TSURUHA HOLDINGS INC. (3391) Q3 2026 Earnings Call Transcript

TSURUHA HOLDINGS INC. Q3 Financial Results Briefing for the Fiscal Year Ending February 2026 January 8, 2026

Event Summary [Company Name]

TSURUHA HOLDINGS INC.

[Company ID]

3391-QCODE

[Event Language]

JPN

[Event Type]

Earnings Announcement

[Event Name]

Q3 Financial Results Briefing for the Fiscal Year Ending February 2026

[Fiscal Period]

FY2026 Q3

[Date]

January 8, 2026

[Number of Pages]

32

[Time]

13:30 – 14:34 (Total: 64 minutes, Presentation: 26 minutes, Q&A: 38 minutes)

[Venue]

Webcast

[Venue Size] [Participants] [Number of Speakers]

5 Jun Tsuruha Hideaki Kirisawa

Ryutaro Miyake Takamune Shibazaki Kei Wakabayashi

[Analyst Names]*

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Toshio Takahashi Sho Kawano Mitsuru Takayanagi Dairo Murata

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President and Representative Director Director and Executive Officer, in charge of Group Sales and Product Management, and Supervisor of Welcia Holdings Co., Ltd. Executive Officer and Chief Financial Officer Executive Officer and Deputy Chief Financial Officer Investor Relations and Budget Management Department Head Mizuho Securities Goldman Sachs Citigroup Global Markets JPMorgan Securities

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*Analysts that SCRIPTS Asia was able to identify from the audio who spoke during Q&A or whose questions were read by moderator/company representatives.

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Presentation Wakabayashi: It is now time to begin the financial results briefing. Thank you for attending the TSURUHA HOLDINGS INC.’s financial results briefing for Q3 of the fiscal year ending February 28, 2026. To begin, I would like to introduce today’s attendees. Jun Tsuruha, President and Representative Director. Hideaki Kirisawa, Director and Executive Officer. Ryutaro Miyake, Executive Officer and Chief Financial Officer. Takamune Shibazaki, Executive Officer and Deputy Chief Financial Officer. I am Kei Wakabayashi, Investor Relations and Budget and Management Department Head, and I will be facilitating this event. Next, I would like to briefly introduce today’s materials and proceedings. This briefing will be held via Zoom webinar. We will share the presentation materials with you on the screen, and you can also download them from our website. With respect to today’s progression, WELCIA HOLDINGS has delisted as of November 27, but we are also disclosing the financial results of WELCIA HOLDINGS for Q3. In this connection, Shibazaki will first provide an overview of WELCIA HOLDINGS’ financial results. Next, Miyake will provide an overview of TSURUHA’s financial results and the revised earnings forecast. Finally, we will have a question-and-answer session. The scheduled closing time is 2:30 PM. Now, let us move on to the explanation. Thank you for your cooperation.

Shibazaki: Hello, my name is Shibazaki. Thank you. I would like to explain WELCIA YAKKYOKU’s performance in Q3 prior to the integration. Support Japan Tollfree

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Please see page three of the PowerPoint presentation. Let me begin with a few words about the general situation. We recognize that H1 of Q3 was warmer, and that the season progressed more slowly. On the other hand, influenza spread earlier than usual, affecting seasonal products and pharmaceuticals. Under these circumstances, in Q3, WELCIA continued to steadily implement various measures in line with the basic policy of “Welcia 2.0,” which aims to shift from a scale-of-operations to a profitable structure. Under these circumstances, the Company reported net sales of JPY1,010.3 billion and operating income of JPY27.5 billion. The M&A in the previous fiscal year, sales growth due to growth in dispensing, improvement in gross profit margin, and continued control of expenses, which have been an issue, resulted in an increase in both sales and income in Q3, with an operating income level of 120.6% of the same period last year. Although profits are still improving, we have positioned this fiscal year as one to strengthen our profit structure, and we are pleased with the progress we have made toward these goals. On the other hand, net income attributable to shareholders of the parent company decreased due to approximately JPY5.6 billion in goodwill amortization for Pupule Himawari, a subsidiary. Since joining the roup in 2021, Pupule Himawari has been striving to improve its performance through PMI, but the deviation from the original plan has been significant, resulting in goodwill impairment this time.

