JINS : Quarterly Securities Report 3Q

Quarterly Securities Report

(The Third Quarter of the 35th Fiscal Year)

JINS HOLDINGS INC.

This document was prepared based on the Company's Quarterly Securities Report in Japanese.

In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

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Quarterly Securities Report

Article 24-4-7, Paragraph 1 of the Financial Instruments and Exchange Act

Director-General of the Kanto Local Finance Bureau

July 14, 2022

Third quarter of the 35th term (from March 1, 2022 to May 31, 2022)

JINS HOLDINGS Inc.

JINS HOLDINGS Inc.

Hitoshi Tanaka, CEO and Representative Director

26-4 Kawaharamachi 2-chome,Maebashi-shi, Gunma

(This is the address of the registered head office, but the actual business is conducted at the nearest place of contact.)

Not applicable.

Not applicable.

Iidabashi Grand Bloom 30th Flr., 10-2 Fujimi 2-chome,Chiyoda-ku, Tokyo

[phone] (main number)

Yukinori Arakawa, Executive Officer and General Manager of Administration Division

Tokyo Stock Exchange, Inc.

(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)

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Part I Company Information

I. Overview of Company

1. Key financial data

		34th term	35th term
Term		Nine months ended	Nine months ended		34th term
		May 31, 2021	May 31, 2022
Accounting period	From September 1, 2020	From September 1, 2021	From September 1, 2020
to May 31, 2022	to May 31, 2022		to August 31, 2021
Net sales	(millions of yen)	47,741	49,916	63,898
Ordinary profit	(millions of yen)	3,976	3,141	5,020
Profit attributable to	(millions of yen)	2,744	1,026	3,292
owners of parent
Comprehensive income	(millions of yen)	3,019	1,238	3,623
Net assets	(millions of yen)	19,615	20,581	20,219
Total assets	(millions of yen)	51,995	54,331	53,007
Earnings per share	(yen)	117.61	43.97	141.07
Diluted earnings	(yen)	106.43	38.69	127.35
per share
Equity ratio	(%)	37.7	37.9	38.1
Term		34th term	35th term
	3rd quarter	3rd quarter
Accounting period	From March 1, 2021	From March 1, 2022
To May 31, 2021	To May 31, 2022
Earnings (loss) per share	(yen)	35.62	(6.17)

(Notes) 1. As the Company prepares the quarterly consolidated financial statements, the description of key financial data of the submitting company is omitted.

2. The Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc., from the beginning of the first quarter and the key financial data for the nine months ended May 31, 2022 and the third quarter under review are data after the said accounting standard have been applied.

2. Description of business

There are no significant changes in the description of business which the Company group (the Company and the Company's affiliates. Hereinafter, the "Group") operates during the nine months ended May 31, 2022.

In addition, there are no changes in major affiliates.

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II. Overview of Business

1. Business risks

In the nine months ended May 31, 2022, there were no matters that may have a significant impact on the judgment of investors in the overview of business, financial information and other matters stated in this Quarterly Securities Report or no significant changes in "Business Risks" stated in the Annual Securities Report for the previous fiscal year.

The impact of COVID-19 is as stated in "2. Management analysis of financial position, operating results and cash flows" and we will continue to monitor the situation.

In addition, there were no material events.

2. Management analysis of financial position, operating results and cash flows

Forward-looking statements in this document are based on the Group's judgments as of the end of this quarter of the fiscal year under review.

(1) Financial position and operating results

During the nine months ended May 31, 2022 (September 1, 2021 to May 31, 2022), the Japanese economy experienced the continued seesawing impact of the novel coronavirus disease (COVID-19) on personal consumption as semi-emergency coronavirus measures were declared again in mid-January due to the prevalence of variants despite the complete lifting from October onward of the state of emergency, etc., which had been declared due to the spread of COVID-19, mainly in urban areas. Currently, as the number of persons infected by COVID-19 has decreased, the impact on personal consumption is on a recovery trend. There are also concerns about impact on the economic conditions due to inflation caused by a surge in crude oil price and currency movement. Looking at the global economy, infection prevention measures, including travel restrictions, remain in place in some regions partly owing to the impact of COVID-19 variants. Particularly in China, urban areas have been intermittently locked down under the zero-Covid policy, leading to concerns about the impact on economic conditions. In addition, there are concerns about a possible worsening of economic conditions as the economic impact of the Russian invasion of Ukraine should be carefully watched and global inflation has become more apparent due to the rising price of crude oil and raw materials.

