Yoshitsu Co., Ltd Reports First Six Months of Fiscal Year 2023 Financial Results.

TOKYO: Yoshitsu Co., Ltd ("Yoshitsu" or the "Company") (Nasdaq: TKLF), a retailer and wholesaler of Japanese beauty and health products, as well as sundry products and other products in Japan, today announced its unaudited financial results for the first six months of fiscal year 2023 ended September 30, 2022.

Mr. Mei Kanayama, Principal Executive Officer of Yoshitsu, commented, "During the first six months of fiscal year 2023, our online sales revenue generated from the Chinese market was significantly impacted by the resurgence of COVID-19. To navigate the challenging conditions we faced, we actively shifted our business strategy to focus on selling our products in domestic franchise stores and through wholesale customers, which partially offset the decrease in online store sales. We anticipate revenue growth over the second half of fiscal year 2023, as recent revenue headwinds seem to be dissipating and we remain focused on executing our strategic initiatives. With the recovery from the COVID-19 pandemic and the resumption of business activities globally, we plan to expand our global footprint in Europe and America. We intend to operate online stores in these regions and our recently rented new warehouses in the U.S. and U.K. lay a foundation for our business expansion efforts. In addition, we are exploring the advertising business of key opinion leaders ("KOLs") through our recently acquired Shenzhen Qingzhiliangpin Network Technology Co., Ltd., to capture the rapid growth of the live streaming e-commerce market. Besides the business expansion in the global market, we strive to diversify our products offering and we launched locally-made food products in our stores in Japan last year, initiating the food product segment. We expect to launch more food products through our multiple distribution channels in the near future. We believe our strategic plan will increase our profitability, enhance our brand awareness in the global market and create significant value for shareholders in the long run."

Mr. Youichiro Haga, Principal Accounting and Financial Officer of Yoshitsu, stated, "Despite the impacts of COVID-19 restriction in China and depreciation of the Japanese yen, the increase in our revenue generated from the domestic market during the first six months of 2023 demonstrates the success of our business strategy of focusing on domestic market. We are also pleased to see increased revenue from our directly-operated stores in Hong Kong, which we believe signifies the recognition of our brand. Looking forward, we will continue providing high-quality products and navigating our business strategy in today's challenging market by leveraging our strong capabilities. We believe we are on track to achieve long-term sustainable growth in both domestic and global expansion markets."

Recent Development

Acquisition of Tokyo Lifestyle Limited

On July 20, 2022, the Company entered into a definitive agreement (the "Agreement") with All Seas Global Limited (the "Seller"). Mr. Mei Kanayama, the representative director of the Company, held 100% of the equity interests in the Seller, and hence, the Seller and the Company were related parties under common control. Tokyo Lifestyle Limited ("TLS") is a company principally engaged in the import and retail of Japanese beauty and cosmetic products in Hong Kong and engaged in the live e-commerce business through its wholly-owned subsidiary, Shenzhen Qingzhiliangpin Network Technology Co., Ltd. Pursuant to the Agreement, the Company agreed to acquire 100% of the equity interests in TLS in consideration of the sum of Y=392,673,800 in cash (US$2,842,173), subject to certain terms. The transaction contemplated by the Agreement was approved by the Company's board of directors at a special board meeting on June 27, 2022. The 100% of the equity interests in TLS were transferred to the Company on July 20, 2022, and cash consideration was paid in full and the transaction was closed on July 27, 2022. This acquisition is a critical initiative of the Company's business strategy to boost its business expansion in the Southeast Asia market and advance the digital transformation of live streaming e-commerce in its retail business. This transaction was accounted for as an acquisition of a business under common control, accordingly, the Company's comparative financial information...