Fiscal year ended March 2024

Nitori Holdings

Integrated Report 2024

To enrich the homes of people all over the world.

New Phase, New Growth.

Top Message

Message from the Chairperson

"Global Expansion" as the Key to Achieving the Vision 2032

With the milestone of reaching 1,000 stores, we will continue to pursue our mission (aspiration) as we expand our store openings globally.

Representative Director & Chairperson

(Chief Executive Officer)

There are 8 years left until the deadline for achieving our vision of "3,000 stores and 3 trillion yen in sales by 2032." This vision aims to expand the number of stores and customers, which are barometers of our contribution to society. Achieving the Vision 2032 requires not moderate growth but rather "discontinuous" growth. One of the major keys is business expansion in the rapidly growing Asian markets. For over 30 years, we have established trading offices and other bases in Asia, built relationships with numerous manufacturing partners, and set up our own factories, thereby building and strengthening our group's supply chain. By effectively leveraging these bases and supply chain networks, we aim to scale up our sales business quickly through rapid store openings in Asia.

We plan to open a total of 100 overseas stores in the fiscal year ending March 2025. Our goal is to establish a system and structure that will enable us to open more than 200 stores annually at an early stage.

In Japan, we will also vigorously promote initiatives to enhance the richness of our customers' lives. To improve convenience, we will continue to actively open stores in urban areas, suburbs, and regions with smaller market populations, as well as various businesses within the group. Additionally, to make our customers' shopping experience more comfortable, we will revamp our apps and e-commerce sites to enable the organic integration of our store network and e-commerce. Regarding the products we handle, we will further strengthen our development framework to ensure expansion and enhancement.

Akio Nitori

Training Top-Tier Specialists Over 20 Years

In April 2024, approximately 1,000 new employees, the largest number in our history, joined our group. We are delighted to see an increase in colleagues who resonate with our mission and vision and aim to grow together.

Under our unique educational systems, such as job rotation and Nitori College, more than 700 specialists with over 20 years of experience, who have developed their mission and vision within their respective areas of expertise, now support our entire

Aiming to Provide Further Enrichment

The fiscal year ending March 31, 2024, marked the milestone of reaching 1,000 stores worldwide.

I believe this transformation has provided us with significant momentum for the future growth of the

We have long invested more than five times the average amount spent by listed companies on education, with the goal of training individuals who possess their own mission and vision, and who think and act independently to achieve them, rather than merely working for the company or their superiors. As a Manufacturing-Logistics-IT-Retail Business, we encompass a wide range of business fields. Each field requires specialists with the highest level of knowledge and experience in the industry. I often tell my employees, "three years on a stone, five years in the wind and snow, ten years of struggle, and twenty years to become a specialist," meaning that perseverance pays dividends.

group.

To achieve the growth we aspire to, we need even more specialists across a broader range of fields.

In particular, we believe that the depth of our global talent responsible for overseas expansion (▶P13-20) and our IT personnel supporting growth through our unique in-house IT infrastructure (▶P21-22) will become increasingly important. Nitori Digital Base CO., LTD. established in April 2022 to accelerate IT and DX, continues to expand steadily, and we plan to further bolster our IT workforce to a system of 1,000 IT personnel. We will continue to invest in human resource education to strengthen our team of numerous elite specialists.

I believe that reaching 1,000 stores despite the recent COVID-19 pandemic, soaring prices of resources and transportation costs, yen depreciation, rising geopolitical risks, and other unprecedented compounding adversities is the result of all employees who share our mission and vision and continued to take on challenges with the spirit of "turning adversity into opportunity". The company is being reborn as a leaner organization by using adversity to eliminate waste, inconsistencies, and overburden, and to curb unnecessary costs.

Nitori Group.

In our pursuit to enrich our customers' lives, we are expanding our offerings beyond home furnishings to include apparel and dining services. (▶P37-38) As we aim to achieve our mission, we will continue to expand and strengthen our unique business model of "Manufacturing-Logistics-IT-Retail Business," striving to turn our mission into reality.

