Onward : Consolidated Financial Results for the Three Months Ended May 31, 2023

Consolidated Financial Results

for the Three Months Ended May 31, 2023

[Japanese GAAP]

July 6, 2023

Company name: Onward Holdings Co., Ltd.

Stock exchange listing: Tokyo Stock Exchange

Securities code: 8016

URL: https://www.onward-hd.co.jp/en/

Representative: Michinobu Yasumoto, President and CEO

Contact: Osamu Sato, Managing Director in charge of Finance, Accounting, Investor Relations

Phone: [phone]

Scheduled date of filing quarterly securities report: July 14, 2023

Scheduled date of commencing dividend payments: -

Availability of supplementary materials on quarterly financial results: Available

Schedule of quarterly financial results briefing session: Scheduled (for institutional investors, securities analysts, and the press)

(Amounts of less than one million yen are rounded down.)

1. Consolidated Performance for the Three Months Ended May 31, 2023 (March 1, 2023 - May 31, 2023)

(1) Consolidated Operating Results (cumulative)	(% indicates changes from the previous corresponding period.)
	Net sales			Operating profit	Recurring profit	Profit attributable to
			owners of parent
Three months ended	Million yen	%	Million yen	%	Million yen	%	Million yen	%
May 31, 2023	49,907	12.0		5,380	168.3	4,861	84.3	3,348	83.6
May 31, 2022	44,551	(3.2)		2,005	74.8	2,638	33.4	1,823	(11.5)

(Note) Comprehensive income: Three months ended May 31, 2023: 2,706 million yen [(48.6)%]

			Three months ended May 31, 2022: 5,267 million yen [46.6%]
		Basic earnings	Diluted earnings
		per share	per share
Three months ended			Yen			Yen
May 31, 2023		24.67			24.64
May 31, 2022		13.44			13.42
(Reference) EBITDA (operating profit + depreciation and amortization):
			Three months ended May 31, 2023: 6,545 million yen [94.5%]
			Three months ended May 31, 2022: 3,365 million yen [37.5%]
(2) Consolidated Financial Position
			Total assets		Net assets	Shareholders' equity ratio
				Million yen			Million yen	%
As of May 31, 2023			164,387		80,887	46.1
As of February 28, 2023			159,198		85,073	47.0
(Reference) Shareholders' equity: As of May 31, 2023: 75,742 million yen
			As of February 28, 2023: 74,747 million yen

2. Dividends

				Annual dividends per share
		1st quarter-end	2nd quarter-end	3rd quarter-end	Year-end	Total
		Yen		Yen		Yen	Yen	Yen
Fiscal year ended		-		-		-	12.00	12.00
February 28, 2023
Fiscal year ending		-
February 29, 2024
Fiscal year ending				-		-	16.00	16.00
February 29, 2024 (Forecast)
(Note) Revision to the forecast for dividends announced most recently: Yes

3. Consolidated Performance Forecast for the Fiscal Year Ending February 29, 2024 (March 1, 2023 - February 29, 2024)

(% indicates changes from the previous corresponding period.)

	Net sales		Operating profit	Recurring profit	Profit attributable to	Basic earnings
		owners of parent	per share
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
1H (cumulative)	90,000	9.5	4,000	-	3,400	419.4	2,400	403.9	17.68
Full year	188,800	7.2	10,000	91.8	9,000	69.2	5,000	63.3	36.84

(Notes) 1. Revision to the performance forecast announced most recently: Yes

2. The year-on-year growth rate of operating profit for the first half of the fiscal year ending February 29, 2024 exceeded 1,000%, and is therefore indicated as "-."

(Reference) EBITDA (operating profit + depreciation and amortization):

Full year ending February 29, 2024 (forecast): 15,100 million yen [45.6%]

Full year ended February 28, 2023: 10,373 million yen [165.0%]

* Notes:

1. Changes in significant subsidiaries during the period under review (changes in specified subsidiaries resulting in changes in scope of consolidation): None
   Newly included: - (Company name:)
   Excluded: - (Company name:)
2. Application of special accounting methods for 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 other than 1) above: None
   3. Changes in accounting estimates: None
   4. Restatement: None
5. Total number of issued shares (common stock)
6. 1. Total number of issued shares at the end of the period (including treasury shares):

As of May 31, 2023:	157,921,669 shares
As of February 28, 2023:	157,921,669 shares
2) Total number of treasury shares at the end of the period:
As of May 31, 2023:	22,204,604 shares
As of February 28, 2023:	22,204,488 shares
3) Average number of shares outstanding during the period:
Three months ended May 31, 2023:	135,717,142 shares
Three months ended May 31, 2022:	135,633,824 shares

• These quarterly consolidated financial results are outside the scope of quarterly review by certified public accountants or an audit firm.
• Explanation of the proper use of performance forecast and other notes
  The performance outlook and other forward-looking statements herein are based on information currently available to the Company and certain assumptions that have been deemed reasonable. Actual performance may differ significantly from these forecasts due to a wide range of factors. For conditions used as the assumptions for the performance forecast and notes on the use of performance forecast, please refer to "1. Qualitative Information on Quarterly Financial Results for the Period under Review (3) Explanation of Consolidated Performance Forecast and Other Forward-looking Information" on page 3 of the Attachments.

