三陽商会（8011） – [Delayed]Fiscal 2022 Financial Results Explanatory Materials

Note: This document is an excerpt translation of the original Japanese document and is only for reference purposes. In the any discrepancy between this translated document and the original Japanese document, the later shall prevail.FY2022Financial Results Explanatory MaterialsSANYO SHOKAI LTD.April 14, 2022Contents1. FY2022 Earnings Report2. FY2022 Review3. FY2023 ProjectionCopyright © SANYO SHOKAI LTD. All Rights Reserved.1Consolidated PL: FY2022 ResultsNet sales were ¥38.64bn. Operating loss was ¥1.05bn, and net income was ¥660m.(Unit: ¥100m)FY2019 1ResultsPrevious YearCurrent Yearvs. FY2019vs. PYNet sales583.4379.3386.4-197.0+7.1Gross profit274.5145.1185.4-89.1+40.3SG&A expensesOperating incomeOrdinary income304.1234.2196.0-108.1-38.2-29.6-89.1-10.5+19.1+78.6-29.7-90.3-7.3+22.4+83.0Net income-27.6-49.86.6+34.2+56.41. Since the results of FY2019 were calculated based on the irregular duration of 14 months, the results from March 2019 to February 2020 are referenced.Copyright © SANYO SHOKAI LTD. All Rights Reserved.2Consolidated PL: KPIGross profit margin improved by 9.7pt YoY.Despite a significant decline in net sales, SG&A expense ratio improved by 1.4pt compared to FY2019.FY2019 1ResultsPrevious YearCurrent Yearvs. FY2019vs. PYGross profit marginSG&A expense ratioOperating marginOrdinary income marginNet income margin47.1%38.3%48.0%+0.9pt+9.7pt52.1%61.8%50.7%-1.4pt-11.1pt-5.1%-23.5%-2.7%+2.4pt+20.8pt-5.1%-23.8%-1.9%+3.2pt+21.9pt-4.7%-13.1%1.7%+6.4pt+14.8pt1. Reference values (03/2019–02/2020)Copyright © SANYO SHOKAI LTD. All Rights Reserved.3Extraordinary Profit/LossExtraordinary profits totaled ¥2.06bn from gain on partial termination ofretirement benefit plan, gain on sale ofinvestment securities, subsidyproceeds due to temporary closures, etc., while extraordinary losses totaled¥620m from store impairment loss, etc.Copyright © SANYO SHOKAI LTD. All Rights Reserved.4(Unit: ¥1m)Extraordinary profits2,060Gain on partial termination of retirement benefit plan1,248Gain on sale of investment securities501Proceeds from subsidies304Other6Extraordinary losses624Loss due to temporary closures, etc.209Impairment loss400Other13Differences From Announced ProjectionsNet sales fell short of the forecast due to the impact of the COVID-19 pandemic throughout FY2022.Although improvement of gross profit margin, by enhancing full-price sales and restricting discountsales, and further reduction in SG&A expenses progressed almost as planned, this could notcompletely cover the decrease in gross profit due to the decline in sales, thereby failing to achievethe projected operating income. We secured a net income surplus of ¥660m, exceeding the forecastannounced on Oct 7 by ¥660m.(Unit: ¥100m)Apr 14 1ForecastOct 7 2ForecastMar 25 3ForecastResultsvs. Apr 14vs. Oct 7OverviewNet sales440.0415.0386.0386.4-53.6-28.6Gross profitSG&A expensesOperating incomeOrdinary incomeNet income215.0203.0185.0185.4-29.6-17.6214.0202.0195.0196.0-18.0-6.01.00.501.0-10.0-10.5-11.5-11.50.50-7.06.0-8.0-7.3-7.8-7.86.6+6.6+6.6The impact of the COVID-19 pandemic has been more far-reaching and prolonged than expectedIn particular, due to semi-emergency COVID-19 measures aimed at containing the Omicron strain (sixth wave)since January, net sales and gross profit declined sharply• The market almost normalized in Oct–Dec after the state of emergency was lifted, but it slowed down rapidly again since JanuaryImprovement of gross profit by enhancing full-price sales and restricting discount sales, as well as further reduction in SG&A expenses, were almost as projected•• We secured a net income surplus in FY20221. Full-year projection at the beginning of the fiscal year announced on April 14, 2021. 