Pola Orbis : Summary of Key Q&A on Presentation for the First Quarter of FY2025 is Released

May 9, 2025

1. [POLA] What was the reason for the income increase, while revenue decreased in the first quarter?

   In terms of costs, sales commissions decreased due to lower revenue in the consignment sales channel, while the new management team reviewed business strategies and implemented effective expense control with clear priorities. On the other hand, net sales in the first quarter was in line with the Company's forecast, and operating income was higher than expected; however, there is no change to the full-year forecast because there is about ¥500 million in expenses allocated to the second quarter and beyond.
2. [POLA] Regarding the progress of the first quarter and outlook for the consignment sales channel.

   In the first quarter, revenue decreased by 0.6%. However, because of the accounting treatment related to the membership program (reward points), the record revenue was higher than the actual sales to customers. The impact of points refers to the system in which revenue is deducted when points are awarded to customers and then recognized as revenue when points are redeemed for gifts, and in the first quarter, gift redemptions occurred. The revenue from the consignment sales channel is still expected as the initial forecast to decrease by around 4% to 5% in the first half of the year compared to the previous year with second half revenue on par with the previous year, and the full-year forecast remains unchanged with an expected decrease of around 2% to 3% in revenue.

3. [POLA] Regarding the number of customers and stores in the consignment sales channel.

   While the number of customers decreased, the purchase per customer increased. This reflects a shift in investment priorities with a greater focus on improving the lifetime value and purchase frequency of existing customers while lowering the relative priority of new customer acquisition. The strategy is to first concentrate on stabilizing the existing customer base, and once this is achieved, efforts will be made to acquire new customers, ultimately aiming for an overall increase in the total number of customers. As for the number of stores, measures are being taken to reduce store closures, and the pace of store reduction has been slowing down. Although there is a sales target determines whether to continue or close a store, the decision on store continuation will be based on market size and customer conditions to prevent further reductions in the number of stores.

4. [POLA] Regarding the situation overseas.

   Looking at the situation by region, in mainland China, closures of unprofitable stores are progressing, leading to a decrease in revenue that is generally in line with expectations. As for the duty-free business in South Korea, revenue is subject to the timing of shipments, so there may be some delays in the periods. There is no change to the forecast for the entire POLA overseas business, which is expected to see a revenue decrease of around 7% to 8% for the year.

5. [ORBIS] The first quarter seems to have been strong, but what is the outlook for the second quarter and beyond?

   ORBIS was driven by both direct selling channel and external channels. In the direct selling channel, a new cleansing oil product will soon be released. This product has already been well-received at a press conference, and with a stable customer base and the launch of new products, we expect the stable performance to continue. In the external channels, the expansion of distribution for Shot Plus, a dedicated product line for external channels is progressing, and we also expect repeat orders in the future.

6. [Jurlique] Despite revenue decreased, losses improved. What cost control measures have been implemented?

   The Company has been promoting cost reductions since 2024, and the results are starting to show in 2025. We have been reducing fixed costs, centering on personnel expenses and creating a structure where operating income can achieve the target even if sales do not grow as expected. By continuing to control costs and lowering the breakeven point, we aim to turn to profitability in 2026.

7. [THREE] Regarding the recovery period.

THREE is focusing on holistic care, including skincare and fragrances based on essential oils. However, it is necessary to further strengthen the rebranding efforts to ensure better penetration with customers. We aim to recover by deepening customers' understanding of the brand direction transformation and the benefits it offers, while also expand the holistic care products lineup.