The domestic retail eyewear market (eyeglasses for vision correction) continues to experience ups and downs versus the same period of the previous year owing to the impact of COVID-19.

Under this market environment, in the eyewear business, the Company and its consolidated subsidiaries (collectively, the "Group") took such initiatives as promoting digital transformation, and strengthening development of innovative products, which they identified as management issues. We have been working to offer consumers a more convenient purchasing experience, including introducing "JINS BRAIN2," a service that uses AI to assess the extent to which pairs of glasses will suit customers with an enhanced level of accuracy, as an initiative to seamlessly connect online and in-store experiences, making it easier for customers to select glasses and creating a more convenient purchasing experience. With regard to product development, as part of our initiatives to realize "the world free from myopia," we conducted a joint project to develop an eyeglass-shaped, violet- light-emitting medical device designed to suppress progress of myopia, and total research and development expenses were ¥155 million for the nine months ended May 31, 2022.

In terms of store development, the number of eyewear stores as of May 31, 2022, was 696, including 463 stores in Japan and 233 stores overseas (172 in China, 49 in Taiwan, 6 in Hong Kong, and 6 in the United States).

As a result, for the nine months ended May 31, 2022, the Company posted net sales of ¥49,916 million (up 4.6% year-on-year) partly thanks to the impact of new store openings despite the impact of COVID-19. Operating profit was ¥2,758 million (down 30.9% year-on-year) partly owing to a rise in the cost of goods ratio with an increase in the number of sales. Ordinary profit was ¥3,141 million (down 21.0% year-on-year), and profit attributable to owners of parent was ¥1,026 million (down 62.6% year-on- year), partly due to the recording of provision of allowance for business structure reform expenses in the United States and provision of allowance for office relocation expenses related to relocation of the Tokyo head office in extraordinary losses.

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1. Analysis and examination of operating results, etc. from management perspective
2. 1. Business results by segment

In the domestic eyewear business, the second release of the JINS Pokémon model, in which we incorporated Pokémon to eyewear designs through JINS' unique point of view, was well-received. Sales were also driven by high-value-added products, including "Airframe Hingeless," for which we eliminated the hinges connecting the front of the frame with the temples, creating a unique new fit and comfort for users. In addition, membership of the JINS app reached approximately 10.71 million people as of the end of May 2022, up 2.01 million people from the end of the previous fiscal year. Also, sales of contact lenses, which provide JINS 1DAY, have grown as planned, thanks to an increase in regular purchases. Regarding the impact of COVID-19, customer traffic decreased as semi-emergency coronavirus measures were declared mainly in urban areas in mid-January due to the prevalence of COVID-19 variants and since April in which the measures were lifted, it has been on a recovery trend. However, footfall has not yet returned to the pre-COVID-19 level.

In terms of store development, the number of stores in Japan was 463 (34 openings and 5 closures) as of the end of the period under review.

As a result, net sales of the domestic eyewear business were ¥39,319 million (up 3.2% year-on-year), and segment operating profit was ¥2,959 million (down 19.2% year-on-year).

In the overseas eyewear business, profit significantly decreased in China as personal consumption stalled, owing partly to intermittent lockdowns of cities amid the continued strengthening of restrictions on individual movement imposed by the government as a measure to combat COVID-19, in addition to the impact of factors such as a fallback from the previous year, when there were exemptions to social security fees.

In Taiwan, profit increased as performance recovered steadily from the impact of COVID-19 infections, though our business was impacted by factors such as an increase in personnel expenses to secure opticians as required by the Optometric Personnel Act.

In Hong Kong, the number of persons infected by COVID-19 rapidly increased, reaching the peak in early March and customer traffic decreased, which adversely affected operating results.

In the United States, although we have reopened all of our brick-and-mortar stores, which had been closed due to the impact of COVID-19, footfall significantly decreased partly due to the impact of the deteriorated environment surrounding our flagship store in San Francisco. In accordance with this, we have decided to promote business structure reform aimed at expanding the scale of business, centered on the EC business.

In terms of store development, the total number of stores overseas was 233 as of the end of the period under review, including 172 stores in China (11 openings and 9 closures), 49 in Taiwan (11 openings and no closures), 6 in Hong Kong (no openings or closures), and 6 in the United States (no openings or closures).

As a result, net sales of the overseas eyewear business were ¥10,596 million (up 10.1% year-on-year), and segment operating loss was ¥200 million (segment operating profit was ¥329 million for the same period of the previous year).

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