Moving on to page four. I would like to explain our quarterly results and the monthly sales growth rate of existing stores. In Q3, both sales and income increased, resulting in higher operating income. In terms of gross profit margin, sales of pharmaceuticals and other products slowed slightly, partly due to a reaction to the previous year’s Support Japan Tollfree

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decline in colds. On the other hand, in the dispensing business, gross profit margin was slightly lower than the previous year, due in part to the high growth in prescriptions for high-priced drugs. On the other hand, sales growth appears to be a little lower than in Q1 and Q2, but this is due to the impact of M&A in H2 of last year, so the trend has not changed significantly from Q3. On the other hand, we continue to control expenses, particularly labor expenses. Although there were some one-time integration expenses, even accounting for them, the integration is contributing to income. As for the growth rate of existing stores in the bottom row, it was 2.8% in Q3. The situation has improved from 1.1 in Q2 due to the spread of influenza in November and growth in dispensing. The impact of cigarettes has been gradually decreasing since last year, and in Q3, the impact on product sales was negative 0.6 percentage points.

Moving on to page five. I would like to explain sales and gross profit margin by product category. Net sales increased, and it was 106.1% of the same period last year, driven by the contribution from M&A in the previous year, as I explained earlier, and continued growth in the dispensing business. By category, food products grew, and it was 107.3% of the same period last year, driven by higher unit prices and the effects of sales promotions. On the other hand, in the dispensing business, despite the remuneration revision, the number of prescriptions remained strong, and it was 110% of the same period last year. The sales composition ratio was also 22.8%.

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On the other hand, gross profit margins were higher than in the previous year. However, compared to H1 of the year, the increase is slightly lower. Regarding this, it was affected by the reactionary decline in sluggish growth of cold-related products from last year. In addition, we have been strengthening sales promotions to attract more customers, which may have had an impact on the number of customers. On the other hand, the private brand category continued to grow, accounting for 10.4% of the total sales.

Moving on to page six about SG&A expenses. Control continued in H1 of the year, with the Q3 cumulative sum reaching 105.8% of the previous year’s level. In the area of labor expenses in particular, we are working to optimize labor-hour control while implementing mechanisms to improve productivity. The SG&A ratio also improved by about 0.3 percentage points. On the other hand, the ratio of other items has increased due to the introduction of a system to optimize labor-hour control and one-time expenditures, but this is in line with our initial assumption.

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Moving on to page seven. These will be the results of the dispensing sector. Dispensing pharmacy sales grew at a double-digit rate in Q3 due to increased prescriptions driven by promotions for stores with dispensing pharmacies, as well as the acquisition of additional sales tax. The unit price of new drugs with high unit prices, as well as high-cost prescriptions for diabetes-related injections and other drugs, has also been raised. The number of stores with dispensing pharmacies was 23, down from the same period the previous year and relatively low compared to the past. We are also reviewing the number of sheets in line with productivity growth. The ratio of stores with dispensing pharmacies was 77.9%, an improvement from the previous year.

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Moving on to page eight. This will be the status of store openings and closures. In total, 46 stores were opened, and 56 closed. Although we did not increase the net number of stores this fiscal year to improve productivity, we are now closing stores at the same level as originally planned. Meanwhile, 210 stores were remodeled. The number of drug & food stores is now six, and is expected to reach 10 for the full year. The renovations have increased the ability to attract customers, and synergies have led to growth in categories beyond food, such as prescription and health & beauty.

