PAL : Consolidated Financial Results for the Nine Months Ended November 30,2021

Consolidated Financial Results

for the Nine Months Ended November 30, 2021

[Japanese GAAP]

January 12, 2022

Company name: PAL GROUP Holdings CO., LTD.

Stock exchange listing: Tokyo Stock Exchange

Code number: 2726

URL: http://www.palgroup.holdings/

Representative: Ryuta Inoue, President and Representative Director

Contact: Toshio Fujii, Executive Officer and General Manager of Finance and Accounting Department

Phone: [phone]

Scheduled date of filing quarterly securities report: January 13, 2022

Scheduled date of commencing dividend payments: ―

Availability of supplementary briefing material on quarterly financial results: Not available

Schedule of quarterly financial results briefing session: Not scheduled

(Amounts of less than one million yen are rounded down.)

1. Consolidated Financial Results for the Nine Months Ended November 30, 2021 (March 1, 2021 to November

30, 2021)
(1) Consolidated Operating Results		(% indicates changes from the previous corresponding period.)
			Net sales	Operating profit	Ordinary profit	Profit attributable to
			owners of parent
			million yen	%	million yen	%		million yen	%		million yen	%
	Nine months ended	98,512	27.8	5,633	288.4		5,720	366.3		3,680	521.2
	November 30, 2021
	Nine months ended	77,059	(22.7)	1,450	(81.9)		1,226	(84.7)	592	(90.8)
	November 30, 2020
(Note) Comprehensive income: Nine months ended November 30, 2021: ¥3,688 million [523.6%]
			Nine months ended November 30, 2020: ¥591 million [(90.9)%]
			Basic earnings per	Diluted earnings per
			share	share
				yen		yen
	Nine months ended		83.80		―
	November 30, 2021
	Nine months ended		13.49		―
	November 30, 2020
(2) Consolidated Financial Position
			Total assets	Net assets	Equity ratio
			million yen	million yen		%
		As of November 30,		95,940		47,038			49.0
		2021
		As of February 28,		108,186		44,351			41.0
		2021
(Reference) Equity: As of November 30, 2021: ¥46,963 million
		As of February 28, 2021: ¥44,351 million

2. Dividends

						Annual dividends
			1st quarter-end		2nd quarter-end		3rd quarter-end	Year-end	Total
			yen		yen		yen	yen	yen
	Fiscal year ended		―		0.00		―	25.00	25.00
	February 28, 2021
	Fiscal year ending		―		0.00		―
	February 28, 2022
	Fiscal year ending
	February 28, 2022							50.00	50.00
	(Forecast)
(Note) Revision of dividend forecast: No

3. Consolidated Financial Results Forecast for the Fiscal Year Ending February 28, 2022 (March 1, 2021 to February 28, 2022)

(% indicates changes from the previous corresponding period.)

	Net sales		Operating profit	Ordinary profit	Profit attributable	Basic earnings
		to owners of parent	per share
	million yen	%	million yen	%	million yen	%	million yen	%	yen
Full year	131,000	20.7	7,400	434.8	7,100	574.3	3,900	1,340.4	88.79

(Note) Revision of consolidated financial results forecast: No

* Notes

1. Changes in significant subsidiaries during the period under review: No
2. Adoption of special accounting methods for preparing quarterly consolidated financial statement: No
3. Changes in accounting policies, changes in accounting estimates and corrections of errors
4. 1. Changes in accounting policies due to the revision of accounting standards: No
   2. Any changes other than 1) above: No
   3. Changes in accounting estimates: No
   4. Corrections of errors: No
5. Total number of issued shares (common shares)
6. 1. Total number of issued shares at the end of the period (including treasury shares):

	As of November 30, 2021	46,272,000 shares
	As of February 28, 2021	46,272,000 shares
2) Total number of treasury shares at the end of the period:
	As of November 30, 2021	2,346,244 shares
	As of February 28, 2021	2,346,134 shares
3) Average number of shares during the period:
	Nine months ended November 30, 2021	43,925,771 shares
	Nine months ended November 30, 2020	43,929,975 shares

• These quarterly consolidated financial results are not covered by the quarterly review conducted by certified public accountants or audit corporations.
• Explanation of the proper use of financial results forecast and other notes
  The statements regarding financial results forecast in this report are based on the information that is available, as well as estimates, assumptions and projections that are believed to be reasonable at the time of publication, and do not guarantee the achievement of the projections. Therefore, there might be cases in which actual results differ from forecast values.