2. Revised full-year projection announced on October 7, 2021. 3. Revised full-year projection announced on March 25, 2022.Copyright © SANYO SHOKAI LTD. All Rights Reserved.5Consolidated BSTotal assets were ¥51.6bn at the end of FY2022, a decrease of ¥1.2bn YoY. Equity ratio was 65.7%.Cash and deposits• Decrease in cash reserves due to temporary expenditures such as payments of additional charges for voluntary retirement, payments of deferred welfare pensions from the previous two fiscal years, and trademark acquisitionsIncrease in cash reserves due to sale of investment securities, control on purchasing/reduction in SG&A expenses•Merchandise and finished goods• Reduced inventory through inventory controlTangible fixed assets• Store impairmentsIntangible fixed assets•Increase in trademark rights due to acquisition of Paul Stuart trademark right and Ecoalf Japan consolidation at the end of the fiscal year; decrease in goodwill due to divestiture of RUBY GROUPeLiabilities• Borrowing increased due to new loans from Shoko Chukin Bank• Other liabilities decreased significantly due to the payments of additional charges for voluntary retirement mentioned aboveCopyright © SANYO SHOKAI LTD. All Rights Reserved.6(Unit: ¥1m)2021/2/282022/2/28ChangeCash and deposits19,65218,767-884Accounts receivable3,3412,659-681Merchandise and finished goods9,4067,819-1,586Tangible fixed assets9,3638,662-700Intangible fixed assets2,1673,9491,782Other assets8,9979,773776Total assets52,92651,629-1,297Accounts payable3,8764,176300Loans6,0006,800800Other liabilities9,5886,732-2,856Total liabilities19,46417,708-1,755Capital15,00215,002-Total shareholders’ equity29,75530,435680Other net assets3,7073,485-222Total net assets33,46233,920458Total liabilities and net assets52,92651,629-1,297Contents1. FY2022 Earnings Report2. FY2022 Review3. FY2023 ProjectionCopyright © SANYO SHOKAI LTD. All Rights Reserved.7Summary: Net Sales and Gross Profit Margin (Non-Consolidated)Net sales almost normalized after the state of emergency was lifted, but declined sharply due to the rapid spread of the Omicron strain.Gross profit margin for the full FY2022 remains above the previous-year level through enhancing full-price sales and restricting discount sales.Net salesGross profit marginGross profit margin (PY)Sales (YoY)Monthly change(¥100m)503/5 3/21State of emergency extendedState of emergency lifted5/29State of emergency extendediSem-emergency COVD-19II-and 3prefecturesApr.COVD194th wave occurredprefectures4/25Smteaates uorfe esm ine rTgoeknycoy’s d enceagrhebdo inri nTgo kyo ilMayState of emergency expanded furtherprefecturesi6/20Snt aTtoek oyfo e amnedr g8ency lifted 7/12TSotaktyeo of emergency decared in lI-COVD195th wave occurred8/2tSot aTtoek oyfo e amnedr g5enpcrye feexcptuarnedsed 9/30State of emergency lifted8/27tSot aTtoek oyfo e amnedr g20enpcrye feexcptuarnedsed Sep.STotaktyeo o af nedm 18ergpernecfeyc etuxrteensded in 403020100Full FY20221H/2HMar.Apr.MayJun.Jul.Aug.Sep.Oct.Nov.Dec.Jan.Feb.109%103%105%••Despite the relatively steady growth in March, net sales remained sluggish after astate of emergency was declared on April 25 due to the fourth wave of COVID-19.Although there was a sign of recovery trend after the declaration was lifted on June20, a state of emergency was issued again with a wider scope of regions on July 12.As a result, sales suffered significantly in July and August.