Expect Further Growth of the Nitori Group Across Industry Boundaries

Creation of Management Policy

Establish a Business Model that Will Revolutionize the Furniture Industry

Domestic Nationwide Development / Overseas Expansion

Globalization and expansion of business fields

1967

Nitori Furniture Store established

1973

Direct purchase from manufacturers started

1995

Began operating an overseas factory

Established factories overseas in order to

2017

The new factory in Ba Ria-Vung Tau, Vietnam, began operation

2021

Opened the first store in Malaysia

Founding Spirit

"To bring the comfortable

and enriched living

Break through from being just a furniture store

●Opened large stores which sold products that make daily life more enjoyable and convenient

●Proposal of total coordination

achieve low prices for products with Japanese quality

2003

Achieved 100 stores and ¥100 billion in net sales

2007

Opened Kaohsiung Dream Mall Store

2014

Opened Wuhan Star City Store Launched Nitori app service

2015

2018

Siam Nitori, a Carpet Manufacturing Plant becomes wholly owned subsidiary

2022

Opened the first store in Singapore Nitori Digital Base CO., LTD. established

2023

of the U.S. to Japan"

2008

Price Cut Declaration

Price cuts on 1,000 items following the global financial crisis

Opened Nitori Printemps Ginza Store as the first store inside a department store

2019

Started apparel brand N+

2020

Management integration with

SHIMACHU CO., LTD.

Opened stores in Thailand, Hong Kong, South Korea and Vietnam Reached 1,000 group stores worldwide.

Current Status of Nitori Group

Nitori Group has continued to provide products tailored to customer needs, based on its concept, which has remained consistent since its founding - to bring the comfortable and enriched living of the U.S. to Japan. Nitori Group of "today" is a midway point on its journey into "tomorrow," as it looks to achieve its vision.

Top Message

Message from the President

Net sales

895.7

billion

Number of customers

Approx.285.3

million

*The number of customer visited to our stores in the main domestic sales business *Approximately 142 million customers shopped in our major global sales business

Number of Nitori members

Approx.

44.64

million

*Of which, 19.33 million are app members, 25.31 million card members (domestic)

Evolving the established business model to achieve the Vision 2032

Toshiyuki Shirai

Representative Director & President (Chief Operating Officer)

Number of annual domestic

Number of containers handled annually

Number of employees of

Our Unique "Manufacturing-Logistics-IT-Retail" Business Model

deliveries

917million

13.4 thousand

TEU

*TEU: Unit of measure equivalent to a 20-foot container

the Group

56,934

• Number of non-regular employees converted to 8-hour equivalents is 38,540 (Of these, the average annual number of non-regular employees is 19,606)

At Nitori Group, every employee shares the mission, "to enrich the homes of people all over the world," which is at the heart of everything we do. The guiding principle of our activities is to do our utmost to achieve our long-term vision of "3,000 stores, 3 trillion yen in sales by 2032," by mobilizing the Group's strengths.

To realize this mission, it is essential to balance affordable pricing with high quality and functionality.

Through rigorous efficiency improvements and cost reductions, aimed at total optimization, we have established all necessary functions within the group

• from planning and manufacturing to sales.

This has led to the creation of our unique, integrated business model known as "Manufacturing-Logistics- IT-Retail Business." The business model we have built since our founding will continue to evolve and expand into new business fields, always striving to

realize our mission.

(billions of yen)

(billions of yen)

(billions of yen)

System

Development

A vertically integrated business model encompassing manufacturing, logistics, IT, and retail

Product Quality

Control

Top Message

Message from the President

Towards the Realization of Our Mission, We Continue to Take on Challenges.

Summary of the Fiscal Year Ending March 2024

Initiatives to Improve the Shopping Experience

While the impact of global financial tightening and concerns about the future of the Chinese economy pose risks to our country's economic outlook, the effects of various policies are raising expectations for an economic recovery. However, the furniture and interior industry continues to face a challenging environment due to intensifying competition across different sectors and business types, rising raw material prices, and soaring labor costs driven by labor shortages. Although the previous consolidated fiscal year was an irregular period of 13 months and

11 days due to a change in the fiscal year end, making it incomparable to the current fiscal year, the Group's operating results for the current fiscal year recorded sales of 895.7 billion yen, a 5.5% decrease year-over- year (YOY), ordinary income of 132.3 billion yen, an 8.1% decrease YOY, and net income of 86.5 billion yen, a 9.0% decrease YOY. We will continue to earnestly provide products and services that "Offering the Unexpected" value and contribute to the enrichment of our customers' lives.

