Summary of Consolidated Financial Results for the Nine Months Ended November 30, 2024

Translation

Notice: This document is an excerpt translation of the original Japanese document and is provided for reference purposes only. In the event of any discrepancy between this translated document and the original Japanese document, the latter shall prevail.

Summary of Consolidated Financial Results for the Nine Months Ended November 30, 2024

3. Forecast of consolidated financial results for the fiscal year ending February 28, 2025 (from March 1, 2024 to February 28, 2025) Percentages indicate year-on-year changes

(Note) Revisions to business forecasts published most recently: No

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1. Application of special accounting methods for preparing quarterly consolidated financial statements: None
2. Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements

Number of treasury shares at the end of the period

Average number of shares during the period (cumulative from the beginning of the fiscal year)

Review of the accompanying quarterly consolidated financial statements by a certified public accountant or an auditing corporation: Yes (mandatory)

Explanation regarding appropriate use of business forecasts and other special instructions

The forward-looking statements such as the forecasts of financial results stated in this document are based on the information currently available to the Company and certain assumptions that the Company judges as rational. These statements are not guarantees of future performance. Actual results may differ materially, depending on a range of factors. See "(3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information" in the section, "1. Qualitative Information on Quarterly Financial Results for the Period under Review," on page 10 of the attached material for the assumptions used in the financial results forecast and precautions for using the financial results forecast.

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• Contents of the attached document

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1. Qualitative Information on Quarterly Financial Results for the Period under Review

The forward-looking statements herein are based on the judgments of the Group as of the end of the third quarter under review.

(1) Explanation of Operating Results

In the first nine months of the fiscal year ending February 28, 2025, the Japanese economy achieved a moderate recovery, driven by an improvement in employment and income levels. However, consumers became more cost-conscious regarding daily necessities due to prolonged inflation stemming from the rising prices of raw materials and energy and the weaker yen. The business environment in the retail industry continued to be unclear due to challenges in recruitment and increasing costs.

In this environment, the Izumi Group, guided by its management philosophy of instilling pride and joy in its employees while contributing to the enhancement of the lives of communities and our customers, has set the long-term goal of creating livable communities and fostering the growth of the population. The Group has been implementing the strategies set out in the Second Medium- term Management Plan formulated in April 2021 (the strategies and target figures were updated in April 2023).

The growth strategy focuses on reducing the number of new store openings and investing in existing stores to revitalize them while expanding into new business areas through mergers, acquisitions and alliances. The Group aims to achieve both organic and inorganic growth to realize its long-term vision. To rapidly execute these initiatives, Izumi Co., Ltd. established the Investment Promotion Division reporting directly to the Executive Vice President in May. This division is responsible for overseeing mergers and acquisitions as well as developing new operations. Additionally, the Company hired external experts to enhance its organizational structure and support the implementation of the initiatives.

In May, the Company made Sunlife Co., Ltd. (Oita, Oita) a wholly owned subsidiary. Sunlife is a community-based food supermarket that has maintained a presence in a small trade area for a long time. Sunlife operates four stores primarily in Oita, an area not served by the existing store network. The Company believes that the acquisition of Sunlife will assist the Group in executing its area strategy such as entering a new market and expanding its market share.

In June, the Company and Maruyoshi Center Inc. (Takamatsu, Kagawa) began integrating their product procurement, logistics, and other systems in the Shikoku region under their capital and business alliance agreement. This integration allows the Company to streamline business processes and reduce costs in the Shikoku region. The Company aims to improve customer service by developing its logistics and delivery system, ensuring that goods are delivered promptly and accurately.

In August, consolidated subsidiary Youme Mart Kumamoto Co., Ltd. took over the supermarket business of by Seiyu Co., Ltd. (Musashino, Tokyo) in the Kyushu region through a company split (absorption-type company split). Youme Mart Kumamoto aims to establish dominance primarily in Fukuoka prefecture, achieve economies of scale in product procurement, promote sales, and streamline logistics. The Group will utilize the knowledge of efficient operations gained in the supermarket business that Youme Mart Kumamoto has taken over to establish a new profitable supermarket business. The goal of this initiative is to enhance the profitability of the entire Group.

