Issues to be addressed

1. Domestic: To shift to a business model that is capable of responding to diversifying customer needs and shorter trend cycles

We will transform ourselves into a business model that is capable of responding to diversifying customer needs and shorter trend cycles, to achieve a recovery and expansion in top line which has been gradually declining and recover our profitability. By reviewing the uniform product mix and delivery style of new products, we will establish a model that reliably delivers top-selling products to stores to reduce missed sales opportunities. We will also change to a production system to match the demand situation at the store, from the conventional batch production system, to improve the supply ratio for top-selling products. With respect to product planning and development, we will shorten development and delivery lead-time by utilizing existing patterns and reviewing business processes such as planning and development meetings, to accelerate the speed of launching products that capture customer needs and improve sales activities.

2. Domestic: To execute cost structure reform toward improvement in profitability

In order to restore basic profitability, a radical cost structure reform will be implemented continuously. We will aggregate product numbers, which have existed in large numbers so far, down to an appropriate level, thereby achieving cost reductions relating to manufacturing and sales activity and enhancing investment efficiency. Additionally, by overhauling the production system and sewing processes, we will strive to reduce the costs of manufacturing and materials. Since sharp increases in raw materials and other costs are expected to continue due to the continuing depreciation of the Japanese yen, we will aim to realize an optimal cost structure by the thorough implementation of selection and concentration.

3. Domestic: To execute “brand strategy” and “customer strategy” that capitalize on the power of digitalization and our strengths

In order to switch the offered value from “WACOAL for female beauty” to “WACOAL to empower customers’ individuality,” we will implement fully customer-driven brand management to develop highly attractive brands with clear value offered. We will also promote customer-driven DX to build deep, broad long-lasting relationships with customers and offer optimal customer experience. We will utilize digital technology to analyze “customers’ voice” and “sales staff’s knowledge in customer service,” in addition to the purchase history data of WACOAL Members, for use in providing customer experience. Further, we provide highly satisfactory customer experience throughout at physical stores and online by utilizing a 3D measuring service and apps in addition to consulting service by our sales staff. On top of them, we will advance initiatives for enhancing customer experience from various angles, including stepping up the service of physical stores putting items on hold and handing over items ordered through our e-commerce platform.

4. Overseas: To execute growth strategy toward the next medium-term management plan

In the U.S., we will continue our efforts aimed at expanding customer contact points by utilizing digital technology toward the realization of growth in e-commerce. In Europe, we will boost our efforts aimed at growth in e-commerce business and strive to cultivate new channels with a company that we acquired in September 2024 and maximize our synergies. In China, the recovery of revenue has been delayed due to the struggling private consumption resulting from the prolonged deterioration in business confidence. We aim at a return to the growth path by revising marketing strategy and concentrating resources in e-commerce business. At the same time, we will execute a cost structure reform to enhance business efficiency.

5. Governance: To improve profitability and capital efficiency through strengthening of our corporate management platform

Our group has decided to introduce ROIC management to improve capital efficiency and realize robust corporate structure. We will use ROIC not only for managing enterprise-wide financial targets, but also as a means of performance management to accurately measure results and quantitatively link improvement activities on the ground with improvements in profitability and capital efficiency expected by investors and other stakeholders.

6. Other issues

Environment issues such as climate change and human rights issues are becoming increasingly serious, and we believe they require appropriate response and prevention. Our group will continue to promote “sustainability management” that achieves both “resolution of social issues” and “sustainable growth” through our business activities, by viewing our efforts to address increasingly complicated and diversified social issues as future “growth opportunities.” The Company will endeavor to achieve resolving social issues on one hand and sustainable growth on the other hand through our initiatives for “maximizing the value provided to customers,” “building an organization in which each employee can grow and be highly motivated,” “preserving the global environment for future generations,” “realizing a society in which everyone can excel at their roles” and “enhancing governance toward realization of sustainable growth,” which we have defined as our materiality (material issue) items.

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