Results for 1Q-3Q of Fiscal 2020: Supplementary Materials

Third Quarter of Fiscal 2020 Supplementary Material

POLA ORBIS HOLDINGS INC.

Director

Finance, Legal & Administration,

PR, IR and CSR

Akira Fujii

This report contains projections of performance and other projections based on information currently available and certain assumptions judged to be reasonable. Actual performance may differ materially from these projections resulting from changes in the economic environment and other risks and uncertainties.

1. Highlights of Consolidated Performance
2. Segment Analysis
3. Forecasts for Fiscal 2020
4. Initiatives Going Forward & Appendices

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Q3 Key Topics

Cosmetics Market

• The overall size of the Japanese cosmetics market, including exports, fell dramatically due to the impact of COVID-19
• Inbound demand, which had accounted for approximately 6% of the Company's net sales, continued to drop significantly due to a decrease in foreign visitors to Japan
• Specifically, sales of makeup struggled in the market, partially due to the normalization of mask-wearing and the impact of widespread telecommuting
• The effects of deteriorating consumer sentiment were seen in the net domestic market, and the future outlook remains unclear

Our Group

*Source: Ministry of Economy, Trade and Industry, Ministry of Internal Affairs and Communications, Japan Tourism Agency, Japan Department Stores Association, and Intage SLI

• Consolidated revenue and income decreased, due to the impact of the previous year's last- minute demand driven by the consumption tax hike, in addition to the impact of COVID-19
• Storefront operations struggled, particularly in the POLA consignment sales channel, with consumers continuing to refrain from outdoor activities
• POLA overseas revenue increased with the China business performed strongly, also Japan domestic e-commerce business achieved double-digit revenue
• ORBIS revenue decreased, but new mail-order (online and catalog) customer acquisition continued to progress well
• In overseas brands, online sales were strong in the Jurlique China business

Ratio of Inbound Sales

to Consolidated Net Sales

FY2018 (Full year)	Approx. 7％
FY2019 (Full year)	Approx. 6％
FY2020 Q3	Approx. 2％

			Quarterly Consolidated Sales					Quarterly Operating Income
80,000					65,736				16,000				13,159
		59,526		59,544			12,000
60,000			57,806			9,943			9,462		9,232 9,175
		52,440	55,282
				43,316	40,485	42,012	8,000		6,773
40,000									3,875
								4,000					3,340
											2,006
20,000									0
2018	2019	2020	2018 2019 2020	2018 2019	2020	(mil. yen)	2018	2019	2020	2018	2019	2020 2018 2019 2020
(mil. yen)	Q1		Q2	Q3				Q1			Q2		Q3	2

Impact of COVID-19 in Q3

Business Situation in Q3		Monthly Progress

Consignment

sales

 Conditions remained difficult for new	 YoY Change in Consolidated Monthly Net Sales
customer acquisition

• Utilized online counseling, maintained and

Department

stores

Domestic

e-commerce

strengthened relationships with customers

• POLA and Brands under development: Storefront sales struggled due to decreased store traffic and continuing to refrain from providing trial use of cosmetics
• ORBIS and DECENCIA: New customer acquisition progressed well
• POLA and Brands under development: Response to COVID-19,e-commerce was strengthened, and performed strongly (POLA up 60%, THREE up 111% during the first nine month period)

(％)	Jan1月. Feb2月. Mar3月.	Apr4月.	May5月 . Jun6月.	Jul7月.	Aug8月 . Sep9月 .
0
				Real YoY change, excluding the
-10				previous year's last-minute demand
				driven by the consumption tax hike

-20

-30

-40

China

Duty-free

• POLA and Jurlique: Strengthened e-commerce business
• POLA: New store openings continued, building a base to accelerate growth after the COVID-19 crisis has passed
• POLA, Jurlique, and Brands under development: Business conditions remained difficult, due to a significant decrease in international flights
• POLA: sales grew in South Korea
  Jurlique: sales grew in Hainan, China

• Conditions bottomed-out in April - May
• Sales recovered significantly in June, with the lifting of Japan's State of Emergency, but the recovery in storefront operations has been hampered by the emergence of a second wave of infections since July

The speed of recovery in performance has been slower than we originally anticipated

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