Istyle : Anticipated Q&A for the 3rd Quarter, FY2024

	May 10, 2024
Company name	istyle Inc.
Representative	Tetsuro Yoshimatsu, Chairperson and CEO
	(Stock Exchange Code: 3660 Prime Market)
Contact	Kei Sugawara, Vice Chairperson and CFO
	(TEL.[phone])

Anticipated Q&A for Q3 FY24 financial results

■ Consolidated Results

1．What are the reasons for the upward revision of the earnings forecast?

Sales and profit of the Retail Segment for both Stores and EC exceeded expectations. In particular,

@cosme OSAKA, which opened in September 2023 (Q1), performed better than expected, and the

success of the special event, @cosme BEAUTY DAY contributed significantly.

2．What is the reason for the lower estimated operating income in Q4 compared to Q3?

This is due to the impact of planned investments to strengthen the business foundation. Specifically, we plan to implement advertising measures to promote application downloads in the Retail Segment and to upgrade the core sales system (BPR expenses).

In the future, the company expects these measures to contribute to cost reductions through improved operational efficiency and higher top-line growth.

• Marketing Solution Segment

3．How is the business alliance with Trenders, Inc. progressing?

From March 2024, the companies have started promoting a joint advertising menu that combines social media marketing and @cosme platform to their respective clients. For istyle clients, we propose influencer marketing and social media advertising, and for Trenders clients, such as solutions based on @cosme. By continuing to develop joint services, the companies aim to achieve consistent brand communication for our clients. Full-scale contribution to istyle's performance is not expected until the next fiscal year.

4．Why was a one-time software amortization expense of 112 million yen recorded in Q3?

Some of the server migration to cloud computing was completed ahead of schedule, and older versions of software were retired this quarter. This is a non-recurring expense.

• Retail Segment

5．What were the reasons for the increase in Store sales in Q3 over Q2?

Increased sales compared to Q2 were due to domestic demand from increased awareness and an increase in inbound sales. In addition, last-minute demand before price increases for some brands also contributed to the increase.

6．Why were Q3 EC sales lower than Q2?

In Q2, sales increased significantly due to the annual special event, @cosme BEAUTY DAY, but in Q3, sales tend to decline compared to Q2 every year as a rebound reaction to the event.

However, Q3 sales were up 32% YOY, reflecting the event's success in acquiring and cultivating customers.

7．What was the reason for the dramatic increase in OP ratio in Q3 compared to Q2?

In Q2, 137 million yen in promotional expenses were recorded for @cosme BEAUTY DAY mentioned above and up to 30% loyalty point rebates were offered at the event. OP ratio increased as these expenses were not recorded in Q3 and sales increased significantly compared to the previous year.

• Global Segment

8．Is the inventory valuation loss of 35 million yen recorded in Q3 for cross-border EC in China a one-time event?

We expect this to be a one-time loss since we have completed a full inventory review at this time,

and we will continue to review inventory to prevent such losses from occurring by improving sales

efficiency.

End