Results for 1Q-3Q of Fiscal 2022: Supplementary Materials

Third Quarter of Fiscal 2022 Supplementary Material

POLA ORBIS HOLDINGS INC.

Corporate Officer

PR, IR, CSR and Sustainability

Naotaka Hashi

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.

• POLA ORBIS HOLDINGS INC. has applied Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020), etc. from fiscal 2022.
• Regarding the results for fiscal 2021:
  The results for fiscal 2021 presented in this presentation have been calculated using the same accounting standards as those in fiscal 2022, and are shown as reference information (unaudited) for the purpose of comparison.

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1. Highlights of Consolidated Performance
2. Segment Analysis
3. Forecasts for Fiscal 2022
4. Initiatives Going Forward & Appendices

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Q3 Key Topics

Cosmetics Market

• The scale of the Japanese cosmetics market (including exports) as a whole was robust.
• The recovery trend continued in the Japanese market, except for inbound demand, with signs of a return in customer traffic.
• In the overseas market, mainland China continued to suffer the impact of lockdowns, etc.

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

Our Group

• The recovery trend continued after a low in the first quarter.
• For POLA, as consignment sales in Japan showed signs of a recovery, domestic sales is reaching almost similar levels to the previous year in the third quarter (July to September). Revenue declined overseas, partly due to the impact of COVID-19 in mainland China and the suppression on shipment to duty free stores in South Korea (down ¥2.8 bil.).
• ORBIS's revenue fell, but the decline in customer numbers slowed.
• In overseas brands, losses were ameliorated for Jurlique, excluding the impact of exchange rates.

Medium-term Management

Plan Indicators (FY2022 Q3 YTD)

Overseas sales ratio	16.7%
(-2.0ppt*)
Domestic e-commerce	27.1%
sales ratio	(+1.3ppt*)
	*vs Dec. 2021

YoY Change in Consolidated Net Sales (same-standard basis)

Jan.-Mar.Apr.-Jun.Jul.-Sep.

(%)	-11.9%	-6.9%	-1.8%
10
0
-10
			Month by month
-20			Cumulative total

• In Japan, an increase in opportunities to go out led to a recovery in customer traffic.
• Overseas, intermittent lockdowns occurred and restrictions on storefront operations continued in mainland China.

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Consolidated P&L Changes Analysis

Net Sales to Operating Income

	FY2021	FY2022	YoY Change
(mil. yen)	Q3 Results (YTD)	Q3 Results (YTD)	Amount		%
(recalculated under the
	2022 standard)
Consolidated net sales	128,560	119,654	(8,905)		(6.9%)
Cost of sales	22,479	21,795	(683)		(3.0%)
Gross profit	106,080	97,859	(8,221)		(7.8%)
SG&A expenses	94,661	90,190	(4,470)		(4.7%)
Operating income	11,419	7,668	(3,750)		(32.8%)

Key Factors

 Consol. net sales	Decreased on a consolidated basis, mainly due to a decrease in revenue from POLA and ORBIS.
 Cost of sales	Cost of sales ratio deteriorated due to lower sales ratio from POLA.
	Cost of sales ratio FY2021 Q3 : 17.5% ⇒ FY2022 Q3 : 18.2%
 SG&A expenses	Labor expenses: up ¥443 mil. YoY
	Sales commissions: down ¥1,646 mil. YoY
	⇒ Decreased due to lower POLA consignment sales.
	Sales related expenses: down ¥1,403 mil. YoY
	Administrative expenses, etc.: down ¥1,864 mil. YoY
 Operating income	Operating margin FY2021 Q3: 8.9% ⇒ FY2022 Q3: 6.4%

Note: FY2021 Q3 (YTD) results are presented for reference only (unaudited).

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