The Company has been steadily implementing initiatives to achieve its environmental KPIs in its Basic Sustainability Policy. In May, the Company renamed its Customer Service Department to the Sustainability Planning Department to enhance its sustainability efforts. For more information about sustainability and the current status of the Company's sustainability activities, please visit the sustainability webpage.

Sustainability website https://www.izumi.co.jp/sustainability/

In June, the Company announced initiatives for implementing management practices that take into account the cost of capital and the stock price. This announcement includes the Company's analysis of its current cost of capital and return on capital and its policy on improvement initiatives. For details, please refer to:

https://www.izumi.co.jp/corp/ir/pdf/2024/0704news.pdf

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In its core retail business, system failures were caused by a ransomware attack that occurred on February 15. The ransomware attack impacted the ordering system, making it difficult to provide certain products. Some sales promotions and services were temporarily suspended, including the distribution of insert fliers from individual stores, the delivery of Youme App coupons, the e-commerce site Youme Online and the online supermarket Youme Delivery. The Company resolved these problems, the systems were restored and services returned to normal by May 1, with some exceptions. Subsequently, the Company took steps to increase the number of customers, which had declined following the ransomware attack. To prepare for rising electricity prices, the Company undertook a company-wide initiative aimed at reducing electricity usage to cut costs. At the same time, the Company actively invested in growth, specifically in the opening of new stores, renovations and mergers and acquisitions.

Following the ransomware attack, the entire Group is reviewing its business processes and developing systems to increase productivity under the theme, "creative restoration."

As a result, operating results for the first nine months of the fiscal year under review were as shown below.

Key factors contributing to operating results

(i) Operating revenue and operating gross profit

Operating revenue rose 28,446 million yen (8.2%) year on year to 373,266 million yen. This is primarily due to consolidated subsidiary Youme Mart Kumamoto taking over the supermarket business of Seiyu Co., Ltd. in the Kyushu region.

Operating gross profit was 148,751 million yen (up 5,215 million yen year on year). This is 39.9% of operating revenue, a decrease of 1.7 percentage points from one year ago.

(ii) Selling, general and administrative expenses and operating profit

Selling, general and administrative expenses increased 10,047 million yen (8.3%) year on year to 131,746 million yen. This increase was primarily due to increased personnel expenses and expenses related to the acquisition of the supermarket business. Selling, general and administrative expenses are 35.3% of operating revenue, remaining flat from the previous year.

Consequently, operating profit declined 4,831 million yen (22.1%) to 17,005 million yen. This is 4.6% of operating revenue, a 1.7 percentage point decrease from the previous year.

(iii) Non-operating income and expenses and ordinary profit

Non-operating income declined by 64 million yen (6.7%) year on year, to 895 million yen. Non-operating expenses climbed 256 million yen (54.4%) to 727 million yen, primarily due to increased interest expenses and fees connected to a syndicated loan arrangement.

As a result, ordinary profit decreased 5,152 million yen (23.1%) year on year, to 17,173 million yen. This is 4.6% of operating revenue, a 1.9 percentage point decline from one year ago.

1. Extraordinary income and loss, income taxes, profit attributable to non-controlling interests, and profit attributable to owners of parent

Extraordinary income stood at 2,860 million yen (an increase of 2,355 million yen from the previous year), reflecting gain on sale of investment securities of 2,343 million yen due to the sale of cross-shareholdings. Extraordinary losses came to 449 million yen (a

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decrease of 631 million yen from the previous year), reflecting provision for loss on building demolition of 150 million yen and impairment losses of 146 million yen.

Income taxes amounted to 6,845 million yen (a decrease of 221 million yen from a year ago).

