NARUMIYA INTERNATIONAL : Summary of Consolidated Financial Results for the Year Ended February 28,2022

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 Year Ended February 28, 2022

(Based on Japanese GAAP)

Company name: NARUMIYA INTERNATIONAL Co.,Ltd

Stock exchange listing: Tokyo

Stock code: 9275 URLhttps://www.narumiya-net.co.jp/ir/ President, Representative Director and ChiefRepresentative:

April 12, 2022

Toshiaki Ishii

Executive Officer
Inquiries: Financial Director	Yoshiari Sakano	TEL [phone]
Scheduled date of ordinary general meeting of shareholders:	May 25, 2022
Scheduled date to file Securities Report:	May 26, 2022
Scheduled date to commence dividend payments:	May 26, 2022
Preparation of supplementary material on financial results:	Yes
Holding of financial results meeting:	Yes
(Amounts less than one million yen are rounded down)

1. Consolidated financial results for the year ended February 28, 2022 (from March 1, 2021 to February 28, 2022)

(1) Consolidated operating results

Percentages indicate year-on-year changes

Net sales	Operating profit	Ordinary profit	Profit attributable to owners of parent
Year ended February 28, 2022 Year ended February 28, 2021	Millions of yen 30,985 29,511	% 5.0 (10.5)	Millions of yen 1,401 1,037	% 35.2 (37.7)	Millions of yen 1,333 1,006	% 32.5 (38.0)	Millions of yen 820 396	% 106.8 (60.3)

Note: Comprehensive income

Year ended Feb. 28, 2022

808 million yen (93.9%)

/Year ended Feb.28, 2021

416 million yen (ሺ59.9)%)

Earnings per share	Diluted earnings per share	Profit attributable to owners of parent/equity	Ordinary profit/total assets	Operating profit/net sales
Year ended February 28, 2022 Year ended February 28, 2021	Yen 81.05 39.19	Yen - -	% 17.6 9.1	% 9.1 6.7	% 4.5 3.5

(2) Consolidated financial position

Total assets	Net assets	Equity ratio	Net assets per share
As of February 28, 2022 As of February 28, 2021	Millions of yen 14,521 14,636	Millions of yen 4,901 4,407	% 33.8 30.1	Yen 484.23 435.40

Reference: Shareholders' equity

As of Feb.28, 2022

4,901 million yen

/As of Feb.28, 2021

4,407 million yen

(3) Consolidated cash flows

Cash flows from operating activities	Cash flows from investing activities	Cash flows from financing activities	Cash and cash equivalents at end of period
Year ended February 28, 2022 Year ended February 28, 2021	Millions of yen 2,608 1,042	Millions of yen (419) (354)	Millions of yen (1,296) (1,345)	Millions of yen 2,724 1,831

2. Cash dividends

Annual dividends per share	Total cash dividends (Total)	Dividend payout ratio (Consolidated)	Ratio of dividends to net assets (Consolidated)
1st quarter-end	2nd quarter-end	3rd quarter-end	Fiscal year-end	Total
Year ended February 28, 2021 Year ended February 28, 2022	Yen - -	Yen 0.00 0.00	Yen - -	Yen 31.00 31.00	Yen 31.00 31.00	Millions of yen 313 313	% 79.1 38.2	% 7.2 6.7
Year ending February 28, 2023 (Forecast)	-	0.00	-	31.00	31.00	37.6

3. Forecast of consolidated financial results for the year ending February 28, 2023 (from March 1, 2022 to February 28, 2023)

Percentages indicate year-on-year changes

Net sales	Operating profit	Ordinary profit	Profit attributable to owners of parent	Earnings per share
Full year	Millions of yen 34,500	% -	Millions of yen 1,450	% 3.4	Millions of yen 1,404	% 5.4	Millions of yen 830	% 1.2	Yen 82.06

Note: As the Company plans to apply the "Accounting Standard for Revenue Recognition" (Accounting Standards Board of Japan Statement No. 29), etc. from the beginning of the year ending February 28, 2023, the above forecasts of consolidated financial results are the amounts after these are applied, and year-on-year changes are not indicated.