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Lastly, please see page nine. This is the breakdown by company. Overall, as I explained earlier, the core WELCIA YAKKYOKU is also on track to increase sales and income. On the other hand, as I mentioned, the impairment of goodwill, Pupule Himawari, is a negative JPY480 million in operating income. However, since income improved by about JPY300 million compared to the previous year, we will continue to focus on this area, although it is still improving. From December onward, we will continue to improve and transform ourselves into a profitable structure. At the same time, we would like to promote integration within the new Tsuruha Group and contribute to enhancing the group’s value. That is all. Thank you very much. Miyake: Okay, I will now provide an overview of TSURUHA’s Q3 results for the fiscal year ending February 28, 2026. Please note that the figures for WELCIA HOLDINGS, as explained by Shibazaki earlier, are not included in the figures for TSURUHA.

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Please see the following page 11. This will be the financial highlights. Net sales were JPY833.3 billion, and operating income was JPY40.5 billion. Existing store sales increased 2.4% YoY. The sales composition of the pharmaceuticals and food products categories continued to increase. Operating income exceeded the plan due to appropriate control of SG&A expenses. The fiscal year-end was changed to the last day of the previous fiscal year, and YoY comparisons are not shown due to the difference in the number of days and other factors.

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Please see the next page. This will be the financial results for Q3 of the fiscal year ending February 28, 2026. Sales were generally in line with plans. As for the gross profit margin, it was lower than the previous year due to sluggish OTC drugs sales and continued declines in face masks and other products for the prevention of infectious diseases. As for SG&A expenses, the Company continued its strict control, resulting in expenses within budget and operating income of JPY40.5 billion and an operating margin of 4.9%, exceeding the plan. Net income for the period was JPY26.9 billion, regarding the gain on sales of investment securities, as disclosed on May 16, 2025. As for the previous year, the figures for the nine-month period from February 16 to November 15, 2024, including the three-month period of Q4 of the fiscal year ending May 31, 2024, and the six-month period of H1 of the fiscal year ending February 28, 2025, after correction of the financial results, are shown for reference.

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Please see the next page. This is the quarterly trend. With regard to gross profit margin, although there is a difference due to the month-long shift in retroactive discounting following the change in the fiscal year-end, the dispensing sector as a whole continues to raise gross profit margins. In addition, because SG&A expenses are properly controlled, the operating income margin remained unchanged from the previous year due to a decrease in SG&A expenses, despite a decline in the gross profit margin. As a result, the operating income margin was 4.4% for the three-month period of Q3.

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Please see the next page. This is the 13-month existing store sales and YoY change. Although the number of visitors was lower than planned due to a reactionary decline from the previous summer’s outbreak of colds, including COVID-19, and people staying home due to the extremely hot summer, the number of visitors is currently on an upward trend in line with the drop in temperatures.

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Please see the next page. These are the results by product group. As for dispensing, an increase in the number of prescriptions dispensed due to the opening of pharmacies contributed to sales growth, accounting for 13.8% of total sales. OTC drug sales fell below the previous year’s level due to a reactionary decline from the spread of COVID-19 in the previous year. We recognize that cosmetics are on a recovery trend, with basic cosmetics and other products performing well, despite the impact of the withdrawal of makeup brands and the weak performance of some brands that performed well in the previous year. In daily goods, sales remained strong as the shift to larger volumes of laundry detergent, kitchen detergent, and other products continued. Regarding food products, rice was the main driver of strong sales, while other luxury items such as coffee, frozen foods, and confectionery also performed well, showing the same trend seen in H1 of the year, with the composition ratio continuing to rise. As for other products, sales of COVID-19 products such as face masks continued to decline, but the downward trend has recently bottomed out.

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Please see the next page. These will be the results of the dispensing pharmacies. 48 dispensing pharmacies were opened, and 10 were closed, for a net increase of 38, bringing the total to 1,005 at the end of the quarter. As for the number of prescriptions, dispensed prescriptions have been increasing in line with the opening of new pharmacies and are steadily growing by 108% of the previous year’s level. The increase in the composition of dispensing sales continued to drive the overall gross profit margin.

