NARUMIYA INTERNATIONAL : Summary of Consolidated Financial Results for the Six Months Ended August 31, 2021(Based on Japanese GAAP)

Translation

Notice: This document is an excerpt translation of the original Japanese document and is only for reference purposes. In the event of any discrepancy between this translated document and the original Japanese document, the latter shall prevail.

Summary of Consolidated Financial Results for the Six Months Ended August 31, 2021 (Based on Japanese GAAP)

October 12, 2021

Company name:

NARUMIYA INTERNATIONAL Co.,Ltd

Stock exchange listing:

Tokyo

Stock code:

9275

URL

https://www.narumiya-net.co.jp/ir/

Representative:

President, Representative Director and Chief

Toshiaki Ishii

Executive Officer

Inquiries:

Financial Director

Yoshiari Sakano

TEL

03-6430-3405

Scheduled date to file Quarterly Securities Report:

October 13, 2021

Scheduled date to commence dividend payments:

-

Preparation of supplementary material on quarterly financial results:

Yes

Holding of quarterly financial results meeting:

Yes

(for institutional investors and analysts)

(Amounts less than one million yen are rounded down)

1. Consolidated financial results for the six months ended August 31, 2021 (from March 1, 2021 to August 31, 2021)

(1) Consolidated operating results (cumulative)

Percentages indicate year-on-year changes

Net sales

Operating profit

Ordinary profit

Profit attributable to

owners of parent

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Six months ended August 31, 2021

13,533

13.2

(52)

-

(79)

-

(115)

-

Six months ended August 31, 2020

11,953

(21.4)

(690)

-

(688)

-

(679)

-

Note: Comprehensive income

As of August 31, 2021: (123) million yen

As of August 31, 2020:(676) million yen

Earnings per share

Diluted earnings per share

Yen

Yen

Six months ended August 31, 2021

(11.41)

-

Six months ended August 31, 2020

(67.16)

-

Note: Diluted quarterly net income per share for the 2Q of the fiscal year ending February 2022 is not shown due to net loss per share and no

dilutive shares.

(2) Consolidated financial position

Total assets

Net assets

Equity ratio

Millions of yen

Millions of yen

%

As of August 31, 2021

12,939

3,970

30.7

As of February 28, 2021

14,636

4,407

30.1

Reference: Shareholders' equity

As of August 31, 2021: 3,970million yen

As of February 28, 2021: 4,407million

yen

2. Cash dividends

Annual dividends per share

1st quarter-end

2nd quarter-end

3rd quarter-end

Fiscal year-end

Total

Yen

Yen

Yen

Yen

Yen

Year ended February 28, 2021

-

0.00

-

31.00

31.00

Year ending February 28, 2022

-

0.00

Year ending February 28, 2022 (Forecast)

-

31.00

31.00

Note: Revisions to the most recently announced dividend forecast: None

3. Forecast of consolidated financial results for the year ending February 28, 2022 (from March 1, 2021 to February 28, 2022)

Percentages indicate year-on-year changes

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Earnings per share
		owners of parent
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Full year	34,500	16.9	1,720	65.9	1,682	67.2	1,002	152.6	98.99

Note: Revision to the most recently announced consolidated forecast: None

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4. Notes

1. Changes in significant subsidiaries during the six months ended August 31, 2021 (changes in specified subsidiaries resulting in the change in scope of consolidation):
2. Application of special accounting methods for preparing quarterly consolidated financial statements:

No

No

(3) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements
Changes in accounting policies due to revisions to accounting standards and other regulations:	No
Changes in accounting policies due to other reasons:	No
Changes in accounting estimates:	No
Restatement of prior period financial statements:	No

(4) Number of issued shares (common shares)

Total number of issued shares at the end of the period (including treasury shares)

	As of August 31, 2021	10,122,830	shares	As of February 28, 2021	10,122,830	shares
Number of treasury shares at the end of the period
	As of August 31, 2021	76	shares	As of February 28, 2021	34	shares
Average number of shares during the period (cumulative from the beginning of the fiscal year)
	Six months ended August 31, 2021	10,122,756	shares	Six months ended August 31, 2020	10,122,830	shares

Note1: The current quarterly financial report is not subject to quarterly review procedures by certified public accountants or auditing firms.

Note2: Explanation and other special notes concerning the appropriate use of business performance forecasts

The forward-looking statements, including earnings forecasts, contained in these materials are based on information currently available to the Company and on certain assumptions deemed to be reasonable, and are not promise by the Company regarding their achievement. Actual results may differ materially from the forecast depending on a range of factors.

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1. Qualitative Information on quarterly consolidated financial performance

(1) Explanation of Results of Operations

A severe situation continued to haunt the Japanese economy during the six months ended August 31, 2021 as the COVID-19 pandemic lingered on and the state of emergency remained in place. As a result, personal consumption remained unchanged due to slumping consumption of services, including food, beverage and lodging services. Looking ahead, we expect the level of socio-economic activities will gradually rise as over 40% of the Japanese citizens had received the second vaccination by the end of August and the figure is expected to increase to about 70% by the end of November.

The apparel industry, to which we belong, continued to face a tough business environment in which many stores suspended operation or shortened business hours, obliged by the extended state of emergency and the priority measures to prevent the spread of disease introduced in response to a rapid spread of new coronavirus variants, and customer visits to stores dropped as school events were canceled and people refrained from going out.

In addition to these factors, a bad weather that affected wide areas of the nation, including the torrential rain in western and eastern Japan, in July and August negatively impacted our business.

