YONDOSHI HOLDINGS INC.

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To Our Shareholders

Overview of 1Q Fiscal 2020

The first quarter period of fiscal 2020 (March to May 2020) was extremely difficult, with economic activity suspended on a global scale due to the COVID-19 pandemic. Japan was also under a nationwide emergency declaration that had a widespread impact on capital expenditures and corporate earnings, centered on the slump in consumer spending resulting from government calls for people to refrain from unnecessary outings, and for businesses to close.
For YONDOSHI HOLDINGS Group, in the Jewelry Business we suspended business operations and shortened operating hours at stores in stages from March to help prevent the spread of the coronavirus, with all stores closed from April 25 to May 26. In the Apparel Business, the everyday fashion brand PALETTE continued to operate with due consideration to the health and safety of employees, in order to fulfill its role as part of the social infrastructure supporting the lives of local customers.
Amid such unprecedented circumstances, the entire corporate group took steps to adapt and continue business operations by adopting a flexible working style, including introducing telework and utilizing online meetings.
As a result, consolidated net sales for the first quarter period amounted to ¥7,850 million (down 29.6% from the same period of the previous fiscal year), with operating income of ¥225 million (down 81.8%), ordinary income of ¥362 million (down 72.9%) and profit attributable to owners of parent to ¥139 million (down 82.7%). Despite the difficult operating environment, we were able to secure earnings.
While sales activities were restricted during the first quarter period, particularly in the Jewelry Business, the strenuous efforts of the Apparel Business supported our earnings. This reaffirmed the importance of securing stability for the corporate group through the business portfolio in order to ensure the continuation of the company.

Full-year Results and Dividend Forecasts

As stated in the results announcement of April 13, 2020, because of the high degree of uncertainty surrounding the COVID-19 situation and the impact it will have on our corporate group, we decided to postpone issuing full-year earnings forecasts for fiscal 2020.
Since that time, with the lifting of the emergency declaration we have gradually resumed business at jewelry stores, and currently all stores are operating as usual. Business at stores has been steady since reopening.
Sales at existing jewelry stores, operated by the F.D.C. Products Group, compared to the same month of the previous year, were around 100% in May on an operating day basis. The figure was 95.8% in June, but considering that there were two fewer weekend days in 2020, in real terms we consider this to be an increase from the previous year.
In the Apparel Business, the AS’TY Group has established a solid reputation for product planning, reliable quality, and delivery, and even during these difficult circumstances has steadily pursued measures with its mainstay clients. Retail firm age Co., Ltd., which operates the mainstay everyday fashion brand PALETTE, recorded an increase in sales at existing stores compared to the same month of the previous year in both May and June. The company continued to operate under the emergency declaration in order to serve the local community, which seems to have fostered even greater loyalty from customers.
Considering these recent trends, on the assumption that the current COVID-19 situation will not deteriorate, and consumer spending will gradually recover even if a certain degree of impact remains, YONDOSHI HOLDINGS Group has calculated and decided to disclose its consolidated results forecasts for fiscal 2020 (ending February 28, 2021).
Based on these assumption, for fiscal 2020 YONDOSHI HOLDINGS Group is forecasting net sales of 39.0 billion (down 13.3% year on year), with operating income of 2.8 billion (down 29.6%), ordinary income of 3.2 billion (down 25.8%), and net income of 1.9 billion (down 23.3%).
The outlook for employment and corporate earnings in Japan is expected to be extremely strained as a result of the impact from the coronavirus, but our mainstay “4°C” brand benefits from firm gift-related demand, and we receive support from many customers for bridal jewelry, so we consider this business to be less susceptible to economic trends. Even during past major crises, such as the 2008 financial crisis and the 2011 earthquake and tsunami, YONDOSHI HOLDINGS Group managed to maintain stable growth. It is still unclear when the virus will be brought under control or the extent of the impact, but by continuing to offer products and services desired by customers, we expect to overcome the current difficulties.
In terms of dividends, adhering to our goal of continual increases to reach an annual dividend of 100 yen per share in the future, for fiscal 2020 we plan to pay a full year dividend of 81 yen per share, comprising interim and year-end dividends of 40.5 yen each. This represents a tenth consecutive fiscal year of dividend increase.
While the economic outlook remains clouded, YONDOSHI HOLDINGS Group will draw on its solid financial standing to strengthen earnings capacity, and increase shareholder returns. We will also maintain stable management with the aim of sustainable growth.
We ask for the continued support and understanding.

Left: CEO Saishi Kimura
Right: COO Tohru Hirota

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