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Please see the next page. This is the performance of PB products. PB accounted for 11.8% of the total, up 0.4 percentage points from 11.4% at the end of the previous period. The scale of sales has been growing steadily, with sales amounting to about 110% of last year’s level. We are preparing for the launch this week of our new private brand, Karada to Kurashi ni +1, which we announced in our post-merger vision in December.

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Please see the next page. This is a breakdown of SG&A expenses. As for personnel expenses, they are progressing according to the plan, and the ratio to sales is decreasing as productivity improves. As for promotion expenses, the ratio to sales decreased by 0.4% due to continued detailed review of flyer sales promotions, etc. Regarding rent expenses on land and buildings, the ratio to sales decreased due to the impact of increased inhouse construction as well as the impact of the allowance for store closing losses. There were no particularly significant topics regarding utility expenses, which remained flat relative to sales as electricity costs slowed. Depreciation and amortization expenses have also remained generally unchanged, with no major movements. Other expenses remained flat relative to sales, as integration-related expenses were recorded in the current period, while special expenses were recorded in the previous period due to corrections made then. As a result, the Company’s SG&A expenses were 0.9 percentage points lower than in the previous period, at 25.2% of sales.

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Please see the next page. This will be the status of store openings and closures. The number of existing stores at the end of the period was 2,690, resulting from 78 store openings, 46 store closings, and a net increase of 32 stores. There are no other special remarks regarding this.

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Please see the next page. This is an overview of the balance sheet. There is no other special note regarding the balance sheet, except for a partial change due to a holiday on the last day of the fiscal year.

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Please see the next page. Next, I would like to explain the revised forecast of the consolidated financial results. Due to the merger with WELCIA HOLDINGS on December 1, the forecast for the end of the current fiscal year includes the three months of Q4 of WELCIA HOLDINGS in addition to the 12 months of the previous accounting period of TSURUHA. In addition, JPY5.5 billion in amortization of three months’ worth of new goodwill will be incurred as a result of the business integration, and an extraordinary gain of JPY10.5 billion will be recorded in connection with the acquisition of WELCIA HOLDINGS. Please note that the amount of goodwill is currently based on a provisional valuation and provisional treatment, so the impact on amortization expense is an estimate. As a result, for the forecast at the end of this fiscal year, we project net sales of JPY1,453 billion, operating income of JPY63.3 billion, operating margin of 4.4%, and net income of JPY39.5 billion.

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Please see the next page. Next, I would like to explain the revision of the year-end dividend forecast. As for TSURUHA, we have always maintained a policy of paying stable dividends. In light of the increase in the number of shares and changes in the income situation due to the integration, we have revised our year-end dividend forecast to JPY10.4 billion, or JPY23 per share, after considering various perspectives and estimating that the year-end dividend will be the same level as the total interim dividend paid by the Company and WELCIA HOLDINGS in the current fiscal year. As a result, the annual dividend per share will be JPY49.7, for a total dividend of JPY20.7 billion. Our basic policy is to continue paying stable dividends, and we plan to disclose our policy for the next fiscal year and beyond in our medium-term management plan, to be announced in April.

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Please see the next page. Next, the changes to the shareholder benefit program. In accordance with the 5for-1 stock split of TSURUHA, shareholders were required to hold at least 500 shares to qualify for the shareholder benefit, but in order to promote the use of the Company’s stores and increase the attractiveness of investing in the Company’s stock, a new shareholder benefit was established for those holding 100 shares. For holding 500 shares or more and 1,000 shares or more, the gift certificate booklets will be substantially increased. The long-term shareholder benefits have been discontinued in light of the resetting of the holding period of WELCIA HOLDINGS shareholders prior to the integration. Additionally, regarding shareholder benefits such as the points previously offered by WELCIA HOLDINGS, we have not adopted them this fiscal year. This decision stems from various risks associated with implementing them during the initial integration phase before the completion of POS register and core system integration, as well as the significant complexity this would introduce to in-store operations. For the same reason, we are also discontinuing the shareholder benefits card. In the future, we will continue to explore ways to convey our company’s appeal to better meet the expectations of more shareholders. For details, please refer to our website. This concludes my explanation. Please refer to the appendix, starting on page 24, for company-specific results and other data. Thank you very much.

