Hard Off : Consolidated Financial Results for the Nine Months Ended December 31, 2021 (Under Japanese GAAP)

February 7, 2022

Consolidated Financial Results

for the Nine Months Ended December 31, 2021

(Under Japanese GAAP)

Company name:	HARD OFF CORPORATION Co., Ltd.
Listing:	Tokyo Stock Exchange
Securities code:	2674
URL:	https://www.hardoff.co.jp/
Representative:	Taro Yamamoto, Representative Director and President
Inquiries:	Tsuyoshi Nagahashi, Senior Managing Director, General Manager of president's office, and
	General Manager of Management Administration Headquarters
Telephone:	[phone]

Scheduled date to file quarterly securities report:	February 10, 2022
Scheduled date to commence dividend payments:	-
Preparation of supplementary material on quarterly financial results: Yes
Holding of quarterly financial results briefing:	None

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the nine months ended December 31, 2021 (from April 1, 2021 to December 31, 2021)

(1) Consolidated operating results (cumulative)		(Percentages indicate year-on-year changes.)
	Net sales		Operating profit	Ordinary profit	Profit attributable to
		owners of parent
Nine months ended	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%
December 31, 2021	18,173		16.7	1,057	47.9	1,153	42.9	761	68.1
December 31, 2020	15,578		7.6	714	15.9	807	8.2	453	7.7

Note: Comprehensive income	For the nine months ended December 31, 2021:	¥795 million	[21.5%]
	For the nine months ended December 31, 2020:	¥654 million	[(6.2)%]
	Basic earnings	Diluted earnings
	per share	per share
Nine months ended	Yen		Yen
December 31, 2021	54.90		－
December 31, 2020	33.57		－

(2) Consolidated financial position

	Total assets	Net assets	Equity-to-asset ratio
As of	Millions of yen	Millions of yen	%
December 31, 2021	18,472	13,349	72.0
March 31, 2021	18,105	13,039	71.8

Reference: Equity
As of December 31, 2021:	¥13,300 million
As of March 31, 2021:	¥12,996 million

2. Cash dividends

			Annual dividends
	First quarter-end	Second quarter-end	Third quarter-end	Fiscal year-end	Total
	Yen	Yen	Yen	Yen	Yen
Fiscal year ended	－	0.00	－	35.00	35.00
March 31, 2021
Fiscal year ending	－	0.00	－
March 31, 2022
Fiscal year ending
March 31, 2022				40.00	40.00
(Forecast)

Notes: 1. Revisions to the forecast of cash dividends most recently announced: Yes

2. As for the revisions to the forecast of cash dividends, please see the "Notice Concerning Revision of Dividend Forecast (Commemorative Dividends)" released today (February 7, 2022).

3. Consolidated earnings forecasts for the fiscal year ending March 31, 2022 (from April 1, 2021 to March 31, 2022)

(Percentages indicate year-on-year changes.)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Basic earnings
		owners of parent	per share
	Millions of yen	%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
Fiscal year ending March	24,000	12.8	1,200	50.8	1,300	46.6	700	101.1	50.43
31, 2022
Note: Revisions to the earnings forecasts most recently announced: None

• Notes
• 1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
  2. Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None
  3. Changes in accounting policies, changes in accounting estimates, and restatement
  4. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: Yes
     2. Changes in accounting policies due to other reasons: None
     3. Changes in accounting estimates: None
     4. Restatement: None
  5. Number of issued shares (common shares)

(i) Total number of issued shares at the end of the period (including treasury shares)

As of December 31, 2021	13,954,000 shares
As of March 31, 2021	13,954,000 shares

(ii) Number of treasury shares at the end of the period

As of December 31, 2021	73,979 shares
As of March 31, 2021	73,979 shares

1. Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)

Nine months ended December 31, 2021	13,880,021 shares
Nine months ended December 31, 2020	13,506,167 shares

• Quarterly financial results reports are exempt from quarterly review conducted by certified public accountants or an audit corporation.
• Proper use of earnings forecasts, and other special matters (Caution regarding forward-looking statements and others)
  Forward-looking statements, including the earnings forecasts stated in these materials, are based on information currently available to the Company and certain assumptions deemed reasonable. These forward-looking statements are not guarantees of future performance. Actual results may differ materially from these forecasts due to a variety of reasons. Please refer to "1. Qualitative information regarding financial results for the nine months ended December 31, 2021, (3) Explanation of consolidated earnings forecasts and other forward- looking statements" on page 3 of the attached material for the suppositions that form the assumptions for earnings forecasts and cautions concerning the use thereof.
  (How to obtain supplementary material on quarterly financial results)
  Supplementary material on quarterly financial results was disclosed on the same day on TDnet.

