During the nine months ended December 31, 2022 (hereinafter “the period under review”), the Japanese economy showed signs of normalization of economic activities after the lifting of quasi-emergency measures to prevent the spread of infections, amid the prolonged effects of the COVID-19 pandemic. Yet, the future outlook remains uncertain due to concerns that would depress consumer sentiment, such as the resurgence of COVID-19 infections caused by new variants, rising energy costs and raw materials prices, sharp depreciation of the yen, and the rising prices resulting from the foregoing factors.
In the auto parts and accessories industry, in which the Company operates, tire sales remained strong throughout the period under review, partly because of last-minute demand for tires before the price hike as tire manufacturers revised the prices of tires twice. Meanwhile, sales of audio visual equipment, including car navigation systems and drive recorders, became even more sluggish compared to the same period of the previous year because of a decline in unit sales of new cars due to the impact of the global semiconductor shortage.
In this environment, given the fact that cars serve as part of the essential infrastructure for everyday life, the Group continued to provide maintenance services and offer auto parts and accessories, while implementing various measures to prevent infections. In particular, we proceeded with the expansion of sales of tires and other expendable auto parts, which is one of our management strategies, the enhancement of installation/maintenance services and maintenance service options, and the strengthening of the motorcycle business.

　During the period under review, net sales amounted to 112,816 million yen (99.6% year-on-year, or down 439 million yen), primarily owing to sluggish sales of audio visual equipment caused by semiconductor shortage, despite brisk sales of tires and other expendable auto parts and an increase in wage earnings in line with tire installation work. Gross profit was 48,258 million yen (104.0% year-on-year, or up 1,835 million yen), primarily owing to a pickup in margins thanks to the strategic purchasing of products and an increase in wage earnings.
Selling, general and administrative expenses totaled 35,356 million yen (100.0% year-on-year, or down 4 million yen), primarily owing to a curbing of other expenses through efforts to rationalize the number of store staff and efficient sales promotion activities, despite increases in utilities expenses caused by sharp rises in electricity costs.
As a result, in the period under review, the Group achieved all-time record highs in operating profit, ordinary profit and profit attributable to owners of parent, with operating profit at 12,901 million yen (116.6% year-on-year, or up 1,840 million yen), ordinary profit at 13,720 million yen (116.2% year-on-year, or up 1,916 million yen), and profit attributable to owners of parent at 9,316 million yen (115.7% year-on-year, or up 1,265 million yen).
As for the breakdown of net sales by key division, the Wholesale Division recorded net sales of 35,753 million yen (97.0% year-on-year, or down 1,110 million yen), while the Retail Division recorded net sales of 69,776 million yen (101.5% year-on-year, or up 1,037 million yen).

　Despite the ongoing uncertainty about the future, including of the economic environment and personal spending due to the COVID-19 pandemic, under these circumstances, the Yellow Hat Group will bolster its efforts in various measures such as the expansion of the automotive parts sales business, which is the principal axis of our profits. We will also continue our efforts to curb the spread of COVID-19 and further strengthen our business foundations for the expansion of profits.
We look forward to your continued support and guidance.

February 2023