Profit attributable to non-controlling interests was 880 million yen (an increase of 723 million yen from a year ago), chiefly due to gain on sale of investment securities recorded by consolidated subsidiaries.

As a consequence, profit attributable to owners of parent declined 2,667 million yen (18.4%) year on year to 11,858 million yen. This is 3.2% of operating revenue, a decrease of 1.0 percentage point from the previous year.

Performance by Segment

• Operating revenue

(i) Retail operations

In the core retail business, system failures resulted from a ransomware attack that occurred on February 15. The ransomware attack affected the ordering system, resulting in difficulties in providing certain products. Some sales promotions and services were temporarily suspended, including the distribution of insert fliers from individual stores, the delivery of Youme App coupons, the e-commerce site Youme Online, and the online supermarket Youme Delivery. The Company addressed these failures, and the systems and most services were returned to normal by May 1, with a few exceptions. The Company then instituted measures to increase the number of customers, which had declined following the ransomware attack.

While working to restore the systems, the Company sought to ensure its ability to supply products to minimize the customer inconvenience caused by the impact the ordering system failure had on the product line. By May 1, the Company had arranged to consistently supply products. It then focused on responding to the increasing polarization of consumption.

The Company stepped up its collaboration with the Nichiryu Group (Fukushima-ku, Osaka), which it joined in February. In the lifestyle division, which the Company manages directly, it is introducing high-value-added, price-competitive products. The Company plans to increase the number of these products from the next fiscal year. In September, Youme Mart Kumamoto, a consolidated subsidiary, introduced Kurashi More, a private brand of the Nichiryu Group. Through these initiatives, the Group will improve its ability to meet the demand for low-priced products which is increasing due to prolonged inflation.

In April, Youme Mart Shin-Omura opened in Omura, Nagasaki. This store is located in Sakura Mirai Shin Omura, a complex that includes a Muji which provides offering household goods, a Starbucks Coffee café, and condominiums. It aims to provide "the pleasure of everyday visits" as a supportive space for everyday life and fostering connections within the local community. The Group is opening Youme Mall neighborhood shopping centers. In May, it opened Youme Mall Koshi (Koshi, Kumamoto). In September, it rebuilt Youme

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Town Itsukaichi (Saeki-ku, Hiroshima) and opened Youme Mall Itsukaichi (Saeki-ku, Hiroshima). Youme Malls are retail facilities that includes Youme Mart, a supermarket, and specialty tenants, such as apparel shops and restaurants. The key phrase there is "a place where people visit, meet, and rest." The Group aims to create malls that are hubs for local communities and environmentally friendly, convenient, and comfortable community-based malls designed to support healthy lifestyles.

The Group remodeled existing stores. In March, Sundrug became a tenant of Youme Town Hirajima (Okayama, Okayama). In April, Muji became a tenant of Youme Town Gakuen (Higashihiroshima, Hiroshima). The Group solicits reputable tenants for its medium-term general merchandise stores to enhance their ability to attract customers. The Group added value to its large general merchandise stores by strengthening the food and beauty and drug sections of Youme Town Takamatsu (Takamatsu, Kagawa) and Youme Town Hakata (Higashi-ku, Fukuoka) in October and November, respectively. The Group expanded the sales floors that it directly operates to better meet the needs of local customers. Additionally, it solicited new food tenants to enhance the food section as a whole. The Group consolidated its beauty and health floors into the beauty and drug section and created new sales floors and product lines to attract new customers.

Thanks to these initiatives and sales promotions, sales picked up starting in May, when the systems were restored, following the decline in sales due to the system failures caused by the ransomware attack in February.

In March and April, sales activities were limited due to failures in the ordering system, which led to problems with merchandise and the suspension of activities such as the distribution of insert fliers and the delivery of app coupons. This meant fewer customers in the food and lifestyle departments directly managed by the Group, resulting in a decrease in sales. In May, the systems were restored and sales activities normalized. As a result, the number of customers increased and sales increased. The impact of the system failures on tenants was limited, and restaurants and other services performed well.