To satisfy more customers, we have been able to gain support by offering our most recommended products at special prices during various campaigns, including the "Life Support Campaign," "Founding Anniversary Sale," and the "Nitori Group 1,000 Stores Milestone Celebration Sale." Additionally, in response to customer requests for mobile payment options, we introduced mobile payment services in our "Nitori," "Deco Home," and "N+" stores in February 2024. Since the introduction, the increased payment options have made shopping more convenient, and we have received positive feedback from our customers.

Toward the Realization of a Global Chain Store

Held a press conference for the "Nitori Group 1,000 Stores Milestone Celebration Sale"

Despite compounding adversities, the fiscal year ending March 2024 became a year of significant leaps in terms of store openings. With the belief that the number of stores and customers serves as a barometer of our contribution to society, we have set an interim goal of achieving "200 million or more customers by the fiscal year ending March 2026" as a milestone towards realizing our mission and vision.

To provide a richer lifestyle for more customers, we are expanding our store network both domestically and globally, working towards establishing a global chain. In the current consolidated fiscal year, we achieved a net increase of 99 stores both domestically and internationally. Domestically, we opened

33 Nitori EXPRESS stores, seven Deco Home stores, eight N+ stores, and one Shimachu store, totaling 49 new stores. Internationally, we opened a total of 50 new stores. As a result, with the opening of the Nitori Tsuruga Store on March 29, 2024, we reached the milestone of 1,000 stores for the group.

Additionally, for the first time this fiscal year, the number of overseas store openings surpassed that of domestic openings. We believe this year marked a significant step forward towards realizing a global chain store.

Direction of Growth Strategies and Approach to Corporate Growth

Top Message

Message from the President

1. Expanding Business Fields and Gaining Customer Support

3. Business Foundation Reform through Supply Chain Management, IT and Organizational Strategies

Nitori Group's Sustainability

We are facing significant changes in the business environment due to increasing global uncertainties, changes in Japan's social environment, such as population decline, an aging society, and the rise of single-person and dual-income households, as well as rapid technological advancements, which is beginning to alter consumer values.

In our existing businesses, we aim to achieve even more attractive pricing, assortment, quality, and coordination proposals to expand our customer base and increase the number of customers. In our home improvement store business, which sees high customer usage, we will leverage our group strengths to increase the number of customers while further promoting low-cost operations to enhance profitability. Additionally, to continue receiving support from our customers, we will strengthen product development and coordination proposals, and adapt our sales methods to changes in shopping behaviors.

2. Accelerating Expansion of Global Chain Store Operation

In the fiscal year ending March 2024, we opened our first stores in four countries and regions: Thailand, Hong Kong, South Korea, and Vietnam. Additionally, we opened 28 stores in Mainland China, 8 stores in Taiwan, and 4 stores in Malaysia, accelerating our expansion in the Asian region. In April 2024, we will enter the Philippines, followed by Indonesia in July. Additionally, we are also considering expanding into India. Moving forward, we will actively expand our store network, focusing on countries and regions in Asia where the middle- income class is rapidly growing due to economic development.

The "Manufacturing-Logistics-Retail Business" model that we have cultivated since our founding, in which we control the entire supply chain through our own network, has evolved into a "Manufacturing-Logistics-IT-Retail Business" through the use of digital technology, which has become increasingly important in recent years. We will further develop this as a business foundation to support the realization of our long- term vision. (▶P21-22) We aim to make the growth of each employee the driving force behind the company's growth through organizational strategies aligned with our medium-and long-term management strategy and HR systems that balance career advancement and life events for our employees. As a group, we aspire to fulfill our mission and contribute to society. By doing so, we will build a business foundation that maximizes the strengths of our diverse channels, including our network of stores, logistics network, and proprietary e-commerce, thereby accelerating our growth.

4. Promotion of M&A and Alliances to Expand Business Fields

We will explore strategic alliances and consider M&A opportunities that are expected to create synergies for both parties, with the aim of expanding our business fields and enhancing vertical functions.

5. Sustainability Management to Both Resolve Social Issues and Achieve Our Mission

We will pursue the realization of a better future for our customers, all stakeholders, the environment and society.

Leveraging Nitori Group's unique circular business model, we strive to promote business that balances our customers' comfortable living with the resolution of environmental and social issues. Guided by seven key sustainability challenges (Materiality Issues), we aim to achieve a sustainable society.

