Treasure Factory : Consolidated Financial Results for the Six Months Ended August 31, 2021(Japanese Accounting Standards)

Consolidated Financial Results for the Six Months Ended August 31, 2021

(Japanese Accounting Standards)

		October 13, 2021
Company name	Treasure Factory Co., Ltd.	Listings The First Section of the Tokyo Stock Exchange
Securities code	3093	URL: https://www.treasurefactory.co.jp/
Representative	President & CEO, Eigo Nosaka
Contact	Director & Manager-Corporate Planning, Eiji Kobayashi
Telephone	[phone]

Submission of statutory quarterly financial report:

October 13, 2021

Commencement of dividend payments:

November 1, 2021

Supplementary documents for quarterly results:

Yes

Quarterly results briefing:

Yes (for institutional investors and analysts)

(Amounts in millions of yen rounded down to the nearest million yen)

1. Results for the six months ended August 31, 2021 (March 1, 2021 to August 31, 2021)

(1) Operating results

(Percentage figures represent year-on-year changes)

Profit attributable to owners of

Net sales

Operating profit

Ordinary income

parent

million yen

%

million yen

%

million yen

%

million yen

%

FY2022 Q2

10,736

28.2

155

－

181

－

45

－

FY2021 Q2

8,377

(7.6)

(263)

－

(222)

－

(266)

－

(Note) Comprehensive income:

FY2022 Q2

38

million yen

(-%)

FY2021 Q2

(264)

million yen

(-%)

Profit per share

Diluted profit per share

yen

yen

FY2022 Q2

4.03

－

FY2021 Q2

(23.51)

－

(2) Financial position

Total assets

Net assets

Equity capital ratio

million yen

million yen

%

FY2022 Q2

10,598

4,326

40.0

FY2021

10,417

4,311

41.1

(Reference) Shareholders' equity:

FY2022 Q2

4,238

million yen

FY2021

4,284

million yen

2. Dividends

Dividend per share

End of 1st quarter

End of 2nd quarter

End of 3rd quarter

Fiscal year end

Total

yen

yen

yen

yen

yen

FY2021

－

2.00

－

8.00

10.00

FY2022

－

8.00

FY2022 (forecast)

－

8.00

16.00

(Note) Revisions to dividend forecast published most recently: No

3. Results forecast for the fiscal year ending February 28, 2022 (March 1, 2021 to February 28, 2022)

(Percentage figures represent year-on-year changes)

Profit attributable to

Profit per share

Net sales

Operating profit

Ordinary income

owners of parent

million yen

%

million yen

%

million yen

%

million yen

%

yen

Full year

22,636

20.8

804

652.2

818

367.6

537

－

47.50

(Note) Revisions to results forecast published most recently: No

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* Notes

(1) Changes in important subsidiaries during the three months of the current consolidated cumulative period under review (changes in specified subsidiaries that caused changes in the scope of consolidation): None

Number of new companies (their names): Number of excluded companies (their names):

(2) Adoption of accounting unique to the preparation of quarterly consolidated financial statements: None

(3) Changes to accounting policies, changes of accounting estimates, and revisions and restatements [1] Changes in accounting policies in accordance with changes in accounting principles: None

[2] Changes in accounting policies other than [1] above: None

[3] Changes in accounting estimates: None

[4] Revisions and restatements: None

(4) Number of shares issued and outstanding (common stock)

[1] Number of shares issued at period-end	As of Aug. 31, 2021	11,598,800	shares	FY2021	11,598,800	shares
(including treasury shares)
[2] Treasury shares at period-end
As of Aug. 31, 2021	386,131	shares	FY2021	386,131	shares
[3] Average number of shares issued during the
As of Aug. 31, 2021	11,212,669	shares	As of Aug. 31, 2020	11,315,769	shares
period

* These quarterly financial results are outside the scope of quarterly review procedures conducted by a certified public accountant or audit corporation.

* Explanation of the proper use of financial results forecast and other notes

Information relating to forecasts stated in this document was based on information available at the time of publication of the document. Actual results may differ materially from the forecasts due to a range of factors. For further information about the results forecast, please refer to (3) Explanation regarding the Information on Forecast including Consolidated Forecasts in 1. Qualitative Information about the Quarterly Financial Results on Page 3 of the attached material.