••In Oct–Dec, with the lifting of the state of emergency, business demand recovered inparticular. Measures to attract customers were successful, and heavy clothing wassold.January saw market conditions deteriorate sharply due to the rapid spread of theOmicron strain, causing net sales and gross profit to fall significantly.Enhanced full-price sales and restricted discount sales throughout FY2022, thereby maintaining a high gross profit marginCopyright © SANYO SHOKAI LTD. All Rights Reserved.81/9Smeemasures in 3prefecturesi-emergency COVD19-I1/21Semexpanded to Tokyo and 15prefecturesi-emergency COVD19measures -I1/27Semexpanded to Tokyo and 33prefecturesi-emergency COVD19measures -I2/5Semexpanded to Tokyo and 34prefecturesi-emergency COVD19measures -IFeb. EndSemimposed in Tokyo and 30prefecturesi-emergency COVD19measures -I(%)7060504030200Reference: Details for 1H/Sep–Dec/Jan–Feb (Non-Consolidated)We were not able to achieve operating surplus for the full FY2022, mainly due to the sharp deterioration of market conditions following the rapid spread of the Omicron strain since January.Sep–Dec Results(Unit: ¥100m) 1H ResultsOperating incomeJan–FebNet sales164.4ForecastResults154.313.5(8.7%)52.9%44.1%89.06.8(7.6%)67.7-3.8(-5.6%)39.5%45.1%-20.3(-12.3%)Gross profit marginSG&A expense ratio47.0%59.3%• Operating income trended towards a surplus in Sep–Dec• However, market conditions deteriorated sharply in Jan–Feb due to the rapid spread of the Omicron strain. As a result, operating income was a deficit of ¥380m, below the projected ¥680m surplus, missing the forecast by ¥1.06bn. This shortfall translated into the full-year operating deficit almost in its entiretyCopyright © SANYO SHOKAI LTD. All Rights Reserved.9Summary: Progress of Priority MeasuresNet sales and gross profit margin were below the forecasts due to the spread of COVID-19, but other priority measures were implementedas planned or better than expected.Priority MeasuresProgressSecuring of net salesImproved gross profit marginNet sales fell short of the forecast due to the impact of the COVID-19 pandemic that spread wider and continued longer than expected.• Net sales recovered in Oct–Dec when the state of emergency was lifted, but full-year net sales fell significantly short of the forecast due to the sharp deterioration in market conditions since January, impacted by the rapid spread of the Omicron strainGross profit margin was 48.0% (+9.7pt YoY), compared to the quantitative target of 48.9%.•It reached 50.0% until December, but remained at 48.0% for the full year due to the drop in Jan–Feb• Despite the improvement of procurement cost margin (reduced by 2.3pt YoY), the enhancement of full-price sales (FY2022 full-price sales margin was 57% in 1H, 64% in 2H, 61% for the full year, and improved by 12pt YoY), the restriction of discount sales, etc., the forecast was not reached due to emergency measures, etc. in response to the rapid spread of the Omicron strain in Jan–FebCopyright © SANYO SHOKAI LTD. All Rights Reserved.10Summary: Progress of Priority MeasuresPriority MeasuresProgressReduction in SG&A expensesInventory reductionFinancial reformBusiness restructuringSignificantly reduced fixed costs according to the Revitalization Plan• Reduced ¥9.8bn (¥10.8bn on a consolidated basis), compared to the target of reducing SG&A by ¥4bn over two years by FY2022, through staff optimization and closing down of unprofitable storesProgressed as planned• Inventory was reduced to ¥7.8bn at the end of FY2022, against ¥13.6bn at the end of FY2020, through controlling purchases and strengthening the inventory management system• Product inventory decreased by ¥1.5bn YoY and carry-over inventory decreased by ¥1.8bn YoY, at the end of FebruaryEquity ratio: 65.7%; Debt-to-equity ratio (DER): 0.20• Net assets: ¥33.9bn, from ¥33.4bn at the end of PY• Total assets: ¥51.6bn, from ¥52.9bn at the end of PY• Interest-bearing liabilities: ¥6.8bn, from ¥6bn at the end of PY• Cash position: ¥18.7bn, from ¥19.6bn at the end of PY• Equity ratio improved to 65.7%, from 63.2% at beginning of FY2022Copyright © SANYO SHOKAI LTD. All Rights Reserved.11Reference: Sales Results by ChannelSales for the full FY2022 increased by 