In our resource recycling efforts, we promote environmentally friendly manufacturing and initiatives at each stage of "manufacturing," "transportation," "use," and "after use." Notably, in our "after use" stage, we focus on recycling collection. For curtains, we began continuous collection in June 2023, and from October to December of the same year, we conducted nationwide collection and resale of recycled down feather quilts. From January to March 2024, we initiated our first-ever towel collection at select stores.

In addressing climate change, we have begun operating solar power generation at some of our stores. This initiative is the first of its kind in Japan, where stores with installed solar panels generate more electricity than they consume, supplying the surplus to other stores within the group. This system will be gradually expanded, including to our logistics centers.

By promoting circular business practices that encompass not only product and waste resource circulation but also energy resource circulation, Nitori Group aims to achieve carbon neutrality by the FY2050.

As an example of our community initiatives, following the Noto Peninsula Earthquake in January 2024, we immediately collaborated with affected municipalities to donate essential living items such as bedding, pillows, and slippers. We continue to support essential living needs for temporary housing in the affected areas. Additionally, we are providing living and employment support to Ukrainian refugees displaced by war to help them lead independent lives in Japan.

Moving forward, we will continue to position sustainability as a key management issue and promote initiatives to address environmental and social challenges required of us as a corporation.

Supporting Sustainable Corporate Growth through "Organization, Talent, and Education"

Since its founding, the Nitori Group repeatedly rejected the status quo and has continued to take on unprecedented challenges. The driving force behind this is our employees. Based on the belief that "individual growth leads to corporate growth," we have focused on the development of numerous elite specialists. (▶ P4, P51-58)

For the future expansion of our business fields, we consider the recruitment of outstanding talent and the development of individuals capable of driving improvement and reform to be of utmost importance. Additionally, to accelerate our global chain expansion, we will promote local hiring and education overseas (▶ P14) and continue to actively invest in human capital to achieve our vision.

Message to Stakeholders

Nitori Group will further strengthen and evolve its business model to realize its mission and vision. We will strive to meet the expectations of our

The solar panels on the rooftop of the Nitori Fujieda Store

stakeholders, and we ask for your continued support.

Special Feature

Global Strategy

Executive Vice President & Director,

General Manager of Global Merchandising Division & General Manager of Global Sales Promotion Office, and In Charge of Overseas Sales Business

Strengthening and dramatically growing the global business is one of Nitori Group's most important tasks in achieving the Vision 2032. Among our priorities is accelerating the expansion of stores in rapidly growing Asian countries and regions. In the fiscal year ending March 2024, we successfully introduced Nitori's products and services to new customers in four additional countries and regions: Thailand, Hong Kong, South Korea, and Vietnam. Utilizing our established frameworks, expertise, and systems, we are committed to further expanding our global business.

Increasing the Number of Stores and Accelerating Human Resource Development for Global Expansion

To achieve our Vision 2032 goal of having 2,000 stores overseas, it is imperative to establish a rapid store opening system and accelerate the development of globally capable talent. Our strategy includes not only educating domestic employees (training expatriates) but also training locally hired national staff and actively recruiting new graduates in each region to speed up talent development.

We are committed to developing domestic talent with operational skills and a passion for working overseas, who can also speak English. These trained expatriates will then educate the national staff, accelerating local human resource development.

Furthermore, following Taiwan and Mainland China, we have begun hiring new graduates in Malaysia and Thailand. Just as we do at Nitori in Japan, we will educate these new

Masanori Takeda

Delivering Enriched Living to Customers Worldwide

graduates from the start and help them improve their skills.

Related page: P54, Focusing on Developing Human Resources Capable of Working Globally to Achieve the Vision 2032

Participants in Japan Training for national staff

The fiscal year ending March 2024 marked a significant milestone in our long-declared goal of accelerating global store openings. Beyond expanding our store networks in Mainland China, Taiwan, Malaysia, and Singapore, we have also entered Thailand, Hong Kong, South Korea, and Vietnam. Additionally, we opened our first store in the Philippines in mid-April 2024 and in Indonesia in late July 2024. We are delighted that customers in ten countries and regions in Asia, excluding Japan, can now enjoy Nitori's products. Looking ahead, we are considering further expansion into India and other countries.

