Medium-Term
Management Plan

To realize our long-term vision, we currently recognize the following four issues.

While the Company is supported by those who are with relatively high sensitivity and want service of high quality, including the store environment and customer service, especially among Generation Y, the appeal to those in their teens and 20s is insufficient.
On the other hand, even for those in their teens and 20s, per-customer spending is at a high level, ranging from mid-10,000 yen to the mid-20,000 yen. By expanding this age segment, we believe we can expand our business while maintaining high sensitivity and highly added value.

The Company’s main brands are concentrated on traditional and conservative tastes, and there are still domains that we haven’t fully captured, such as casual, mode, street, and feminine.
We see the two issues of age and fashion tastes as evidence that the Company has plenty of room to grow even within the domestic apparel market.

In offering lifestyles with high sensitivity, the area that the Company has been able to propose is still limited to fashion. In recent years, we have been working on outdoor activities, golf, wellness, and others, however we have yet to reach the point where we can offer complete lifestyles. Our overseas business is also limited to the Taiwan area, and partly due to the COVID-19 pandemic, we are now about to begin our efforts in mainland China on a full scale. This is another area of potential growth in the future.

There is still work to be done that involves a variety of infrastructure investments, including review of the core product management system with a view to the medium to long term, digitization of product procurement, capital expenditure to promote OMO, and reorganization of distribution with an eye on future business expansion. To achieve our long-term vision, we must make appropriate investments under the Medium-Term Management Plan.

The slogan of the new Medium-Term Management Plan, which is to resolve these issues and serves as a starting to achieving the long-term vision, is “Providing excitement: connecting with customers widely and deeply .” While deepening relationships with the existing customers centered on the OMO initiatives, we will expand our business and customer base through new business development.

Our financial targets for the fiscal year ending March 2026, the last fiscal year of the period of the Medium-Term Management Plan are as the below.

The Medium-Term Management Plan consists of three main strategies; UA CREATIVITY strategy, UA MULTI strategy, and UA DIGITAL strategy.

UA CREATIVITY strategy consists of three items: Growth and expansion of the existing businesses, strengthening of brand appeal, and re-grow of COEN.

■Growth and expansion of the existing businesses
・Grow the top line
We will work to grow the top line through promoting OMO and resuming store openings.
We have been working on various initiatives, such as linking with retail stores’ inventory and digitizing customer service skills, including styling and online customer service. While evolving these initiatives, we will renovate the House Card program and renew the app for UNITED ARROWS LTD. Online (UAO).

・Improve gross margin.
We will continue to control cost of sales, ensure the procurement of inventory in appropriate quantities, improve the ratio of items sold at regular prices, and improve gross margin of online. In the face of rising costs, we will continue to carefully set prices and implement cost control measures to maintain the cost ratio at an appropriate level. Also, we improved our gross margin by switching to a sales method that improves the ratio of items sold at regular prices while controlling the amount of procurement. As for online sales, we will curb discount sales and strengthen sales of private label products to increase gross profit margin.

■Strengthening of brand appeal
・Expand investment in human capital
We recognize that the Company’s competitiveness comes from the power of products of planning and procuring attractive products, the power of service to deliver them to customers with refined customer service skills, and the power of places to provide customers with a comfortable and uplifting shopping experience. It is our employees, the human capital of the Company, that support these efforts and build the brand value. Under the Medium-Term Management Plan, we plan to enhance the Company’s brand appeal by improving employee engagement. One of the efforts is investment in employee education. In order to encourage employees to learn and develop their capabilities of their own initiative, we will enhance our educational system, including support for business school attendance and the acquisition of certifications. We will make active use of our talent management system to visualize the experience, skills, and vision of each and every employee, and promote the assignment of the right talented people in the right positions for various future initiatives, creating an environment in which they are highly motivated to carry out their tasks. At the same time, we will strengthen new recruitment.

・Rebranding of the corporate brand
An effort to reinvent the corporate entity itself by developing new brands that create a new corporate image. We will maintain our existing positive image of being strong in business and formal, traditional, conservative, reliable, and reassuring, while rebuilding the corporate brand to one that is even more active and appealing to a wide range of generations.

■Re-grow of COEN
In order to secure a solid position in the new basic trend-conscious market under this Medium-Term Management Plan, we will strive for growth and expansion.

UA MULTI strategy is an effort to broaden the range of value that the Company offers and expand its customer base. We will work on business development and global development aimed at business expansion.

■Business development for business expansion
We will develop new brands with an eye on younger customers, strengthen apparel-derived brands including yoga, golf, and outdoor activities, explore and execute domains other than apparel, and expand the B to B business.

■Global expansion
In addition to growing our Taiwan business by opening more new stores, we will advance the China strategy, which was temporarily suspended due to the COVID-19 pandemic. In addition to strengthening cross-border EC by making UAO multilingual, we will also promote wholesale to other countries.

UA DIGITAL strategy is to make capital investments for future growth and streamline corporate operations by promoting OMO and optimizing the supply chain.

■Promoting OMO
We will invest in the renovation of the House Card program and the renewal of the app for UAO, which are included in UA CREATIVITY strategy in order to build a robust sales structure that integrates physical stores, online stores, and apps.

■Optimizing the supply chain
We will promote investment in infrastructure with a view to expanding our business in the future. Since the current core product management system, which covers everything from product planning to sales, is designed to cater existing businesses, we will upgrade it to accommodate the future expansion of domains other than apparel. Centralized management of inventory information at stores, online, and distribution warehouses will help curtail lost sales opportunities and improve inventory efficiency, while strengthening cybersecurity measures at the same time. In conjunction with this renovation, we will promote the digitization of product procurement to visualize the status of products from ordering to delivery. By making it possible to check the status of product procurement nearly in real time, we aim to improve the precision of inventory procurement and operational efficiency. We will also reorganize our distribution centers in line with future business expansion. We will move ahead with the enhancement of facilities at the centers and the development of a system optimized for OMO.

As for cash allocation, we assume free cash flows of 26 billion yen to 27 billion yen during the period of this Medium-Term Management Plan.

In accordance with the initiatives set under the Medium-Term Management Plan, we plan to allocate 6 billion yen to 7 billion yen for store openings in the existing and new businesses and remodeling, etc., of retail stores to grow the top line, 1 billion yen to 1.5 billion yen for improvements of UAO to promote OMO and CRM-related investments, 6 billion yen to 7 billion yen for various infrastructure investments for the digitization of the supply chain, and approximately 1 billion yen for capital expenditure for offices and the like.

The Company recognizes that maximizing shareholder value is a key management issue, and its basic policy is to maximize shareholder value through measures such as stable dividends that are linked to business performance, stock splits, and the acquisition and cancellation of treasury stock.

Based on this thinking, we aim for a payout ratio of around 30% during the period of the Medium-Term Management Plan, and plan to use 7 billion yen to 9 billion yen in shareholder returns of dividends and share buybacks.