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○ Table of Contents (Attachment)

1. Qualitative Information about the Quarterly Financial Results ………………………………………………………………	4
(1)	Explanation regarding the Non-consolidated Results of Operations ……………………………………………………	4
(2)	Explanation regarding the Non-consolidated Financial Position …………………………………………………………	5
(3)	Explanation regarding the Information on Forecast including Consolidated Forecasts …………………………………	5
2. Quarterly Consolidated Financial Statements and Main Notes ………………………………………………………………	6
(1)	Quarterly Consolidated Balance Sheet ……………………………………………………………………………………	6
(2)	Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income ……	8
(3)	Quarterly Consolidated Statement of Cash Flows ………………………………………………………………………	10
(4)	Notes on the Quarterly Consolidated Financial Statements ……………………………………………………………… 11
	(Notes on Going Concern Assumption) …………………………………………………………………………………	11
	(Notes on Substantial Changes in the Amount of Shareholders' Equity) ………………………………………………	11
	(Segment Information, etc.) ……………………………………………………………………………………………	11
	(Material Post-Balance Sheet Events) …………………………………………………………………………………	12

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1. Qualitative Information about the Quarterly Financial Results

(1) Explanation regarding the Non-consolidated Results of Operations

During the second quarter of the current consolidated cumulative period, a state of emergency was issued several times in Japan due to the novel coronavirus pandemic. Restrictions on economic activities were applied only to specific regions and types of businesses, and thus overall consumption has been picking up. That said, consumption that had been heading for recovery until July temporarily slowed down in August because of a rapid rise in coronavirus cases in late July. Nevertheless, demand for purchases by neighborhood reuse stores remained steady as decluttering homes became part of people's lives and their need for selling used items grew. In regard to sales, there remained considerable needs of consumers to buy daily necessities at bargain prices and to replace household goods to create a comfortable home environment.

With this great demand for reuse, the Treasure Factory Group opened nine directly-managed stores as it fully resumed new store openings. Furthermore, purchases through our channels (e.g., in-store,home-delivery, and home-visit purchases) grew, boosting the sales at new and existing stores. In regard to Group companies, from January 2021, sales of PickUP JAPAN were included in our financial results. In addition, Kindal, which engages in the reuse business, is seeing its sales heading for recovery, although the sales of products and services for international visitors remain slow. Selling, general and administrative expenses for new stores increased ¥155,658 thousand year on year as non-consolidated store openings went well. Moreover, ¥64,000 thousand was recorded as share-based remuneration expenses that accompanied the issuance of performance-linked share acquisition rights.

Consequently, the results of operations for the second quarter of the current consolidated cumulative period show net sales of ¥10,736,162 thousand (up 28.2 percent year on year), operating profit of ¥155,229 thousand (the same period of the previous year saw operating loss of ¥263,378 thousand), ordinary profit of ¥181,202 thousand (the same period of the previous year saw ordinary loss of ¥222,178 thousand), and quarterly profit of ¥45,187 thousand attributable to owners of the parent (the same period of the previous year saw quarterly loss of ¥266,079 thousand attributable to owners of the parent).

The results of operations sorted by segment are as stated below. (Reuse Business)

Consolidated sales increased 28.2 percent year on year, non-consolidated sales increased 17.1 percent year on year, and non- consolidated sales at existing stores increased 11.3 percent year on year. In terms of sales by category, apparel sales, which were greatly affected by the pandemic during the same period last year, made a recovery and increased 29.4 percent year on year, and sales of household items increased 15.3 percent year on year. As for electric appliances, sales dropped after the dramatic increase driven by special cash payments provided for residents in Japan during the second quarter of the last year. In addition, the sales of air conditioners and other summer appliances remained below our projection due to lower-than-normal temperatures in August. As a result, sales of electric appliances decreased 2.9 percent year on year. Sales of fashion items and hobby-related items showed significant increases of 56.0 percent and 60.5 percent year on year, respectively, as PickUP JAPAN's sales were included in the results. As for e-commerce sales, we expanded offerings on our e-commerce site to meet the demand for shopping from home, thereby increasing non-consolidatede-commerce sales on our website by 63.2 percent year on year.

Consolidated purchases of merchandise for the fiscal year under review increased 51.5 percent year on year partly because PickUP JAPAN's purchases were included. Non-consolidated purchases also grew by 32.3 percent. As for non-consolidated purchases by channel, in-store purchases showed a steady increase of 40.1 percent year on year. Home-visit purchases dramatically increased by 61.1 percent year on year, and home-delivery purchases continued favorably and increased 29.9 percent year on year.

During the second quarter of the current consolidated cumulative period, we opened 3 general reuse stores, 4 fashion reuse stores, and 2 brand-name item reuse stores, the non-consolidated total being 9 stores. The numbers of stores at the end of the consolidated fiscal year under review are as follows: 141 directly-managed stores and 4 franchise stores, the non-consolidated total being 145; and 212 stores in total across the Group.

