Revised Medium-Term Management Plan

Basic Policy of the Revised Medium-Term Management Plan

In order to improve the probability of achieving VISION 2030, we will shift to a structure that can steadily generate cash

Recognizing the Current Situation	The speed of changes in the external environment was quicker than expected, and weaknesses in our supply chain management have become apparent With diversifying customer needs, we recognize that conventional advertising, product planning, and production systems are not enough to respond to market changes, causing deterioration in profitability and excessive inventory (especially with the existing product planning and development lead time [LT], which takes more than one year to market, and improvements are urgently needed). As for the harmful effects of functional organizations, various coordinated tasks and complicated profit and loss management hinder prompt decision-making. The responsibility for the management strategy is not clear, and the unity of the effectiveness of the strategy is not improving. In addition, the holding company’s supervisory function over its subsidiaries is insufficient, and improvements are needed.
Environmental Awareness	Opportunities Diversifying need to “be yourself” Increasing need for health and comfort Social inculcation of sustainability awareness Developing markets with significant growth potential		Risks Increasing procurement costs due to changes in the external environment Declining domestic demand due to population decline Lack of competitiveness due to slow innovation Declining corporate attractiveness and a serious shortage of staff
Wacoal Group’s Strengths	Personalized body and mind database	Research/knowledge of various body types/life stages	Manufacturing technology for products that suit each customer	Organizational ability to meet individual needs and embody services
Basic Policy	Strive to improve and enhance profitability and capital efficiency and transform ourselves into a company that can continue to invest in the growth necessary to sustainably increase corporate value and return profits to our stakeholders. 1. Business model reforms to improve profitability Implementing business model reforms (supply chain management reforms and cost structure reforms) to restore basic profitability 2. Growth strategy to achieve VISION 2030 Carrying out brand strategy and customer strategy, utilizing the power of digital resources and our Company’s strengths to lead to further growth 3. Introducing ROIC management Introducing ROIC management as business management infrastructure that supports measures to enhance profitability and the effectiveness of strategies 4. Promoting asset reduction Improving capital efficiency by reducing inventories, cross-shareholdings, and streamlining real estate holdings
Financial Strategy	Improving profitability through business model reforms and growth strategies as a top priority, we will reduce inventories and cross-shareholdings, and streamline real estate holdings to improve capital efficiency and increase ROE While prioritizing investments for future growth, we will actively return profits to shareholders to improve capital efficiency

Revised Medium-Term Management Plan Strategy

(1) Business Model Reforms	Supply chain management reform Implementing SCM reforms at Wacoal (Japan) to respond quickly to changes in customer needs and the market environment With the use of digital technology to build SCM linked to demand from the customer’s point of view, thoroughly selecting and focusing to optimize the cost structure Cost structure reform In order to restore Wacoal (Japan)’s basic profitability, a radical cost structure reform will be implemented. Setting reduction target to ¥7 billion We plan to improve the sales profit ratio by 3 pts to 4 pts and SG&A expenses by 4 pts to 5 pts by FY2026 (compared to FY2023) Dealing with unprofitable businesses Examine the future ideal state of each business and determine an action plan for the continuation, sale, or withdrawal of each business
(2) Growth Strategy	Wacoal Corp. To meet diversifying customer needs, we will contribute to the “beauty, comfort, and health of each customer” Overseas business Amid an uncertain business environment, we will first work to improve our management infrastructure and execute growth strategies for the next medium-term management plan
(3) Introducing ROIC Management	Introducing ROIC management to improve capital efficiency and achieve a robust corporate structure In addition to portfolio management, it is also used 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
(4) Promoting Asset Reduction	In order to improve asset and capital efficiency, the Company’s basic policy is to sell any assets that do not contribute to raising corporate value When selling, we will search for investment opportunities that will contribute to business growth, and determine the businesses that should be invested in from the perspective of ROIC (Inventories, cross-shareholdings, and real estate holdings are subject to review and implementation)

Quantitative Targets in the Revised Medium-Term Management Plan

In light of the external environment, initial sales targets have been revised downward. On the other hand, through business model reforms and growth strategies, we will strengthen our ability to respond to customer changes and profitability while striving to improve capital efficiency. In addition, we aim to achieve a ROE of 7% and a PBR of 1 time or more.

Financial Strategy

Financial Policies：

Improving profitability through business model reforms and growth strategies as a top priority, we will reduce inventories and cross-shareholdings, and streamline real estate holdings to improve capital efficiency and ROE
While prioritizing investments for future growth, we will actively return profits to shareholders to improve capital efficiency

Dividend Policy：

Our basic policy on profit distribution to shareholders is to make stable distributions based on consideration of our consolidated performance, while seeking to increase our enterprise value through active investment aimed at higher profitability and to increase net income per share.

Dividend and Share Repurchase

Cash Flow Allocation（FY2024~FY2026）：

during the medium-term plan revision period, we will strive to improve profitability through structural reforms, reduce inventories andcross-shareholdings, and liquidate real estate holdings.The policy is to actively return the cash generated thereby to shareholders in order to improve capital efficiency, while giving priority to investment in growth. We will work to achieve our ROE and ROIC targets through both business and financial strategies.

Revised Medium Term Management Plan FY2024 to FY2026