Artnature : Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023

Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023 [J-GAAP]

			July 28, 2022
Name of listed company:	ARTNATURE INC.	Listed on: Tokyo Stock Exchange
Securities code:	7823	URL: https://www.artnature.co.jp/english/index.html
Representative:	Yoshikata Igarashi, Chairman and President
Contact:	Hiroaki Inoue, General Manager, Finance & Accounting Division	TEL: [phone]
	Senior Corporate Officer
Scheduled date of filing the quarterly financial report:	August 4, 2022
Scheduled date of the start of dividends distribution:	―
Supplementary quarterly materials prepared:	None
Explanation meeting for quarterly financial results:	None

(Figures shown are rounded down to the nearest million yen.)

1. Consolidated results for the first quarter ended June 30, 2022 (April 1, 2022 - June 30, 2022)

(1) Consolidated operating results					(Percentage figures show changes from the previous year.)
												Net income attributable to
			Net sales		Operating income	Ordinary income		owners of the parent
												company
	Three months ended	Millions of yen		%	Millions of yen		%	Millions of yen		%	Millions of yen		%
	June 30, 2022		10,414		9.5	1,225		35.5	1,260		49.7	790		61.8
	June 30, 2021		9,513		75.7	904		―	842		―	488		―
Note: Comprehensive income:	Three months ended June 30, 2022: ¥752 million (28.8%)
			Three months ended June 30, 2021: ¥584 million (―%)
			Net income per share	Diluted net income
			per share
	Three months ended				Yen			Yen
	June 30, 2022				24.60			24.32
	June 30, 2021				15.22			15.07
(2) Consolidated financial position
			Total assets		Net assets		Shareholders' equity ratio	Net assets per share
			Millions of yen	Millions of yen			%
	As of June 30, 2022				45,933			24,903			53.7			767.94
	As of March 31, 2022				46,510			24,596			52.4			758.47

(Reference) Equity capital: As of June 30, 2022: ¥24,684 millionAs of March 31, 2022: ¥24,367 million

2. Dividends

				Dividends per share
		First quarter-end	Second quarter-end		Third quarter-end	Year-end	Annual
		Yen	Yen		Yen	Yen	Yen
	Year ended March 31, 2022	―	14.00		―	14.00	28.00
	Year ending March 31, 2023	―
	Year ending March 31, 2023		14.00		―	14.00	28.00
	(forecast)
Note: Revisions to dividend forecasts published most	recently: None

3. Consolidated financial forecast for the fiscal year ending March 31, 2023 (April 1, 2022 - March 31, 2023)

(Percentage figures show changes from the previous year.)

							Net income		Net income
	Net sales		Operating income	Ordinary income	attributable to owners
		per share
							of the parent company
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Full year	41,991	3.8	2,105	(30.3)	2,155	(29.1)	1,137	(5.6)	35.40

Note: Revisions to most recently announced results forecasts: None

Notes:

1. Significant changes to subsidiaries during the period (Transfers of specific subsidiaries with changes in the scope of consolidation): None
2. Application of specific accounting methods for preparing the quarterly consolidated financial statements: None
3. Changes in accounting policies, accounting estimates and restatement of revisions

1)	Changes in accounting policies due to revision of accounting standards, etc.:	Yes
2)	Changes in accounting policies other than 1):	None
3)	Changes in accounting estimates:	None
4)	Restatement of revisions:	None

Note: More information is provided on page 7 of the supplementary materials, "2. Quarterly consolidated financial statements and related notes, (3) Notes on quarterly consolidated financial statements (Changes in accounting policies)."

(4) Number of outstanding shares (common stock):

1)	Number of shares issued and outstanding (including treasury shares)
	As of June 30, 2022	34,393,200 shares	As of March 31, 2022	34,393,200 shares
2)	Number of treasury shares
	As of June 30, 2022	2,249,539 shares	As of March 31, 2022	2,266,339 shares
3)	Average number of shares issued and outstanding in each period
	Three months ended June 30, 2022	32,128,780 shares	Three months ended June 30, 2021	32,097,256 shares

• This quarterly kessan tanshin document is outside the scope of audit procedures conducted by certified public accountants or the independent auditor.
• Explanation of the appropriate use of financial results forecasts; other important items
  (Cautionary statement regarding forward-looking statements, etc.)
  Forward-looking statements in this document, including forecasts, are based on information available at the time of disclosure and on certain assumptions deemed reasonable by the Company. Actual results may differ materially from forward-looking statements due to a number of factors. For more information about these assumptions and other conditions that form the basis of these forecasts, please see page 2 of the supplementary materials, "1. Analysis of operating results and financial position, (3) Qualitative information on consolidated financial forecasts."