In such an environment, in the shopping center channel, the "PTPR" sets, the last fiscal year's hit under our mainstay "petit main" brand, maintained brisk sales and products in collaboration with the "Curious George" character contributed to sales. In addition, the "Lovetoxic" brand tied up with the "Merupuchi" YouTube channel, which commands popularity among the brand's target customer segment. As a result, sales through the shopping center channel increased by 21.1% from the year- earlier level.

Despite the COVID-19-affected drop in customer visits, sales through the department store channel increased by 19.2% year on year. We plan to continue to put effort into structural reforms.

On the other hand, sales dropped by 2.3% from a year earlier for the e-commerce channel. The channel's sales increased significantly in the previous fiscal year, as physical stores suspended operation across Japan, leading more customers to use the online channel. However, this fiscal year, temporary store closures remained minimal even under the state of emergency, making multiple shopping channels available to customer and resulting in a slight year-on-year drop in sales. Going forward, we plan to launch new services, including a rental service. The work to transfer operation to new logistic bases was completed, which we expect to contribute to cutting logistics costs.

The photo studio business opened an outlet each in May, June and August, bringing the total number to eight.

In the cumulative 2Q, we opened 2 stores at department stores and 6 at shopping centers, and closed 4 at department stores and 3 at shopping centers. (Note)

As a result, during the 2Q of the fiscal year under review, we recorded net sales of 13,533 million yen (up 13.2% from the same period of the previous fiscal year), an operating loss of 52 million yen (an operating loss of 690 million yen in the same quarter of the previous fiscal year), an ordinary loss of 79 million yen (an ordinary loss of 688 million yen in the same quarter of the previous fiscal year), and a loss attributable to parent company owners of 115 million yen (a loss attributable to parent company owners of 679 million yen in the same quarter of the previous fiscal year).

(Note) Because the number of stores at department stores is calculated by multiplying the number of places where things are sold by the number of brands, the number of stores opened and closed tends to increase.

Year on year comparison of fiscal first half operating results	(Millions of yen)
		Six months ended	Six months ended	Changes (%)
		August 31, 2020	August 31, 2021
	Net sales	11,953	13,533	13.2%
	Operating loss	(690)	(52)	-
	Ordinary loss	(688)	(79)	-
	Loss attributable to owners	(679)	(115)	-
	of parent
	EBITDA	(294)	365	-

1. Explanation of Financial Position Assets
   Assets at the end of the 2Q of the current fiscal year were 12,939 million yen, a decrease of 1,696 million yen from the end of the previous fiscal year. This was mainly due to a decrease of 892 million yen in notes and accounts receivable-trade and a decrease of 725 million yen in merchandise.

Liabilities

Liabilities at the end of the 2Q of the current fiscal year were 8,968 million yen, a decrease of 1,259 million yen from the end of the previous fiscal year. This was mainly due to a decrease of 813 million yen in accounts payable-trade, a decrease of 259 million yen in accounts payable-other, and a decrease of 340 million yen in income taxes payable.

Net assets

Total net assets at the end of the 2Q of the current fiscal year amounted to 3,970 million yen, a decrease of 436 million yen from the end of the previous fiscal year. This was mainly due to of a loss attributable to owners of parent of 115 million yen and the payment of dividends of 313 million yen.

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1. Explanation of Consolidated Earnings Forecasts and Other Forward-Looking Information There are no changes to the full-year consolidated earnings forecasts announced on April 12, 2021.
   The above forecasts were prepared based on information available as of the date of publication of this document and certain assumptions deemed to be reasonable. Actual results, etc. may differ from these forecasts due to a variety of factors going forward.

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Quarterly consolidated financial statements

Consolidated balance sheets

			(Thousands of yen)
		As of February 28, 2021	As of August 31, 2021
Assets
Current assets
Cash and deposits	1,831,755	1,827,605
Notes and accounts receivable - trade	2,813,646	1,921,335
Merchandise	3,409,102	2,683,501
Prepaid expenses	68,311	92,609
Other	53,883	73,796
Allowance for doubtful accounts	(12,690)	(7,903)
Total current assets	8,164,008	6,590,944
Non-current assets
Property, plant and equipment
Buildings and structures	1,375,313	1,391,230
Accumulated depreciation	(1,104,705)	(1,150,787)
Buildings and structures, net	270,608	240,443
Tools, furniture and fixtures	105,321	90,950
Accumulated depreciation	(81,493)	(64,109)
Tools, furniture and fixtures, net	23,828	26,841
Land	5,940	5,940
Construction in progress	-	9,366
Leased assets	2,495,350	2,570,896
Accumulated depreciation	(1,782,933)	(1,936,150)
Leased assets, net	712,417	634,745
Total property, plant and equipment	1,012,794	917,336
Intangible assets
Goodwill	3,192,406	3,077,123
Software	167,768	217,338
Leased assets	110,104	90,315
Other	606	566
Total intangible assets	3,470,886	3,385,343
Investments and other assets
Investment securities	39,977	17,791
Distressed receivables	97,627	101,149
Long-term prepaid expenses	17,969	11,751
Guarantee deposits	1,168,137	1,222,646
Deferred tax assets	466,312	467,594
Other	271,982	301,044
Allowance for doubtful accounts	(73,624)	(76,374)
Total investments and other assets	1,988,383	2,045,603
Total non-current assets	6,472,063	6,348,283
Total assets		14,636,072	12,939,228

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