PAL : Consolidated Financial Results for the Three Months Ended May 31,2021

Consolidated Financial Results

for the Three Months Ended May 31, 2021

[Japanese GAAP]

July 13, 2021

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: July 14, 2021

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 Three Months Ended May 31, 2021 (March 1, 2021 to May 31, 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	%
Three months ended	31,210	97.1	1,793	―	1,757	―	1,030	―
May 31, 2021
Three months ended	15,834	(53.6)	(3,088)	―	(3,224)	―	(2,200)	―
May 31, 2020
(Note) Comprehensive income: Three months ended May 31, 2021: ¥1,041 million [―%]
		Three months ended May 31, 2020: ¥(2,260) million [―%]
		Basic earnings per	Diluted earnings per
		share	share
			yen		yen
Three months ended		23.45		―
May 31, 2021
Three months ended		(50.08)		―
May 31, 2020
(2) Consolidated Financial Position
		Total assets	Net assets	Equity ratio
		million yen	million yen		%
As of May 31, 2021			103,552		44,294		42.8
As of February 28,			108,186		44,351		41.0
2021

(Reference) Equity: As of May 31, 2021: ¥44,294 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		―
February 28, 2022
Fiscal year ending
February 28, 2022			0.00		―	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 to	Basic earnings
	owners of parent	per share
	million yen	%	million yen	%	million yen	%	million yen	%	yen
First half	63,000	39.5	1,850	―	1,700	―	800	―	18.21
Full year	134,000	23.5	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 May 31, 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 May 31, 2021	2,346,236 shares
	As of February 28, 2021	2,346,134 shares
3) Average number of shares during the period:
	Three months ended May 31, 2021	43,925,796 shares
	Three months ended May 31, 2020	43,937,939 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

1

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

(1) Explanation of Operating Results

During the three months ended May 31, 2021 (March 1, 2021 to May 31, 2021), in Japan, although the second state of emergency declaration was lifted in March, the third state of emergency was declared in April. As it was difficult to tell when COVID-19 would be contained, the outlook also remained uncertain.

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. The Company also focused on the lifestyle miscellaneous goods/accessories brand centered on 3COINS to respond to stay-at-home demand.

During the first quarter ended May 31, 2020, after the declaration of a state of emergency on April 7, the rate of closure of our stores was nearly 70% by the end of the first quarter. During the first quarter ended May 31, 2021, however, the rate of store closure decreased to as low as 25% after the declaration of a state of emergency on April 24. As a result, net sales in the Apparel Business increased by 69.4% year on year to ¥19,961 million, and net sales in the Miscellaneous Goods/Accessories Business increased by 177.9% year on year to ¥11,224 million. In addition, EC sales on which we made every effort increased by more than 40% year on year. In particular, sales of PAL CLOSET, our own e-commerce website, increased by nearly 55% year on year.

As a result of the above, as for operating results for the three months ended May 31, 2021, the Company recorded net sales of ¥31,210 million (97.1% increase year on year), operating profit of ¥1,793 million (operating loss of ¥3,088 million for the previous corresponding period), ordinary profit of ¥1,757 million (ordinary loss of ¥3,224 million for the previous corresponding period), and profit attributable to owners of parent of ¥1,030 million (loss attributable to owners of parent of ¥2,200 million for the previous corresponding period).

1. Explanation of Financial Position (Assets)
   Current assets decreased by ¥4,324 million compared with the end of the previous fiscal year, due mainly to decreases in cash and deposits by ¥5,386 million and income taxes receivable by ¥446 million, despite an increase in merchandise and finished goods by ¥1,912 million.
   Non-current assets decreased by ¥310 million compared with the end of the previous fiscal year, due primarily to a decrease in guarantee deposits by ¥428 million, despite an increase in leased assets by ¥164 million. (Liabilities)
   Current liabilities decreased by ¥4,652 million compared with the end of the previous fiscal year, due mainly to a decrease in notes and accounts payable - trade by ¥5,512 million, despite an increase in provision for bonuses by ¥783 million.
   Non-current liabilities increased by ¥75 million compared with the end of the previous fiscal year, due primarily to an increase in long-term lease obligations by ¥144 million.
   (Net assets)
   Net assets decreased by ¥57 million compared with the end of the previous fiscal year, due mainly to a decrease in retained earnings by ¥67 million resulting from paying the year-end dividend of ¥1,098 million for the previous fiscal year, despite profit of ¥1,030 million.

2