4. Notes

(1) Changes in significant subsidiaries during the year ended February 28, 2022

No

(changes in specified subsidiaries resulting in the change in scope of consolidation):

Newly included: None Excluded: None

(2) 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: Changes in accounting policies due to other reasons:

Changes in accounting estimates:

Restatement of prior period financial statements:

No No No No

(3) Number of issued shares (common shares)

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

As of February 28, 2022 10,122,830 shares

As of February 28, 2021 10,122,830 shares

As of February 28, 2022

10,122,830 shares As of February 28, 2021

10,122,830 sharesNumber of treasury shares at the end of the period

As of February 28, 2022 122 shares

As of February 28, 2021 34 shares

122 shares As of February 28, 2021

As of February 28, 2022

34 shares

Average number of shares during the period

Year ended February 28, 2022 10,122,741 shares

Year ended February 28, 2021 10,122,827 shares

Year ended February 28, 2022 10,122,741 shares

Reference: Overview of non-consolidated financial results

1. Non-consolidated financial results for the fiscal year ended February 28, 2022 (March 1, 2021 to February 28, 2022)

(1) Non-consolidated operating results

Percentages indicate year-on-year changes

Net sales	Operating profit	Ordinary profit	Profit
Year ended February 28, 2022 Year ended February 28, 2021	Millions of yen 30,080 28,436	% 5.8 (11.3)	Millions of yen 1,405 998	% 40.8 (41.1)	Millions of yen 1,354 973	% 39.2 (41.5)	Millions of yen 844 391	% 115.6 (62.5)

Earnings per share	Diluted earnings per share
Year ended February 28, 2022 Year ended February 28, 2021	Yen 83.43 38.69	Yen - -

Earnings per share Diluted earnings per share

(2) Non-consolidated financial position

Total assets	Net assets	Equity ratio	Net assets per share
As of February 28, 2022 As of February 28, 2021	Millions of yen 14,441 14,425	Millions of yen 4,947 4,418	% 34.3 30.6	Yen 488.76 436.48

Reference: Shareholders' equity As of Feb.28, 2022 4,947 million yen / As of Feb.28, 2021 4,418 million yen

Note 1. These financial results are outside the scope of the quarterly review by a certified public accountant or audit corporation.

Note 2. Cautionary statement with respect to forward looking statements

Forward looking statements in this report are based on currently available information and certain assumptions judged to be reasonable. These statements are not promises by the Company regarding future performance. Actual results may differ significantly from these forecasts for a number of factors. For the assumptions that form the basis of the earnings forecasts and notes on the use of the earnings forecasts, refer to "1. Overview of Operating Results (4) Future Outlook" on page 3 of the attachment.

1. Overview of Operating Results

(1) Overview of Operating Results for the Fiscal Year Ended February 28,2022

During the fiscal year under review, Japan's economic activity was restricted as the COVID-19 pandemic remained and the state of emergency and priority measures to prevent the spread of disease were repeatedly introduced. Furthermore, the new variant called omicron emerged and the outlook of the economy remained uncertain.

In the apparel industry, to which we belong, corporate earnings were seen trending upward as the scale of suspension of retail outlets' operation was not as large as in the fiscal year ended February 28, 2021. However, customers' consumption activity and spending on leisure activities still remained sluggish and the recovery of earnings remained halfway to the level of earnings before the pandemic.

In such a business environment, the Group continued to operate business, working with shopping centers and department stores in which we have outlets, taking counter-COVID-19 measures daily and prioritizing safety and health of customers and employees.

Throughout the fiscal year, sales of physical outlets at shopping centers and department stores outperformed the levels in the previous fiscal year. However, six "petit main" stores were the only stores newly opened amid the spread of new coronavirus infection. Sales through the e-commerce channel increased only slightly from the level in the previous fiscal year, in which stay-at-home demand drove a strong year-on-year sales growth of 41.8%. This was because multiple shopping channels became available to customers as physical outlets, including shopping centers and department stores, were now constantly open. On the other hand, the share of the sales through the Company's online site increased 3.2% from a year earlier to 53.7% in the total e-commerce sales.

By brand, sales of the mainstay "petit main" shopping center brand maintained a more than 10% year-on-year growth throughout the year. Sales also remained solid throughout the year for the "PTPR" sets, which became a staple in the previous fiscal year. Products in collaboration with the "Curious George" and "miffy" characters, latter of which was introduced in the previous fiscal year, also drove sales. In terms of department store brands, sales of the "kate spade NEW YORK," "ANNA SUI mini," "Paul Smith JUNIOR," "mezzo piano Junior," and "pom ponette junior" all grew 10% year on year, driving the overall sales through the department store channel to exceed the year-earlier level.

The "LOVST" photo studio business opened five new outlets during the fiscal year under review and now operates a total of 10 outlets. While the business commands a high level of customer satisfaction after photo-shooting, its recognition remains low. It thus put effort into boosting recognition using social media, including Instagram.

