Wacoal : Initiatives for the 2H of the FY2023 (Transcription)

Wacoal Corp.'s

Initiatives for the 2H of the FY2023

Wacoal Holdings Corp.

Representative Director, President and CEO

Hironobu Yasuhara

1

Hello, everyone.

I am Hironobu Yasuhara, Representative Director, President and CEO (Group CEO) I will now explain Wacoal Corp. 's Initiatives for the 2H of the FY2023

Change of Representative Director of the Company and Representative Director of Major Subsidiary

Background of change in representative directors

• Tomoyasu Ito, President of Wacoal Corporation, has tendered his resignation as President of Wacoal Corporation and Vice President of Wacoal Holdings for personal reasons (resignation at the end of November 2022).
• Until the end of March 2023, Hironobu Yasuhara, President of Wacoal Holdings will also take the position of the President of Wacoal Corporation and manages domestic business.
• Wacoal will make a transition to a new structure from April 2023.

	Wacoal Holdings Corp.
	Representative Director, President and CEO
2	Hironobu Yasuhara

Please see page two.

First, we would like to reiterate our announcement of the change in representative directors, which was disclosed on November 11.

Tomoyasu Ito, President of Wacoal Corporation, has tendered his resignation as President of Wacoal Corporation and Vice President of Wacoal Holdings for personal reasons, which was accepted and approved by the Board of Directors. At the same time, it is resolved that I, as President of Wacoal Holdings Corp., will also take the position of the President of Wacoal.

As stated in my presentation, my term as President will end at the end of March next year, and Wacoal will transition to a new management structure from April 2023 onward. Although it will be a short period of about four months, we would like to speed up the structural reforms that we are currently undertaking, and after setting a firm course for recovery, we would like to pass the baton to the new management team.

Implementing the Flexible Retirement Program to optimize the personnel structure.

Purpose of implementation of this system

• To speed up business structural reforms in order to improve the profitability of our domestic business.
• To optimize the personnel structure to match the scale of the business.
• To accelerate the transformation into a resilient organization that boldly takes on new challenges and delivers results quickly.
  → The impact of this system on business performance is scheduled to be disclosed in mid-February.

Company to target for implementation:

Target:

Expected Acceptance Number:

Offer Period (scheduled):

Date of Retirement:

Incentives:

Wacoal Corp.

permanent employees below the management level and

employees on indefinite-term contracts, who are at least 45 years of age

• permanent employees at management level who are at least 50 years of age）
  *Excluding sales staff

Approximately 250 employees

January 2023（schedule）

March 31, 2023

Special additional payment based

3

Please see page three.

Next, I will explain the implementation of the special operation of the flex retirement system, which was also disclosed on the 11th.

The flex retirement system is an elastic retirement system introduced with the aim of supporting employees in their second life. The decision to implement this special operation was made in order to optimize the personnel structure to match the scale of the business and to accelerate the transformation into an organization with the ability to respond to change.

Please refer to the disclosure documents for information on eligible employees, number of employees, and details of support. The impact of this matter on business performance has not been incorporated in the revised plan. We plan to disclose the amount of impact on business performance again in mid-February after the special management offering is completed.

To reiterate, we will increase the speed of business structure reforms to realize improved profitability.

Review of 1H

Wacoal Corp.'s Priority Initiatives

Progress of	Aim to improve LTV by improving the
CX strategy	customer experience value and bringing
online and offline together.
Evolution of the	Implementation of an optimal marketing
approach for each region and customer
area sales system
	based on area information.
Strengthening of	Integration of cooperative marketing
marketing	capabilities to enable effective promotion
that resonates with customers.
Cost structural	Improving profitability by continuing structural
reform	reforms of work style and manufacturing and
pursuing cost-effectiveness.
Withdrawal of	Decision making on withdrawal of
unprofitable stores	stores, etc. through periodic inspection.

Evaluation at the end of 1H

• ⇧ Purchases by member customers proceeding due to

• strengthenedCXretention戦略marketingの推進.
• • Challenge: Purchases by non-members, including new members, were lower than expected.
  • Dysfunction of the area sales system, and delayed

• developmentCXof customer戦略のcontacts推進.
• • Delay in area analysis (population structure/ consumer characteristics, etc.)
  • Continuation of storefront-first mass marketing.
• ⇩ Delayed causeCX戦analysis略のand推進response to the marketing failure.
• • Started to optimize workforce for cost structural reforms. ▲ ⇩ Challenge:CXTransformation戦略の推to進P/L centered organization
    and response to rising cost of materials.

• ⇧ Discussions on addressing and dealing with

• unprofitable CXbusinesses戦略のhave推progressed進 . (Decide to continue in 2H)

	➢ Efforts to resolve issues are slow, and the process from verification to improvement of each
	measure is not functioning properly.
Reflection	➢ Lack of clarity in management and responsibility for each policy. HD supervision was also
inadequate.
	➢ We, both management and employees, have not yet eliminated the bad mindset of not
	wanting to change Wacoal.

4

Please see page four. We will take a candid look back at Wacoal in H1 of this fiscal year, which was a difficult period for the Company.

First, we rated the CX strategy, which aims to increase customer value through digital innovation, as "▲". Purchases by member customers are proceeding as planned due to strengthened retention marketing, but purchases by non-members, including new members, were lower than expected. Next, we rated the evolution of the area sales system, which implements an optimal marketing approach for each region and customer based on area information, as "×". We have not been able to transform from our previous channel-based sales operations and have not yet developed contacts with customers, which was the original objective of the area strategy. We also rated a firmer commitment to strengthen our marketing efforts as "×". We have not been able to break away from over-thecounter-first mass marketing and develop promotions that generate buzz. Cost structure reforms and addressing unprofitable businesses were rated as triangles. Although we have taken measures to optimize our workforce, such as the decision to implement a special flex retirement system, I feel that we have yet to transform our organizational management to be P/L centered on a company-wide basis. We are also behind schedule in how to cover the rising cost of materials and the impact of foreign exchange rates in this area.

In summary, we recognize that Wacoal has three challenges today. The first issue is speed. The speed of efforts to resolve issues is slow, and the process from verification to improvement is not functioning properly. The second issue is the lack of clarity in management and responsibility for each policy. HD supervision was also inadequate. This is something I have greatly regretted myself. The third challenge is that we have not yet eliminated the bad mindset of not wanting to change that is inherent in Wacoal.

Wacoal : Speed up the structural reform Initiatives for the 2H of this year

Priority measures for the 2H of this year

Speed up the structural reform	Pave the way back to growth	Selection of
successor

Specific initiatives

➢ Undertaking a fundamental review of our marketing activities: Restructuring of marketing structure and strategic cost allocation.

➢ Restructuring area strategy: Pursuit of human resource and investment efficiency, selection of growth areas and transfer of resources.

➢ Determining the P/L of existing stores and formulate a list of stores to be closed: Based on profit and loss plans and improvement measures.

➢ Strengthening Wacoal's EC: Review of storefront-first marketing strategy and strengthen measures to acquire new customers.

➢ Creating a workplace with high organizational vitality and psychological safety: Identifying and improving organizational issues.

➢ Formulation of the management structure for the next fiscal year: Selection of human resources capable of carrying on the future, optimization of personnel, and streamlining the

5 organization.

Moving onto page five.

My own role as President of Wacoal is to work to resolve issues as quickly as possible and to promote the creation of a workplace where employees can work without anxiety. To this end, we have set the following three priority measures for H2 of the fiscal year: speeding up structural reforms, setting a course for returning to a growth trajectory, and selecting successors and handing over the Company to the next generation. At the same time, we will work on the six initiatives listed on the page.