ARTNATURE INC. (7823) Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023

Contents
1. Analysis of operating results and financial position ..............................................................................................................	2
(1) Analysis of operating results.................................................................................................................................................	2
(2) Analysis of financial position ...............................................................................................................................................	2
(3) Qualitative information on consolidated financial forecasts.................................................................................................	2
2. Quarterly consolidated financial statements and related notes............................................................................................	3
(1)	Quarterly consolidated balance sheets..................................................................................................................................	3
(2)	Quarterly consolidated statements of income and comprehensive income ..........................................................................	5
	(Quarterly consolidated statements of income) ....................................................................................................................	5
	(Quarterly consolidated statements of comprehensive income) ...........................................................................................	6
(3)	Notes on quarterly consolidated financial statements ..........................................................................................................	7
	(Notes on the going concern assumption) ............................................................................................................................	7
	(Notes on significant fluctuation in amounts of shareholders' equity) .................................................................................	7
	(Changes in accounting policies)..........................................................................................................................................	7

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ARTNATURE INC. (7823) Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023

1. Analysis of operating results and financial position

(1) Analysis of operating results

Operating results for the first three months of fiscal 2023

During the first quarter of the consolidated fiscal year under review, the situation surrounding the Japanese economy remained uncertain because the surge in crude oil and raw material prices, which was attributable to the Russian invasion of Ukraine and sharp weakening of the yen, started to affect consumer spending. However, there were signs of a recovery in consumer spending following the easing of restraints on a range of activities that had been enforced to prevent the spread of COVID-19.

Against this backdrop, ARTNATURE INC. and its consolidated subsidiaries (the ARTNATURE Group) saw the ARTNATURE Challenge Plan, the three-yearmedium-term management plan, mark its final year. Under the plan, we have been implementing six priority challenge initiatives, as we did in the previous year: (1) grow the Group's earnings, (2) develop new business fields,

1. reinforce recruitment, (4) cultivate human resources, (5) encourage dialogue with capital markets, and (6) drive business innovation, with the aim of strengthening the ARNATURE Group's position in existing businesses and further expanding new businesses to build the foundations for a new ARTNATURE capable of opening up the next phase in the Group's history. At the same time, we have continued to take comprehensive measures to prevent COVID-19 infections in our business activities.
   As a result, consolidated net sales in the first three months under review increased 9.5% year on year to ¥10,414 million. In terms of profits, operating income stood at ¥1,225 million (increasing 35.5% year on year), and ordinary income came to ¥1,260 million (increasing 49.7% year on year) due to an increase in net sales. Net income attributable to owners of the parent company was ¥790 million (increasing 61.8% year on year).

Business results by segment are as follows.

• Men's business >

Sales in the men's business increased 1.5% year on year, to ¥5,394 million, as a result of the sale of new products and the promotion of customer retention programs, among other initiatives.

• Ladies' business >

Sales in the ladies' business climbed 19.5% year on year, to ¥3,561 million, mainly reflecting strong sales of new products and an increase in the number of exhibition and trial fitting events held as well as that of products sold.

< Ladies' ready-made wigs business >

Sales in the ladies' ready-made wigs business rose 26.0% year on year, to ¥1,072 million, chiefly reflecting an increase in the number of products sold due to a rise in the number of customers visiting retail facilities in which the Company's stores are located.

1. Analysis of financial position Assets, liabilities and net assets
   (Assets)
   As of the end of the first quarter, total assets were ¥45,933 million, a decrease of ¥576 million compared with the end of the previous fiscal year. Current assets decreased ¥758 million, mainly due to a fall in cash and deposits, while non-current assets increased ¥181 million, primarily reflecting an increase in investments and other assets.

(Liabilities)

As of the end of the first quarter, liabilities totaled ¥21,030 million, a decrease of ¥883 million compared with the end of the previous fiscal year. This was largely due to decreases in accounts payable-other, income taxes payable and advances received, as well as a decrease of ¥946 million in current liabilities mainly due to increases in provision for bonuses and others in current liabilities.

(Net Assets)

As of the end of the first quarter, net assets were ¥24,903 million, an increase of ¥306 million compared with the end of the previous fiscal year. This largely reflected an increase in retained earnings.

(3) Qualitative information on consolidated financial forecasts

Consolidated financial forecasts for the fiscal year ending March 31, 2023 remain the same as those announced on May 13, 2022.

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ARTNATURE INC. (7823) Financial Results for the First Quarter of the Fiscal Year Ending March 31, 2023

2. Quarterly consolidated financial statements and related notes

(1) Quarterly consolidated balance sheets

(Millions of yen)

As of March 31, 2022

As of June 30, 2022

Assets
Current assets
Cash and deposits	19,546	18,626
Accounts receivable - trade	3,066	2,754
Securities	23	25
Merchandise and finished goods	3,050	3,225
Work in process	182	186
Raw materials and supplies	1,195	1,227
Others	964	1,224
Allowance for doubtful accounts	(5)	(6)
Total current assets	28,021	27,263
Non-current assets
Property, plant and equipment
Buildings and structures, net	4,779	4,783
Others, net	3,915	3,976
Total property, plant and equipment	8,694	8,759
Intangible assets
Goodwill	233	209
Others	441	426
Total intangible assets	674	636
Investments and other assets
Others	9,512	9,719
Allowance for doubtful accounts	(393)	(444)
Total investments and other assets	9,119	9,274
Total non-current assets	18,488	18,670
Total assets	46,510	45,933

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