J Front Retailing : Notice Regarding Transfer of Shares Resulting in Changes in Consolidated Subsidiary

[Translation]

May 10, 2021

To whom it may concern

Company name: J. FRONT RETAILING Co., Ltd.

Representative: Tatsuya Yoshimoto, President

(Securities code: 3086, First Section of the Tokyo Stock Exchange and Nagoya Stock Exchange) Inquiries: Hajime Inagami, Senior General Manager of Investor Relations Promotion Division, Financial Strategy Unit

(TEL: [phone] (from overseas))

Notice Regarding Transfer of Shares Resulting in Changes in Consolidated Subsidiary

J. FRONT RETAILING Co., Ltd. (the "Company") hereby announces that PARCO CO., LTD. ("PARCO"), a consolidated subsidiary of the Company, intends to transfer all of the shares of NEUVE・A CO., LTD. ("NEUVE・A"), a consolidated subsidiary of the Company, to Libra Invesco Co., Ltd. ("Libra Invesco") on June 30, 2021 (planned; the "Share Transfer"), and has concluded a share transfer agreement with Libra Invesco concerning the Share Transfer.

NEUVE・A will cease to be a consolidated subsidiary of the Company as a result of the Share Transfer.

1. Reason for the transfer of shares

NEUVE・A was established as an associate of PARCO, which is owned by the Group. As a company that continues to offer new value proposals and contribute to enhancing customers' lifestyles with general goods specialty stores at its core, NEUVE・A has opened and operated specialty stores throughout Japan in PARCO stores as well as in shopping centers, etc.

However, due to changes in the environment in which NEUVE ・ A operates, intensifying competition and other factors, the business environment has become challenging. Although NEUVE・A opened stores in new formats in recent years, strengthened EC, and worked to improve profitability by closing unprofitable stores, given the sudden changes in the management environment, such as the impact of temporary store closures due to the novel coronavirus disease (COVID-19) pandemic in the previous fiscal year, the business results have been sluggish.

Given the above points, although it is currently patronized by many customers, the Company has determined that the best option for NEUVE・A to grow in the future is for it to collaborate with and operate under the corporate umbrella of another company with broad-ranging business expertise, such as in specialty stores, and by enhancing the individuality and editing capabilities held by NEUVE・A, build a stable business foundation.

Furthermore, the Company believes that this action will allow the Company to promote business portfolio reforms and focus its management resources on our main businesses and growth areas by accelerating efforts for the reform of management structure that is included in the new medium- term business plan that started from this fiscal year.

Based on this, of the transfer counterparty candidates that the Company considered for NEUVE・A, the Company has reached an agreement with Libra Invesco on the terms and conditions of the transfer and has decided to transfer all of its shares of NEUVE・A to Libra Invesco.

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2. Overview of changing subsidiary (NEUVE・A)

(As of February 28, 2021)

(1)	Name		NEUVE・A CO., LTD.
(2)	Headquarters		8-16 Shinsencho, Shibuya-ku, Tokyo
(3)	Representative		Mitsuhiro Matsuzaki, Representative Director
(4)	Businesses		Specialty store business
(5)	Share capital		¥100 million
(6)	Established		June 1, 2001
(7)	Major shareholder	and	PARCO CO., LTD.	100%
shareholding ratio
			Capital		Wholly owned subsidiary of PARCO
			relationship
			Personnel		PARCO has dispatched to NEUVE・A two Directors and
			relationships		one Auditor. (Note)
					Some of the Company's consolidated subsidiaries have
	Relationships with	the			intra-Group transactional relationships with NEUVE・A
(8)			relating to leasing of buildings; system maintenance and
Company		Transactional
		administration, and provision of other services; mutual
			relationship
				lending and borrowing of funds; and other relationships.
					Furthermore, NEUVE ・ A operates	45 stores at stores
					operated by PARCO.
			Status as a		NEUVE・A is a consolidated subsidiary of the Company
			related party		and falls under a related party of the Company.
(9)	Operating results and financial position for the most recent three fiscal years
						(Millions of yen, unless otherwise noted)
	Fiscal year-end		Fiscal year ended	Fiscal year ended		Fiscal year ended
		February 28, 2019	February 29, 2020		February 28, 2021
Net assets			2,840	1,416		(226)
Total assets			6,429	5,314		3,915
Net assets per share (yen)		289,875.34	144,509.92		(23,124.42)
Net sales			19,740	18,016		11,954
Operating profit			122	(458)		(872)
Ordinary profit			122	(463)		(868)
Profit				(65)	(1,424)		(1,642)
Basic earnings per share (yen)		(6,718.45)	(145,365.42)		(167,634.34)
Annual dividends per share		0.00	0.00		0.00
(yen)

Note: Directors and an Auditor that have been dispatched to NEUVE・A will have retired from that company as of June 30, 2021, which is the date on which the Share Transfer is slated to go into effect.

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9,800 shares (Equity ownership: 100.0%)

9,800 shares (Equity ownership: 100.0%)

0 shares (Equity ownership: 0.0%)

3. Overview of transfer counterparty (Libra Invesco)

				(As of April 30, 2021)
(1)	Name	Libra Invesco Co., Ltd.
(2)	Headquarters	5F, Sanno Park Tower, 2-11-1 Nagatacho, Chiyoda-ku, Tokyo
(3)	Representative	Kenji Fukai, Representative Director
(4)	Businesses	Investment; credit	and finance; operation and management of investment
partnership assets; management consulting
(5)	Share capital	¥1 million
(6)	Established	December 26, 2020
		Capital		No material relationship; no material relationships among
		relationship		related parties or companies.
		Personnel		No material relationship; no material relationships among
		relationships		related parties or companies.
	Relationships with the
(7)	Transactional		No material relationship; no material relationships among
Company	relationship		related parties or companies.
				Libra Invesco does not fall under the category of related
		Status as a		party of the Company; related parties or companies of Libra
		related party		Invesco do not fall under the category of related party of
				the Company.

4. Number of shares to be transferred, transfer price and share ownership before and after the transfer

(1)

(2)

Number of shares held before the transfer

Number of shares to be transferred

(3)

Number of shares to be held after the transfer

Due to a confidentiality provision in the agreement with the transfer counterparty, the Company is refraining from disclosing the transfer price.

5. Schedule

Share Transfer

June 30, 2021

6. Future prospects

Following the Share Transfer, the Company expects to record relevant expenses, including loss on sale of businesses, in the consolidated earnings results for the first three months of the fiscal year ending February 28, 2022.

The amount of this impact is currently being assessed; however, at this stage it is expected to have a negative impact of around ¥2.5 billion (estimated) at the operating profit level. This impact has been factored into the consolidated earnings forecast for the fiscal year ending February 28, 2022 announced on April 13, 2021.

Details will be announced as they become clear.

END

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