During the fiscal year ended February 28, 2022, we opened 11 stores at department stores, six stores at shopping centers, and one outlet store. Store closures totaled 13 at department stores and five at shopping centers.

As a result of the above, for the fiscal year ended February 28, 2022, we recorded sales of 30,985 million yen (up 5.0% from the previous fiscal year), an operating profit of 1,401 million yen (up 35.2% from the previous fiscal year), an ordinary profit of 1,333 million yen (up 32.5% from the previous fiscal year), and a profit attributable to owners of parent of 820 million yen (up 106.8% from the previous fiscal year).

(2) Explanation of Financial Position

Assets

Current assets increased by 33 million yen from the end of the previous fiscal year to 8,197 million yen. This was mainly due to an increase of 892 million yen in cash and deposits and a decrease of 436 million yen in notes and accounts receivable-trade. Non-current assets decreased by 147 million yen from the end of the previous fiscal year to 6,324 million yen. This was primarily due to an increase of 28 million yen in property, plant and equipment as a result of an increase in leased assets and a decrease of 216 million yen in intangible assets as a result of a decrease in goodwill. As a result, total assets as of the end of the fiscal year ended February 28, 2022 decreased by 114 million yen from the end of the previous fiscal year to 14,521 million yen.

Liabilities

Current liabilities increased by 3,128 million yen from the end of the previous fiscal year to 8,711 million yen. This was mainly due to a decrease of 125 million yen in accounts payable-trade and an increase of 3,162 million yen in the current portion of long-term borrowings. Non-current liabilities decreased by 3,737 million yen from the previous fiscal year to 908 million yen. This was primarily due to a decrease of 3,790 million yen in long-term borrowings. As a result, total liabilities as of the end of the fiscal year ended February 28, 2022 decreased by 608 million yen from the end of the previous fiscal year to 9,620 million yen.

Net Assets

Net assets increased by 494 million yen from the end of the previous fiscal year to 4,901 million yen. This was mainly due to an increase of 506 million yen in retained earnings as a result of profit attributable to owners of parent and the payment of dividends.

(3) Status of Cash Flow

Cash and cash equivalents (hereinafter referred to as "net cash") at the end of the fiscal year ended February 28, 2022 were 2,724 million yen, an increase of 892 million yen compared to the end of the previous fiscal year.

Cash flows and factors that affected them in the fiscal year ended February 28, 2022 are described below.

Cash Flow from Operating Activities

Net cash provided by operating activities during the fiscal year ended February 28, 2022 resulted in a cash inflow of 2,608 million yen (compared to a cash inflow of 1,042 million yen in the previous fiscal year). This was primarily due to profit before income taxes of 1,321 million yen, depreciation of 524 million yen and a decrease in trade receivables of 428 million yen, a decrease in inventories of 463 million yen, and a decrease in trade payables of 125 million yen, amortization of goodwill of 230 million yen, and income taxes paid of 536 million yen.

Cash Flow from Investment Activities

Net cash used in investment activities during the fiscal year ended February 28, 2022 resulted in a cash outflow of 419 million yen (compared toa cash outflow of 354 million yen in the previous fiscal year). This was primarily due to a cash outflow consisting of purchase of property, plant and equipment of 100 million yen, purchase of intangible assets of 111 million yen and payments of guarantee deposits of 161 million yen.

Cash Flow from Financing Activities

Net cash used in financing activities during the fiscal year ended February 28, 2022 resulted in a cash outflow of 1,296 million yen (compared to a cash outflow of 1,345 million yen in the previous fiscal year). This was primarily due to a cash outflow consisting of repayments of long-term borrowings of 628 million yen, repayments of lease obligations of 354 million yen and dividends paid of 313 million yen.

(4) Future Outlook

The below table shows consolidated earnings forecasts for the fiscal year ending February 28, 2023.

(Millions of yen)Year ended February 28,

2022 (actual)Year ending February 28, 2023 (forecast)

Difference (amount)

Difference (%)Net sales (old standard)* Net sales (new standard)* Operating profit Ordinary profit Profit attributable to owners of parent

30,985

-

32,023 34,500

1,038

3.4%

-

-

1,401

1,450 48 3.4%

1,333

1,404 71 5.4%

820

830 10 1.2%

* The Company plans to apply the "Accounting Standard for Revenue Recognition" (Accounting Standards Board of Japan Statement No.

29), etc. ("Revenue Recognition Standard") from the beginning of the year ending February 28, 2023.

The "net sales (old standard)" figures are net sales amounts based on the previous accounting standard, while the "net sales (new standard)" figure is the sales amount under the Revenue Recognition Standard.