Attached Material

Index

1. Qualitative information regarding financial results for the nine months ended December 31, 2021 ………………………	5
(1) Explanation of operating results ………………………………………………………………………………………	5
(2) Explanation of financial position ………………………………………………………………………………………	6
(3) Explanation of consolidated earnings forecasts and other forward-looking statements ………………………………	6
2. Quarterly consolidated financial statements and significant notes thereto …………………………………………………	7
(1) Quarterly consolidated balance sheet …………………………………………………………………………………	7
(2) Quarterly consolidated statement of income and quarterly consolidated statement of comprehensive income ………	9
Quarterly consolidated statement of income …………………………………………………………………………	9
Quarterly consolidated statement of comprehensive income ………………………………………………………	10
(3) Notes to quarterly consolidated financial statements …………………………………………………………………	11
Notes on premise of going concern ……………………………………………………………………………………	11
Notes on significant changes in the amount of shareholders' equity …………………………………………………	11
Changes in significant subsidiaries during the period ………………………………………………………………	11
Changes in accounting policies ………………………………………………………………………………………	11

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1. Qualitative information regarding financial results for the nine months ended December 31, 2021

(1) Explanation of operating results

During the nine months ended December 31, 2021, while the Japanese economy saw some signs of temporary recovery from the impact of the novel coronavirus disease (COVID-19), the economic outlook still remains uncertain due to the occurrence of new variants and other factors. Under such conditions, HARD OFF CORPORATION Co., Ltd. (the "Company") has been pushing ahead with the enhancement of human resource development and expansion of the procurement channel while setting "Work in Real-Time-Back to the Basics, Have Fun and Smile-" as the annual theme. By carrying out initiatives such as establishing the Pickup Buying Center for the Metropolitan Area and promoting procurement activities at temporary locations for a limited period of time in areas without permanent stores, the Company aims to enhance its procurement capability, which is a key factor for the Secondhand Business.

With respect to the opening of secondhand stores during the nine months ended December 31, 2021, the Company opened twelve directly operated stores, closed five directly operated stores, opened two franchised stores, and closed five franchised stores. Moreover, one store was transferred from a franchised store to a directly operated store. As a result, the total number of secondhand stores was 917, which was comprised of 397 directly operated stores and 520 franchised stores.

The number of stores by business category as of December 31, 2021 is shown in the following table.

										(Stores)
									Total number
Number of	HARD OFF	OFF HOUSE	MODE OFF	Garage OFF	Hobby OFF	Liquor OFF	BOOK OFF	Overseas	of	BOOK ON
stores	secondhand
									stores
Directly	133	125	20	11	49	4	50	5	397	3
operated
[+4]	[+5]	[-2]	[±0]	[+2]	[±0]	[-1]	[±0]	[+8]	[±0]
stores
Franchised	232	198	2	5	75	1	-	7	520	-
stores	[±0]	[-4]	[-1]	[±0]	[+1]	[±0]	[±0]	[-4]
Total	365	323	22	16	124	5	50	12	917	3
[+4]	[+1]	[-3]	[±0]	[+3]	[±0]	[-1]	[±0]	[+4]	[±0]

Notes: 1. Figures in square brackets [ ] indicate the increase or decrease in the number of stores during the period.

1. The stores operated by the Company's subsidiaries HARD OFF Family Co., Ltd. and ecoplus Co., Ltd. are included in the number of directly operated stores.
2. The stores operated by the Company's subsidiaries ECO TOWN HAWAII INC., HARD OFF TAIWAN INC. and ECO TOWN USA INC. are included in the number of directly operated overseas stores.

With respect to the operating results for the nine months ended December 31, 2021, net sales remained strong, up 3.4% year on year for existing stores in Japan, and up 27.6% year on year for Internet sales. Outside of Japan, three stores in the U.S. have returned to or above the pre-COVID-19 level (fiscal year ended March 31, 2020), and two stores in Taiwan have continued the strong performance from the previous year. Due to the contribution from the 12 new stores in Japan from the previous year and the 60 stores of the subsidiary ecoplus Co., Ltd., which was included in the scope of consolidation from the third quarter ended December 31, 2020, consolidated net sales amounted to ¥18,173 million (up 16.7% year on year).

In terms of profit, as a result of securing gross profit margin of 68.7%, almost the same level as the previous year, gross profit totaled ¥12,481 million (up 16.5% year on year), and selling, general and administrative expenses totaled ¥11,424 million (up 14.2% year on year), operating profit amounted to ¥1,057 million (up 47.9% year on year) and ordinary profit amounted to ¥1,153 million (up 42.9% year on year).

Furthermore, as a result of recording ¥105 million from gain on sale of investment securities as extraordinary income, ¥101 million from impairment losses on non-current assets of stores as extraordinary losses, profit attributable to owners of parent amounted to ¥761 million (up 68.1% year on year) and the Company achieved significant increases in the profit items.

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