102% YoY — 111% YoY from physical stores1 and 89% YoY from EC.Despite a declining EC sales, the full-price sales margin and gross profit margin improved significantly.1. Total of department stores, directly managed stores, and outletsCopyright © SANYO SHOKAI LTD. All Rights Reserved.12Revenue (Unit: ¥1m)1Q2Q1H3Q4Q2HFYSales composition ratioDepartment stores4,7134,4299,1416,5446,20412,74821,88957%Directly managed stores5185081,0266897271,4162,4426%EC & mail order1,6611,5323,1931,7352,3334,0687,26119%Outlets9428671,8091,2251,4732,6984,50712%Other6881608488204571,2772,1255%Subsidiaries188230418—4181%Total8,7107,72616,43611,01311,19322,20638,642100%YoY1Q2Q1H3Q4Q2HFYDepartment stores177%77%109%104%108%106%107%Directly managed stores170%78%108%100%104%102%104%EC & mail order91%87%89%83%94%89%89%Outlets304%105%159%115%154%133%143%Other195%52%129%87%75%82%96%Subsidiaries62%74%68%—25%Total151%81%107%95%101%98%102%vs. 20191Q2Q1H3Q4Q2HFYDepartment stores52%55%53%70%63%67%60%Directly managed stores40%52%45%52%52%52%49%EC & mail order104%107%105%96%107%102%103%Outlets96%116%105%112%108%110%108%Other54%26%44%65%50%59%52%Subsidiaries26%244%50%—24%Total58%65%61%72%70%71%66%Reference: SG&A ExpensesCompared to the target of reducing SG&A expenses by ¥4bn over two years by FY2022 under the Revitalization Plan, SG&A decreased by ¥10.8bn.Sales expenses decreased by ¥4.83bn(or a decrease of ¥4.62bn, after excluding recorded extraordinary losses of ¥210m)• FA expenses decreased by ¥3.57bn due to FA staff optimization and temporary store closings• Real estate rents decreased• Sales commissions decreased due to sluggish salesPromotional expenses decreased by ¥1.36bn• Improved efficiency of marketing promotions• Cancellation of exhibitionsEquipment expenses decreased by ¥610m• Restriction of new store openingsEmployee personnel expenses decreased by ¥1.54bn• Staff optimization by offering voluntary retirement• Reduced bonus paymentsAdministrative expenses decreased by ¥1.51bn• Physical distribution costs decreased due to decline in sales and reduction in purchases• Travel expenses decreased by temporarily closing stores and promoting remote workingOther expenses decreased by ¥950m• Decreased due to divestiture and absorption-type merger of subsidiariesSales expenses: FA expenses, rent expenses for real estate, sales commissions, outsourcing fees (sales-related), etc. Equipment expenses: Shop construction costs, depreciation expenses (for shops), lease fees, repair costs, etc. Employee personnel expenses: Salaries, statutory welfare benefits, etc. Administrative expenses: Depreciation (management-related), outsourcing fees (management-related), physical distribution costs, utility expenses, travel expenses, communication expenses, miscellaneous expenses, etc.Copyright © SANYO SHOKAI LTD. All Rights Reserved.13(Unit: ¥1m)Mar 2019–Feb 2020FY2022vs. FY2019Sales expenses14,6499,819-4,830Promotional expenses2,5341,174-1,360Equipment expenses1,163552-611Employee personnel expenses5,2253,677-1,548Administrative expenses5,7244,213-1,511Other1,120170-950Total SG&A expenses30,41519,606-10,809Topics in FY2022Divestiture of a consolidated subsidiary (RUBY GROUPe)• March• Purpose: Streamlining of business operationsAcquisition of domestic trademark right (Paul Stuart)• Acquired on March 31• Purpose: Business expansion based on Sanyo’s unique strategyOffering of voluntary retirement•Implemented on March 31• Purpose: Staff optimization2021Absorption-type merger of a consolidated subsidiary (Sanyo Apparel)• Merged on September 1• Purpose: Streamlining of business operationsListing on the TSE Prime Market• Board resolution was made on November 26, along with the submission of Plan to Meet Continued Listing Criteria and application that were subsequently approved• Purpose: To achieve sustainable growth and enhance medium- to long-term corporate valueIssuance of unsecured convertible bond-type bonds with stock acquisition rights allotted to Mitsui & Co.