG and CAT" products.

10