Results for the First Quarter of Fiscal 2021: Supplementary Materials

First Quarter of Fiscal 2021 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 2021
4. Initiatives Going Forward & Appendices

1

Q1 Key Topics

Cosmetics Market

• The overall size of the Japanese cosmetics market (including exports) continued to shrink due to the impact of COVID-19
• Inbound demand was sluggish due to Japanese border entry restrictions
• The outlook for the net domestic market remains unclear, with the declaration of another state of emergency in some regions by the Japanese government on January 8, which was lifted only to be reimposed on April 25

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 increased, thanks to a strong performance	Medium-term Management
	from POLA overseas, and growth in e-commerce across each brand	Plan Indicators (2021Q1)
	POLA overseas revenue increased (+63% YoY), with high growth continuing in China	Overseas sales ratio	18.3%
	（＋3.3ppt*）
 ORBIS revenue and income decreased, with little activity from existing customers
Domestic e-commerce
 Jurlique China revenue increased, and losses were improved	26.5%
sales ratio	（＋2.6ppt*）
 Achieved a profit in overseas business across the Group
	*vs Dec. 2020

• Acquired tricot, Inc. as a subsidiary on April 1 (not reflected in the consolidated results forecast)

YoY Change in Consolidated Monthly Net Sales

• Impacted by the declaration of a state of emergency, revenue

(%)	Jan.	Feb.	Mar.	decreased in January-February 2021 compared to the high
						level achieved in the same period in the previous year, which
	10
						was before the impact of the COVID-19 pandemic

 Results for the first quarter slightly exceeded the plan, as

0

strong performance from POLA overseas and e-commerce

Monthly net sales YoY

across each brand compensated for a decline in revenue in

(month by month)

domestic storefront operations

-10

Monthly net sales YoY

2

(cumulative

total)

Consolidated P&L Changes Analysis

Net Sales to Operating Income

	FY2020	FY2021	YoY Change
(mil. yen)	Q1 Results	Q1 Results	Amount		%
Consolidated net sales	43,316	43,561	245		0.6%
Cost of sales	7,106	6,399	(706)		(9.9%)
Gross profit	36,210	37,162	951		2.6%
SG&A expenses	34,204	32,854	(1,349)		(3.9%)
Operating income	2,006	4,307	2,301		114.7%

	Key Factors
	sales	Increased, as e-commerce and overseas operations compensated for
Consol. net
			the decrease in revenue from storefront operations
 Cost of sales	Cost of sales ratio improved due to an increase in the contribution
			from POLA's high price range products
			Cost of sales ratio 2020Q1 : 16.4% ⇒ 2021Q1 : 14.7%
 SG&A expenses	Labor expenses: down ¥129 mil. YoY
			Sales commissions: down ¥ 1,031 mil. YoY
			⇒ Resulted from a sales decline at POLA consignment sales channel.
			Sales related expenses: down ¥365 mil. YoY
			⇒ Reduced due to expense rationalization
			Administrative expenses, etc.: up ¥177 mil. YoY
 Operating income	Operating margin 2020Q1: 4.6% ⇒ 2021Q1: 9.9%

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Consolidated P&L Changes Analysis

Operating Income to Profit Attributable to Owners of Parent

			FY2020	FY2021	YoY Change
(mil. yen)	Q1 Results	Q1 Results	Amount	%
Operating income	2,006	4,307	2,301	114.7%
	Non-operating income	88	1,518	1,429	-
	Non-operating expenses	2,248	62	(2,186)	(97.2%)
Ordinary income	(154)	5,763	5,917	-
	Extraordinary income	0	0	0	(74.9%)
	Extraordinary losses	744	210	(533)	(71.7%)
Profit before income	(898)	5,552	6,450	-
taxes
	Income taxes etc.	352	1,600	1,247	353.8%
	Profit attributable to	(4)	11	15	-
	non-controlling interests
Profit attributable to	(1,246)	3,939	5,186	-
owners of parent
	Key Factors
 Non-operating income:	Foreign exchange gain ¥1,396 mil.
 Extraordinary losses:	Impairment loss related to storefront operations ¥185 mil.

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