Note:

This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

Table of Contents - Attachments
1. Qualitative Information on Quarterly Financial Results for the Period under Review	2
(1)	Explanation of Operating Results	2
(2)	Explanation of Financial Position	3
(3)	Explanation of Consolidated Performance Forecast and Other Forward-looking Information	3
2. Quarterly Consolidated Financial Statements and Principal Notes	4
(1)	Quarterly Consolidated Balance Sheets	4
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income	6
(3)	Notes to Quarterly Consolidated Financial Statements	8
	(Uncertainties of entity's ability to continue as going concern)	8
	(Notes when there are significant changes in amounts of shareholders' equity)	8
	(Changes in accounting policies)	8
	(Additional information)	8
	(Segment information, etc.)	9
	(Significant events after reporting period)	10

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1. Qualitative Information on Quarterly Financial Results for the Period under Review

(1) Explanation of Operating Results

During the three months ended May 31, 2023, the Japanese economy showed a moderate recovery trend as economic activities continued to normalize due to the easing of mask-wearing rules and COVID-19's reclassification as a category V infectious disease, and with the recovery of inbound tourism demand helping to bolster improvement in business sentiment, among other factors. On the other hand, the outlook remains uncertain, as there are concerns that consumers will become more defensive in their lifestyles due to climbing inflation on the back of global rises in resource prices and exchange rate fluctuations.

Under these circumstances, the Group saw a steady increase in the number of customers visiting both its physical stores and online store, with sales growing significantly. This was due to factors such as increased awareness of the Click and Try service offered in OMO (Online Merges with Offline)-type stores by our core operating company, Onward Kashiyama Co., Ltd., and the success of marketing initiatives using social media. Furthermore, the global business reforms that we have been undertaking since the fiscal year ended February 29, 2020, have clearly borne fruit, and efforts to improve the efficiency of the product supply chain progressed, which resulted in an improvement in gross profit margin while the SG&A ratio decreased significantly.

Additionally, we have initiated a capital and business alliance with fashion company WEGO Co., Ltd., with the aim of tapping into a new customer base.

As a result of the above, consolidated net sales amounted to 49,907 million yen (a 12.0% increase year on year), consolidated operating profit was recorded at 5,380 million yen (a 168.3% increase year on year), consolidated recurring profit was recorded at 4,861 million yen (an 84.3% increase year on year), and profit attributable to owners of parent amounted to 3,348 million yen (an 83.6% increase year on year).

Furthermore, the Group has adopted EBITDA (operating profit + depreciation and amortization) as a key management indicator with the purpose of enabling convenient comparisons between companies regardless of differences in accounting standards, amid its efforts to accelerate growth through enhancement and expansion of business foundations that utilize creation of new businesses, M&As, etc.

EBITDA for the three months ended May 31, 2023 was 6,545 million yen (a 94.5% increase year on year).

Status by segment is as follows.

[Apparel Business]

In the domestic business, by focusing on customer-centric product development and sales services, Onward Kashiyama Co., Ltd.'s key brands, namely Nijyusanku and GOTAIRIKU, among others, maintained strong performance. Additionally, sales were favorable for "steppi," which became an independent brand from the D2C brand UNFILO. Sales at Onward Personal Style Co., Ltd., which develops the KASHIYAMA brand, increased significantly due to the strong performance of high-priced products and store renovations, among other factors.

In the overseas business, sales increased in Europe, the U. S., and Asia, respectively, and the higher utilization rate of the Dalian factory contributed to improved profitability.

As a result, both sales and profit increased in the Apparel Business.

[Lifestyle Business]

Chacott Co., Ltd., which operates a wellness business, saw strong performance in the sales of its mainstay ballet goods as well as Chacott COSMETICS. Creative Yoko Co., Ltd., which operates a pet and home life business, saw an expansion in sales due to the success of efforts to open new stores as well as development of new and other products in its pet business. Yamato Co., Ltd., which operates a gift catalogue business, also continued to perform well.

As a result, both sales and profit increased in the Lifestyle Business.

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