• Payment completed on December 15• Purpose: To strengthen the relationship with Mitsui & Co.Copyright © SANYO SHOKAI LTD. All Rights Reserved.14Contents1. FY2022 Earnings Report2. FY2022 Review3. FY2023 ProjectionCopyright © SANYO SHOKAI LTD. All Rights Reserved.15Application of the New Revenue Recognition StandardAs of FY2023,the “Accounting Standard for RevenueRecognition” (ASBJ Statement No. 29, March 31, 2020;hereinafterreferred to as “New Revenue RecognitionStandard”) etc. will apply.Main changes:Shops handling purchase-as-sold consignment sales in department stores will now recordretail sales as “net sales,” and sales commissions (amount equivalentfordepartment stores as “SG&A”• Under the old revenue recognition standard, the amount of retail sales minus salesto rents)commissions was recorded as “net sales”For our purchase-as-sold consignment products, we will now record income from salescommissions only as “net sales”• Under the old revenue recognition standard, retail sales were recorded as “net sales”The entire fee for applying loyalty program points will now be deducted from “net sales”• Under the old revenue recognition standard, part of it was recorded as “SG&A”Copyright © SANYO SHOKAI LTD. All Rights Reserved.16Basic Policy for FY2023Basic PolicyEstablish a stable profit structure based on the results obtained by executing the Revitalization PlanStart promoting growth strategy aimed at business expansionCopyright © SANYO SHOKAI LTD. All Rights Reserved.17Full-Year Forecast: Consolidated PLNew Revenue Recognition StandardFY2023 full-year forecasts — net sales: ¥56bn; operating income: ¥1.2bn (operating margin: 2.1%); net income: ¥900m (net income margin: 1.6%)FY2022FY2023ResultsForecastReference: FY2019Results1(Unit: ¥100m)Financial FiguresMajor Financial IndicatorsNet salesGross profitSG&A expensesOperating incomeOrdinary incomeNet incomeGross profit marginSG&A expense ratioOperating marginOrdinary income marginNet income margin496.3295.3305.9-10.5-7.36.659.5%61.6%-2.1%-1.5%1.3%560.0347.2335.212.011.49.062.0%59.9%2.1%2.0%1.6%YoY/Difference113%118%110%–136%+2.5pt-1.7pt+4.2pt+3.5pt+0.3pt757.5448.6478.2-29.6-29.8-27.759.2%63.1%-3.9%-3.9%-3.7%1. Since the results of FY2019 were calculated based on the irregular duration of 14 months, the results from March 2019 to February 2020 are referenced.Copyright © SANYO SHOKAI LTD. All Rights Reserved.18Trend of Operating IncomeNew Revenue Recognition StandardMeasures necessary to meet the forecasts, as well as their effect, are shown in the chart.Medium-Term Business Plan15.915.914.011.412.0-10.52.12.122.0(Unit: ¥100m)Revitalization Plan-89.134.543.211.510.3FY2021 operating incomeRecorded extraordinary loss for PY1Increase in gross profit from increased salesImproved gross profit marginReductions in SG&A expensesRecorded extraordinary loss for SG&A expenses1FY2022 operating incomeRecorded extraordinary loss for PY11. Actual SG&A expenses, out of the extraordinary losses due to temporary closings during the COVID-19 pandemicCopyright © SANYO SHOKAI LTD. All Rights Reserved.Increase in gross profit from increased salesImproved gross profit marginIncrease in gross profit due to changes in revenue recognition standardIncrease in SG&A due to changes in revenue recognition standardIncrease in SG&A expenses due to new investments, etc.FY2023 operating income19Securing of Net SalesNew Revenue Recognition StandardTotal net sales of 113% YoY is projected. For directly managed stores, we aim for 121% YoY through opening of stores of core brands and diffusion lines. For outlets, we aim for 120% YoY through continued aggressive