In June, the Group launched its "All-out low prices" campaign, offering discounts of up to 30% on 60 daily necessities. The goal of this initiative was to attract more customers and address the growing demand for low-priced goods due to the prolonged inflation. At the same time, the Group responded to the polarization of consumption by promoting sales of Zehi, its own manufacturing brand, as well as high-value-added products, including Kore-uma products that were selected via an internal evaluation process. This initiative led to a rapid increase in the number of customers.

In Autumn, the growth of clothing sales in the directly managed lifestyle department was sluggish due to the persistent summer heat. In the directly managed food department, the Group took steps to address the polarization of consumption with a focus on low-priced products. As a result, the number of customers increased, and sales were strong. Like the directly managed lifestyle department, clothing tenants faced challenges. Meanwhile, tenants in the food and leisure categories, including restaurants and amusement facilities, had their sales increase significantly.

As a consequence, same-store sales (including specialty tenants' sales) in the first nine months increased 0.4% year on year (before the application of the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29)). Same-store sales, excluding tenant sales, declined 1.6% year on year.

Costs were affected by a company-wide review of business processes and system development aimed at enhancing productivity under the theme "creative restoration" following the system failures. The Company has made active investments in growth, including store openings, renovations, and mergers and acquisitions while implementing a company-wide initiative aimed at reducing electricity usage to prepare for rising electricity prices.

As a result, operating revenue increased 8.4% year on year, to 360,150 million yen, and operating profit decreased 27.0% year on year, to 12,805 million yen.

(ii) Retail-peripheral operations

In retail-peripheral operations, the financial business and facility management business, in particular, were significantly affected by the system failures caused by the ransomware attack. However, revenue rose as the systems were restored.

At Youme Card Co., Ltd. in the financial business, the fees from Youme Card declined due to a drop in retail sales caused by the system failures. However, credit sales were strong at tenants in Youme Town facilities, and this contributed to an overall increase in revenue.

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The cumulative number of Youme Cards issued increased to 10,570,000 at the end of the first nine months under review from 10,230,000 at the end of the previous fiscal year.

In the facility management business, revenue at Izumi Techno Co., Ltd. was affected by delays in the start of renovations at Group companies due to the system failures. However, revenue improved significantly in the third quarter and moved into positive territory. Operating profit declined due to the lingering effects of the system failures, but improved steadily.

Operating revenue at Izumi Food Service Co., Ltd., which operates restaurant businesses, rose compared with the previous year, when operating revenue exceeded the level in FY2019, before the COVID-19 pandemic, reflecting the progress in the normalization of social and economic activity. Sales for key brands, such as Mister Donut and BR 31 Ice Cream, continued to increase. Moreover, Osaka Ohsho and Okonomi Ichiban, the main restaurants operated directly by the Group, experienced a recovery in sales, which contributed to the overall growth in revenue.

As a result, operating revenue stood at 34,732 million yen (up 6.0% year on year) and operating profit was 3,920 million yen (down 2.1% year on year).

(iii) Other businesses

In the wholesale business, net sales were weak, and the cost of sales increased chiefly due to the weak yen. Rental income in the real estate lease business was stable.

As a result, operating revenue amounted to 3,882 million yen (down 9.0% year on year) and operating profit was 475 million yen (down 14.5% year on year).

(2) Explanation of Financial Position

(i) Assets, liabilities and net assets

Total assets, liabilities, and net assets at the end of the first nine months of the fiscal year ending February 28, 2025 are as stated below.

Total assets

• Goodwill increased 55,733 million yen primarily due to the acquisition of the supermarket business previously operated by Seiyu Co., Ltd. in the Kyushu region (hereinafter the "Acquired Business"). As allocation of the acquisition costs has not been completed, the amounts of goodwill are provisional estimates.
• Capital expenditures during the first nine months reached 10,418 million yen, chiefly due to investments in new store openings, the revitalization of existing stores, and digital transformation. Property, plant and equipment increased 17,640 million yen after depreciation, principally due to the acquisition of the Acquired Business.
• Notes and accounts receivable - trade, and contract assets rose 11,443 million yen, mainly due to an increase in the credit transaction volume.

