The fiscal year ended February 2026 marked the first year of the new Medium-Term Business Plan ("MTBP") announced in April last year. With all employees working together, we have been striving to achieve the goals set forth in this plan.

Throughout the fiscal year ended February 2026, however, business conditions remained extremely challenging. Net sales were sluggish for the year as a whole due to a combination of adverse factors. These included irregular weather conditions, such as unusually low temperatures in early spring followed by a sharp rise in temperatures, which shortened the spring full‑price selling period, as well as record‑breaking heat from August through early October that significantly delayed the start of the autumn/winter selling season. In addition, uncertainty over domestic and overseas political and economic conditions, together with persistent inflation, heightened consumers' defensive mindset and weakened overall consumer sentiment. As price consciousness increased, the mid‑ to high‑end market - particularly at department stores, our primary sales channel - remained sluggish. Furthermore, inbound sales, which had previously driven market expansion, were weak throughout the fiscal year, adding further downward pressure. With these multiple negative factors overlapping, net sales, operating profit, and ordinary profit declined year on year and fell significantly short of our initial plan. Although we achieved the revised plan announced on 27 February 2026, this outcome remained well below our expectations. Net income, however, met the initial plan due to gains on the sale of investment securities.

In light of these results and taking into account current social conditions, the economic outlook, and changes in the market environment, as already announced, we have revised the plans for both the fiscal year ending February 2027, the second year of our MTBP, and the fiscal year ending February 2028, the final year of the plan.

As we enter the new fiscal year, we have conducted a thorough analysis of the factors behind last year's underperformance and have incorporated various measures into our plan aimed at overcoming and breaking through these challenges. By steadily executing these measures, we are determined to achieve our targets without fail and to make a strong comeback.

The entire management team, with renewed resolve, is firmly committed to driving forward toward the achievement of the plan. We sincerely ask for your continued support.