store openings.Net Sales Projection(Unit: ¥100m)FY2021ResultsFY2022ResultsFY2023ForecastYoY Measures476.0293.523.388.931.638.7496.3320.624.580.345.525.41. Subsidiaries, employee sales, wholesales, etc.Copyright © SANYO SHOKAI LTD. All Rights Reserved.560.0Net sales (total)113%375.329.682.854.617.6Department stores117%Recover from the impact of store closures in PY. Improve sales per square foot. Promote OMO by utilizing comprehensive catalogs etc.Directly managed storesEC & mail orderOutletsOther1121%Open more stores of core brands, and open new stores in urban FB/SC through a diffusion line approach.Continue to expand EC-only products and enhance full-price sales. Enhance reciprocal customer transfers with physical stores.Opened 4 new stores in FY2022. Actively open stores in leading facilities.103%120%69%20Measures to Improve Gross Profit MarginNew Revenue Recognition StandardContinue to promote measures such as reducing procurement cost margin, improving full-price sales margin, inventory control, etc. Aim to improve gross profit margin by 2.5pt from FY2021.Quantitative Target: Improve gross profit margin by 2.5pt (vs. FY2021)Qualitative policy Specific measuresReduced procurement cost margin• Optimize SCM by strengthening initiatives with major suppliers• Secure high profit margins by expanding outlet- and EC-only productsFundamental improvements to full-price sales margin and total sell-through rate• Full-price sales margin: Plan to improve from 61% for the full FY2022 to over 70%– Reduce product numbers/aggregate MD, and add bestselling products during the period– Strengthen the appeal of full-price sales at stores and EC, control discount rates, and shorten bargain sales period• Aim for total sell-through rate of over 80%, from 73% (FY2022 results)Inventory controlLow-cost management of unprofitable businesses• Control over-purchasing by keeping 20% of purchases, which have been reduced to ¥15bn in FY2022. ¥17bn projected in FY2023, but we will flexibly manage them depending on the situation• Product inventory at end of FY2022 was ¥7.8bn (decreased by ¥1.1bn from beginning of the period); product inventory at end of FY2023 is projected as ¥6.9bn–Improve inventory turnover rate by shortening merchandising cycles and developing a QR system• For unprofitable businesses, we have thoroughly reduced costs through restructuring such as aggregating stores, fundamentally reducing SG&A expenses, etc. by the previous fiscal year. Continue operating at low cost, and aim to convert them into profitable businesses‒ LOVELESS: Close down additional 3 stores, reducing the number of stores from 8 in PY to 5, and focus on improving store profitability (operating loss: forecast ¥220m, against ¥470m in PY)‒ CAST: Maintain number of stores at 9 and SG&A expenses flat at ¥330m. Plan to break even from ¥100m operating loss (vs. PY), by improving gross profit margin, etc.Copyright © SANYO SHOKAI LTD. All Rights Reserved.21Controls on SG&A ExpensesNew Revenue Recognition StandardActively invest in stores, systems, etc. while continuing to control fixed costs that have been reduced under the Revitalization Plan.Past Results vs. FY2023 Forecast(Unit: ¥100m)FY2021Results342.4111.5203.013.68.246.714.334.310.8FY2022Results308.012.1208.111.75.536.814.128.01.7FY2023Forecast335.2vs. PY MeasuresSG&A (total)+27.2An increase of ¥1.22bn226.7Sales expenses+18.614.010.337.016.430.8Promotional expensesEquipment expensesEmployee personnel expenses+2.3+4.8+0.2Logistics expenses+2.3Administrative expensesOther+2.8-1.7Recorded amount equivalent to rent for shops handling sales-linked purchase-as-sold consignment products (an increase of ¥1.59bn YoY). Optimization of FA staff due to closing down of unprofitable stores; reduced store operating costsEnhance promotion of new