Appendix
1. Qualitative Information on Consolidated Financial Results for the Period under Review	2
(1)	Explanation of Operating Results	2
(2)	Explanation of Financial Position	2
(3)	Explanation of Consolidated Financial Results Forecast and Other Future Projections	3
2. Consolidated Financial Statements	4
(1)	Consolidated Balance Sheets	4
(2)	Consolidated Statements of Income and Comprehensive Income	6
3. Additional Information	8
(1)	Sales Results by Segment (Consolidated)	8
(2)	Status of Stores (Consolidated)	8

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1. Qualitative Information on Consolidated Financial Results for the Period under Review

(1) Explanation of Operating Results

During the nine months ended November 30, 2021 (March 1, 2021 to November 30, 2021), the Japanese economy suffered from the declaration of a state of emergency across several prefectures and the implementation of priority preventative measures, which had a significant impact on personal consumption. The lifting of the state of emergency and all priority preventative measures on September 30 has increased customer traffic in stores, and conditions are on their way to recovery. However, the outlook remains uncertain, with an increase in COVID-19 cases due to the emergence of new variants.

Under such a business environment, the Company made every effort to strengthen EC sales to make up for the decline in customer traffic, while securing the health and safety of its employees. At the same time, the Company focused on the lifestyle miscellaneous goods/accessories brand centered on 3COINS to respond to stay-at-home demand. As a result of these measures, net sales in the Apparel Business increased by 15.8% year on year to ¥62,984 million, and net sales in the Miscellaneous Goods/Accessories Business increased by 56.9% year on year to ¥35,456 million. In addition, EC sales increased by 41.2% year on year. In particular, sales of PAL CLOSET, our own e-commerce website, increased by 62.2% year on year.

As a result of the above, net sales for the nine months ended November 30, 2021 increased by 27.8% year on year to ¥98,512 million. In terms of profit, the gross profit margin increased by 0.1 percentage point year on year to 55.9%. Operating profit increased by ¥4,182 million year on year to ¥5,633 million, ordinary profit increased by ¥4,494 million year on year to ¥5,720 million, and profit attributable to owners of parent increased by ¥3,088 million year on year to ¥3,680 million.

1. Explanation of Financial Position (Assets)
   Current assets decreased by ¥10,979 million compared with the end of the previous fiscal year, due mainly to a decrease in cash and deposits by ¥14,412 million, despite increases in notes and accounts receivable - trade by ¥2,503 million and merchandise and finished goods by ¥2,094 million.
   Non-current assets decreased by ¥1,266 million compared with the end of the previous fiscal year, due primarily to decreases in guarantee deposits by ¥797 million, deferred tax assets by ¥431 million, and land by ¥149 million, despite an increase in leased assets by ¥349 million.

(Liabilities)

Current liabilities decreased by ¥14,485 million compared with the end of the previous fiscal year, due mainly to decreases in short-term borrowings by ¥15,000 million and notes and accounts payable - trade by ¥2,784 million, despite increases in accrued expenses by ¥2,012 million and income taxes payable by ¥1,254 million. Non-current liabilities decreased by ¥447 million compared with the end of the previous fiscal year, due primarily to a decrease in long-term borrowings by ¥827 million, despite an increase in long-term lease obligations by ¥310 million.

(Net assets)

Net assets increased by ¥2,687 million compared with the end of the previous fiscal year, due mainly to an increase in retained earnings by ¥2,582 million.

2