These results added up to net sales of ¥10,450,765 thousand (up 27.8 percent year on year) and the segment's profit of ¥967,965 thousand (up 117.3 percent year on year).

(Other)

Cariru, our rental business, successfully captured demand as people attended weddings and other events despite the pandemic. Consequently, sales of the rental business made a recovery and showed a dramatic increase of 337.1 percent year on year. The information system business, on the other hand, saw operating loss due to increased development costs.

These results added up to net sales of ¥309,692 thousand (up 39.2 percent year on year) and the segment's loss of ¥20,307 thousand (the same period of the previous year saw ¥44,551 thousand in loss).

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(2) Explanation regarding the Non-consolidated Financial Position

Total assets at the end of the second quarter of the current consolidated accounting period increased by ¥181,196 thousand year on year to ¥10,598,752 thousand because of an increase of ¥376,187 thousand in merchandise, an increase of ¥161,196 thousand in buildings and structures (net), an increase of ¥110,651 thousand in leasehold and guarantee deposits, and a decrease of ¥512,956 thousand in cash and deposits, among other reasons.

Total liabilities at the end of the second quarter of the current consolidated accounting period increased by ¥165,953 thousand year on year to ¥6,272,169 thousand because of an increase of ¥78,306 thousand in current portion of long-term borrowings, an increase of ¥93,474 thousand in income taxes payable, and an increase of ¥116,347 thousand in long-term borrowings, among other reasons.

Total net assets at the end of the second quarter of the current consolidated accounting period increased by ¥15,242 thousand year on year to ¥4,326,583 thousand because share acquisition rights increased by ¥66,819 thousand and the quarterly profit of ¥45,187 thousand attributable to owners of the parent was recorded, among other reasons.

(Analysis of cash flows)

Cash and cash equivalents at the end of the second quarter of the current consolidated accounting period decreased by

¥512,956 thousand year on year to ¥1,424,377 thousand. The status of the cash flows during the second quarter of the current consolidated cumulative period and factors in these flows are as follows:

(Cash flows from operating activities)

Cash flows from operating activities during the second quarter of the current consolidated cumulative period added up to an expenditure of ¥132,335 thousand (the same period of the previous year saw an income of ¥125 thousand). This is mostly because we recorded an increase of ¥414,663 thousand in inventories, whereas we also recorded ¥153,342 thousand in depreciation and ¥123,097 thousand in profit before income taxes.

(Cash flows from investing activities)

Cash flows from investing activities during the second quarter of the current consolidated cumulative period added up to an expenditure of ¥493,369 thousand (the same period of the previous year saw an expenditure of ¥190,622 thousand). This is mostly because we recorded ¥273,235 thousand in purchase of property, plant and equipment, along with ¥121,249 thousand in payments of leasehold and guarantee deposits, to establish new stores.

(Cash flows from financing activities)

Cash flows from financing activities during the second quarter of the current consolidated cumulative period added up to an income of ¥108,286 thousand (the same period of the previous year saw an income of ¥255,495 thousand). This is mostly because we recorded ¥335,347 thousand in repayments of long-term borrowings, whereas we also recorded ¥530,000 thousand in proceeds from long-term borrowings.

(3) Explanation regarding the Information on Forecast including Consolidated Forecasts

The Treasure Factory Group pursues four growth strategies: development of the reuse business, investment in new businesses, growth in overseas markets, and growth through M&A. On the basis of these strategies, we are working toward the goals of our medium-term profit and loss plan. For the fiscal year under review, we have set the annual store openings target of 15 to

20. We opened 9 stores by the end of the second quarter of the cumulative period, and we expect to open 7 more stores by the end of the second half of the fiscal year (this prospect is current as of the publication of this document). We believe we have been opening stores in the Kanto, Kansai, and Chubu regions according to well-balanced plans.

During the six months that ended August 31, our sales temporarily slowed down in July and August due to the repercussions from the same period last year as well as unusually low temperatures. Nevertheless, both consolidated sales and profits were higher than the planned targets. The second half of the fiscal year has seen an increase in non-consolidated sales at existing stores by 4.1 percent, owing partly to seasonal changes in September. Recent drops in coronavirus cases have also helped stabilize our business environment.

That said, our full-year results forecast remain unchanged. This is because we may record additional share-based remuneration expenses that would accompany the issuance of performance-linked share acquisition rights, and because there may be another surge of coronavirus cases and the impact of it on our business results is indeterminate.

Given these factors, the full-year consolidated forecasts for fiscal 2022 remain unchanged from the figures released by the Company on April 14, 2021.

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