To achieve rapid business growth, we are focusing on establishing a robust supply chain network, pursuing economies of scale through product standardization, tailoring marketing strategies to each country and region, and developing human resources. Since February 2024, I have dedicated myself exclusively to overseeing our overseas business to address these challenges promptly.

Drawing on the strengths and expertise cultivated through our operations in Japan, Mainland China, and Taiwan, the Nitori Group is united in its commitment to "Offering the Unexpected" value through our products and services, thereby enriching the lives of even more customers.

Image of Accelerated Overseas

Store Openings

Image of the Transition in Numbers of Expatriates and National Staff (Example of Opening a Store in a Specific Country)

By having expatriates convey and educate on the Nitori

Group's mission and vision, we accelerate the development

of national staff.

• Accelerating store openings in prime locations to enhance early recognition among customers.
• Ensuring attractive pricing, quality, and services to solidify the
  "Offering the Unexpected" value of the Nitori brand.
• Using positive feedback from customers and developers to improve store conditions and accelerate the pace of openings.
• Quickly forming dominant areas to improve customer convenience.
• Rapidly launching full-scale e-commerce operations in each country and region.
• Reducing various costs through early realization of economies of scale to enhance profitability.
• Enhancing and optimizing manufacturing, logistics, and IT functions to support the expanded sales network.
• Establishing a robust system for human resource development and backend support as soon as possible.

"Nitori Hong Kong Kowloon Wan MegaBox Store," the first store in Hong Kong.

In both Mainland China and Taiwan, we have continued to open new stores, and we are now receiving numerous requests for further store openings. We will continue to expand our store network.

In Mainland China, which marks its 10th anniversary since our first store opening, we achieved rapid store openings in existing areas such as Shanghai and Shenzhen and expanded into new areas like Chongqing and Xiamen in the fiscal year ending March 2024. As of the end of June 2024, the number of stores surpassed 100. For the fiscal year ending March 2025, we plan to further expand into major cities like Shanghai, Beijing, Shenzhen, and Guangzhou. To support this expansion, we are continuously

strengthening our aggressive recruitment efforts, having hired approximately 400 new graduates last year. We were honored to receive the Popular Employer Award, given to only 140 companies out of 400,000 in Mainland China.

With the aim of enhancing the recognition of

the Nitori brand, we renovated and expanded the "Taipei Dunbei Store," which opened in 2010 in Taiwan, our first overseas market. We more than tripled the store's sales floor area to 1,197 tsubo (previously 360 tsubo) to serve as a flagship store. In the fiscal year ending March 2025, we also plan to open Deco Home stores, further expanding the Nitori Group's store network.

Special Feature

Supporting Global Expansion

Discussion with National Staff

Growing together to open up

A major key to achieving our mission and vision is business expansion in Asian countries and regions. Taiwan, and Vietnam discussed their thoughts and development, aimed at achieving our mission and

Please tell us about your current responsibilities and what you find rewarding about your job.

as a group the future

the acceleration of store openings and national staff active in mainland China, challenges, as well as human resource vision.

K: I belong to NTL*, which is responsible for the group's trading and logistics functions. Currently, as a Senior Manager in the

Product Development Division, I work with the Global Merchandising Division and NTL members to develop products that satisfy our customers. The products we develop are supplied to all the countries and regions where Nitori has stores. It is truly rewarding to see our products being loved by many customers across Asia.

C: As the Task Improvement Section Manager in the Store Operations Division at Nitori Taiwan, I mainly focus on improving the efficiency of store operations. Task improvement can only be

achieved through the cooperation and collaboration of various divisions. Sometimes, it requires making significant changes to the existing methods, which can be challenging. The most rewarding moments for me are when we see changes in efficiency metrics as a result of our efforts and when members who participated in the reforms express their gratitude.

R: I belong to Nitori Taiwan, just like C. Currently, as the Manager of Education and Training in the Organization Development

Office, I focus on educating Taiwanese employees in chain store theory, leadership, and communication skills, which are the foundation of our group.

I also draft personnel transfers as part of our job rotation. I joined the company shortly after Nitori opened its first store in Taiwan, during the first regular recruitment. Although OFF-JT was conducted at that time, the Organization Development Office was established as a specialized department in 2022 to respond to the acceleration of globalization. As the first member of this department, I referred to the training materials used in Japan to learn the theories and received training from the HR Education Division in Japan to become a trainer. It was a continuous learning process for me as I built the educational foundation from scratch. Although it was a period of trial and error, I find it rewarding to see my

Taiwanese colleagues understand and apply chain store theory in their work and witness their growth through the training programs.