Liabilities

• Short-termand long-term borrowings increased 48,211 million yen, primarily to financing for the acquisition.
• Notes and accounts payable - trade rose 26,691 million yen, reflecting a delay in settlement. The last day of the fiscal year was a bank holiday, resulting in the postponement of settlement to the beginning of the following month.
• Other current liabilities increased 10,154 million yen, chiefly due to increases in accrued consumption taxes and sales deposits received from specialty tenants.

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Net assets

• Retained earnings rose 5,385 million yen, indicating an increase in internal reserves.
• As a result, the equity ratio was 48.7%, an 8.6 percentage point decline from 57.3% at the end of the previous fiscal year.

Cash flows from operating activities

• The main cash inflows were profit before income taxes of 19,583 million yen, an increase in trade payables of 26,340 million yen, depreciation of 13,149 million yen, and an increase in cash flows of 12,602 million yen from other operating activities, including an increase in accrued consumption taxes.
• The major cash outflows were an increase in accounts receivable - trade, and contract assets of 11,386 million yen and income taxes paid of 10,162 million yen.

Cash flows from investing activities

• The primary cash outflows were 77,676 million yen related to an absorption-type company split which led to the acquisition of the Acquired Business, and purchase of property, plant and equipment totaling 12,679 million yen. The purchase of property, plant and equipment mainly involved investments in new store openings, the revitalization of existing stores, and digital transformation.

Cash flows from financing activities

• The main cash inflows were proceeds from long-term borrowings of 78,500 million yen. This cash inflow was due to a syndicated loan arrangement.
• The major cash outflows were repayments of short-term borrowings of 18,700 million yen, repayments of long-term borrowings of 11,588 million yen, and dividends paid of 6,438 million yen.

As a result, the balance of cash and cash equivalents increased 3,596 million yen from the end of the previous fiscal year, to 15,594 million yen.

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(3) Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information

There has been no revision to the consolidated forecasts for the fiscal year ending February 28, 2025, which were released on August 28, 2024.

(4) Important Contracts, Etc. Related to Management

(i) Absorption-type split agreement

The Company and consolidated subsidiary Youme Mart Kumamoto Co., Ltd. resolved at their respective Board of Directors meetings held on April 3, 2024 that Youme Mart Kumamoto would acquire the supermarket business operated by Seiyu Co., Ltd. in the Kyushu region (hereinafter the "Acquired Business") through an absorption-type company split (hereinafter the "Absorption-type Company Split"). On the same date, Youme Mart Kumamoto entered into an Absorption-type Company Split agreement with Seiyu.

On June 17, 2024, Youme Mart Kumamoto resolved at a Board of Directors meeting to enter into an agreement to amend the Absorption- type Company Split agreement with Seiyu in order to modify the rights and obligations that Youme Mart Kumamoto would take over. On the same date, Youme Mart Kumamoto entered into an agreement to amend the Absorption-type Company Split agreement with Seiyu.

The basis for calculation of contents of the allotment pertaining to the Absorption-type Company Split

The acquisition price was determined after discussion between both parties. They considered the rights and obligations to be transferred, the current condition of the business being acquired, its future prospects, and the anticipated synergy between the business and the Izumi Group. The Company considers the price to be appropriate.

(ii) Syndicated loan agreement

The Company resolved at a Board of Directors meeting on July 9, 2024, to enter into an agreement to secure a syndicated loan of 78.5 billion yen. The goal of this loan is to raise the funds necessary for the acquisition set out in the abovementioned Absorption-type Company Split agreement. The loan agreement was concluded on August 30, 2024, and the Company received the funds on September 6, 2024.

Outline of the syndicated loan

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