During the fiscal year ended February 28, 2022, the apparel industry continued to face the COVID-19 pandemic, which left consumer sentiment remaining at low levels. In the market for children's clothing, where the Group belongs, occasion-specific demand for children's clothing recovered as school events, etc. were held with counter-infection measures, rather than many of them being canceled, which was the case in the previous fiscal year. However, infection of the omicron variant, which emerged toward the end of last year, led to a severe environment as it spread mainly to daycare facilities and primary schools, forcing them to scale down events for children.

Going forward, we see little chance the risk of the spread of the new coronavirus infection may decrease and do not expect children's events to return to the state before the pandemic. Furthermore, rises in energy and logistic costs and purchase price hikes have continued, making it difficult for us to be optimistic about economic recovery going forward. We thus believe the business environment will become even more difficult.

In such an environment, the Group aims to maintain growth by responding flexibly to changes in the business environment. Specifically, we plan to maximize sales opportunities by further brushing up on the multichannel measures, in which the Company excels, and providing our products into each channel at the right time.

The following describes issues we need to address in respective sales channels.

Maximizing Sales Opportunities in E-commerce Channel

Sales through the e-commerce channel increased 100.1% year on year in the fiscal year under review. We moved warehouses and updated the logistic systems in September, speeding up delivery, but failed to significantly improve costs as sales for the year under review did not reach our target. In terms of sales mix, sales through our online sites were relatively strong, but sales through external sites did not grow as we had expected.

In the next fiscal year, we aim to work on external sites, which face tough competition, by updating the "Lycée mine." brand and release it afresh as a baby and toddler brand available only through the e-commerce channel. In addition, we will work to speed up the sales process by transferring responsibilities of purchasing, inventory and sales to each brand and maximize sales opportunities.

Shopping Center Brands

Sales increased 106.4% year on year in the fiscal year under review. The existing stores under our "petit main" brand for babies and toddlers performed relatively strongly, having opened six new stores. We plan to open additional three new stores in the fiscal year ending February 28, 2023. On the other hand, sales of the "Lovetoxic" junior brand failed to reach the level achieved in the previous fiscal year. To address this situation, in the next fiscal year, we aim to bolster strategies in collaboration with characters and films popular with the junior generation and, as a new measure, feature "Lovetoxic Girls," or junior high school girls hired through open recruitment, on our e-commerce sites, TikTok channel, etc. and strengthen communication with customers.

Department Store Brands

Sales grew 105.8% year on year in the fiscal year under review. We expect sales to increase again in the next fiscal year. We will work to improve precision of product planning and purchasing to achieve stable growth for the brands that performed strongly in the fiscal year under review, namely: "kate spade NEW YORK," "ANNA SUI mini," and "Paul Smith JUNIOR," as well as "pom ponette junior" and "mezzo piano Junior," which have been driven by solid occasion-specific demand. As structural reforms have established a structure that enables contribution in operating profit, we will maintain it.

Photo Studio Business

The plan is to open two additional outlets in the next fiscal year for a total of 12 outlets. As a survey conducted on customers after photo-shooting sessions indicated high level of satisfaction, we think the key issue for this business is boosting its recognition and taking effective measures of promoting it. For this, we plan to deploy email newsletters, social media, etc. in a systematic manner. We will also work to build chain operations, standardize high quality and introduce effective operational structures.

Efforts on ESG Management

As part of its SDGs efforts, the Group aims to continue undertaking support activities to ensure all children can have a dream and be happy.

In the fiscal year under review, the Group made donations to a group that supports "Kodomo Shokudo," or Children's Cafeteria. In addition, we ran a program in collaboration with single-mother family support centers in which single-mother families were invited to LOVST photo studios where they had their photos taken for free.

In the next fiscal year, we plan to launch a new recycling program and an employee volunteering program. We will introduce a program in which our Group employees interact with children in exciting activities. Specifically, we will hold an event in which our Group employees give a lecture and make one-and-only T-shirts for them.

In the next fiscal year, we plan to again run a program in which our Group employees can have actual experiences of directly stimulating children's imagination and giving them happiness.

Capital Tie-up with World Co., Ltd.

On February 21, 2022, the Company became a consolidated subsidiary of World Co., Ltd. Starting in the next fiscal year, we will carry out projects to achieve synergy effects, including improvement in administrative operations, development of logistic networks, consideration of new businesses, under a capital tie-up deal.

2. Basic Approach Regarding Choice of Accounting Standards

Considering the burden of establishing the framework for preparing consolidated financial statements in compliance with IFRS, the Group uses Japanese accounting standards.