M: I am the manufacturing chief of the Dining Department at the Ba Ria-Vung Tau factory in Vietnam, where approximately 600

employees work. With the mission of delivering better products to our customers, our employees unite to pursue daily improvements and reforms. Knowing that our efforts contribute to enriching our customers' homes through the products we manufacture at the factory gives me a great sense of fulfillment. The factory plays a crucial role in providing our customers with affordable and high-qualityproducts, and I am very proud to be part of this environment.

Special Feature

Discussion with National Staff

Please tell us about the challenges you face in your work.

To flexibly respond to rapidly changing markets and environments, past experience alone is not enough. I have learned that it is essential to continuously study, acquire new knowledge and skills, and take action by gaining everyone's understanding through communication. Currently, we are also working on new reforms to address future concerns about labor shortages.

K: The situation continues to be truly challenging. Not only are we facing the COVID-19 pandemic, but we are also dealing

with compounded adversities such as the soaring costs of procurement due to the strong dollar, increased prices of resources and materials, and rising transportation expenses. Maintaining prices that are affordable for our customers while ensuring gross profit is a challenge not only for my division but for the entire group. From the standpoint of NTL, a trading company responsible for exports and imports,

What kind of training programs do you believe are necessary for developing talent to drive the expansion of global business?

M: The first store in Vietnam opened in 2023. There are many companies in Vietnam

that compete with Nitori. Therefore, it is crucial to further advance our commitment to providing products with "Offering the Unexpected" value to establish a competitive advantage. In the manufacturing process, we are making efforts to thoroughly eliminate waste, inconsistency, and overburden. Additionally, I feel that it is a challenge to

create a standardized system where anyone can achieve the same quality and results, thereby improving work efficiency.

R: "Standardization" is also an important issue in education. We are working to expand the training system of "Nitori College"* that we have

established in Japan to Taiwan as well. While the translation of various training materials is progressing and the foundation is being laid, the duty of

our division is to build an educational system that supports the growth of employees towards realizing their own mission. Since we aim to create an education system that supports the further success of employees in five to ten years, I believe there are still many educational and training tasks that need to be done. It is also necessary to develop talent who are responsible for education.

*A term referring to Nitori's unique educational framework.

C: I was assigned to my current division, which was newly established, about three years ago. The biggest challenge is

improving and reforming store operations to continuously enhance various efficiency indicators of the stores.To achieve this, it was necessary to build a lot of data and work processes from scratch, but we were greatly affected by the COVID-19pandemic before we had a solid foundation. Customers could not visit the stores, and employees were not able to work with peace of mind. While being fully occupied with building my own work, I had to support the stores in dealing with the

the challenge lies in complying with various regulations that differ by country and region, such as trade and product labeling with the destination countries, and providing products in a stable and low-costmanner. SDGs are also a challenge for the entire group, but I believe each department and location is tackling them with a sense of responsibility.

M: Every position has its own challenges. At Nitori, we often say, "The problem is that

there is no problem." The joy of finding problems, taking action and solving them is huge, isn't it?

R: In 2018, I was the first Taiwanese employee to participate in the Pegasus Mid-Level Development Seminar* in Japan. I discovered

both the difficulty and the fascination of "theory." I remember feeling the urgency to establish an environment in Taiwan where such training could be conducted. What I want to continue to value is the

annual training in the United States. Now I participate as an educater, but it is a valuable opportunity to interact with colleagues from other countries and regions. The number of participants increases year by year, and I feel the speed of globalization and the growth of the company.

*A seminar conducted by the Pegasus Club, a joint research organization for chain store management.

pandemic. It was really difficult to promote reforms in an environment where face-to-face communication was challenging. So, I shifted my mindset to see the crisis as an opportunity and started with what could be done. What I valued was dialogue to help everyone understand "why change is necessary." Through persistent communication and gaining understanding and cooperation from store members, we were able to significantly improve efficiency indicators. This is the result of the efforts of all Nitori staff in Taiwan.

Continuous improvement and reform through persistent problem identification.