businessesInvestment in stores associated with opening new storesPersonnel expenses remain unchanged from PYIncrease in conjunction with sales and purchasesIncrease due to system investments1. Recorded extraordinary lossesSales expenses: FA expenses, sales commissions, rent expenses for real estate, etc. Equipment expenses: Shop construction costs, depreciation expenses, lease fees, repair costs, etc. Employee personnel expenses: Salaries, statutory welfare benefits, etc. Logistics expenses: Packing & transportation costs, logistics outsourcing fees Administrative expenses: Business outsourcing fees, physical Copyright © SANYO SHOKAI LTD. All Rights Reserved.distribution costs, utility expenses, travel expenses, communication expenses, miscellaneous expenses, etc.22Channel StrategyNew Revenue Recognition StandardFor department stores, improve profitability by enhancing store efficiency, while for directly managed stores and outlets, strengthen store openings centered on core brands. Improve EC profit margins by enhancing full-price sales.Department Stores Policy of strengthening selection and enhancing efficiencyImprove profitability through closing down of unprofitable shops• Closed down 160 shops in FY2021, and 40 shops in FY2022• Advance with the store opening and withdrawal plan focusing on shop efficiency from FY2023 as wellFor shops that continue businesses, streamline operations by reviewing the staffing system and promote OMO by utilizing comprehensive catalogs, etc.Directly Managed Stores Policy of strengthening and expansionActively open directly managed stores and outlets of core brandsStrengthen store openings in urban FB/SC through a diffusion line approach such as MACKINTOSH PHILOSOPHY “GREY LABEL”and CB CRESTBRIDGESupport for store developments and operations across different brands offered by a dedicated support team (nation-wide store development division/Headquarters sales division)EC Policy of enhancing and expanding full-price salesContinue to enhance full-price sales• Establish a fully cooperative system with full-price stores at brands’ EC sites• Restrict discount sales, and enhance full-price sales in SANYO iStore through specially featured content production• Plan to improve net sales by 103% YoY, gross profit margin by 5.1pt YoYCopyright © SANYO SHOKAI LTD. All Rights Reserved.23DisclaimerThis material was created to provide information related to the finances, business, etc. of SANYO SHOKAI LTD. and its affiliatedcompanies; it is not a full declaration or guarantee and was not created to solicit investments. Decisions regarding investing in the Company should be based on one’s own judgment, not the information provided in this material. In addition to historical results, this material includes the Company’s outlook for the future, and the outlook may change on account of various social and economic developments. The Company bears no responsibility for losses incurred on account of the use of information provided in this material. As for the outlook included in this material, the Company is not obligated to revise it according to new information and future developments and to announce any revisions. This material does not include all the information the Company discloses to entities such as securities exchanges, and may use expressions different than those used in disclosure material. Information in this material may be deleted or changed without notification. The Company has carefully prepared this material, and regardless of the reason, the Company bears no responsibility for incorrect information, troubles due to altered or downloaded information by third parties, etc. 24Inquiries regarding this material:Managing Officer &General ManagerCorporate PlanningCorporate Management HQHiroaki TeradaTEL: 03-6380-5421