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Question & Answer

Wakabayashi [M]: Now, we will move on to the question-and-answer session. If you would like to ask a question, please press “Raise Hand.” We will unmute your microphone here. We have unmuted your microphone. Please begin. Takahashi [Q]: My name is Takahashi from Mizuho Securities. Thank you for your explanation. Please allow me to ask two major questions. One question is about the full-year forecast that was announced this time, including the figures. For my other question, I would like to ask President Tsuruha and President Kirisawa to comment on the situation after the integration. First, I would like to know how you have constructed this plan based on the assumptions of the new plan you have presented, such as the situation of existing stores in Q4 and other such business conditions. Also, regarding the goodwill of JPY5.5 billion, which I understand is also a provisional figure, how many years of amortization is this JPY5.5 billion based on at this point in time? It would be helpful if you could tell us about that as well. This is the first question. Miyake [A]: I will answer. First, the Q4 results remained unchanged from the initial plan. We have not made any changes with respect to the existing stores. We have reduced expenses, so we are making progress in this area. Although gross profit margins are a little weak, we have put in place a structure that allows us to do so. Regarding the other question on goodwill, amortization is tentatively estimated to be 20 years, and the forecast includes JPY5.5 billion for the three months of amortization. These are my answers to your questions. Takahashi [Q]: How do you see WELCIA’s Q4 business conditions, and how did you arrive at this figure? I understand, of course, that the business conditions of existing stores, etc., have not changed since the beginning of the fiscal year at TSURUHA, but since WELCIA originally provided guidance only through H1 of the fiscal year, please tell me what your assumptions are for this Q4, if you don’t mind my asking. Company Representative [A]: Okay, I’ll answer. Q4 is also planned based on the situation up to Q3, so the figure of 2.8 up to Q3 is used as a reference value. Takahashi [Q]: Thank you. Second question. I think it has been a little over a month since the press conference at the beginning of December, but I don’t know whether to say “a month” or “only a month.” I am sure you have been holding in-depth meetings and discussions on various matters that have not been possible before. I would like President Tsuruha and Director Kirisawa to comment on these. I understand that you have released various roadmaps on December 1 and that the finalized roadmap is due in April, but at this point, how do you feel you are responding to the situation? I know it’s only been a month, but in what areas do you see synergies or changes as the companies become one? I would love to hear your comments on how you have felt over the past month, whatever it may be. Thank you.

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Tsuruha [A]: Thank you. Let me start answering. A month has passed, and the ban on various activities has been lifted since December 1, but many areas remain to be negotiated, including the amount of synergy we had calculated. I feel that the difference between the synergy amount originally calculated on paper by a third party and what we are trying to do is not so large, and in a sense, I feel we are on the right track from this past month. That said, it has only been a month, and the year-end and New Year holidays were also in between. As we look toward the medium-term plan in April, the new Tsuruha Group is still working together with WELCIA, and each department, and, of course, Director Kirisawa and I are currently discussing how we should formulate strategies and grow in each item. We hope to be able to show you those things again in April. That’s all from me. Kirisawa [A]: I, Kirisawa, will speak next. First of all, I would like to mention the personnel exchange between TSURUHA and WELCIA HOLDINGS, or rather, the exchange of personnel. Now that we have begun assignments at TSURUHA, I have a strong sense that we are gradually deepening our understanding of each other. As President Tsuruha mentioned earlier, product synergies will account for a large portion of the synergies, but negotiations for NB products began in December. As mentioned earlier, we are now at a stage where we expect to achieve some of the planned synergies. In the private brand business, teams from TSURUHA and WELCIA are working together to develop the new +1 brand, and we have begun to make concrete progress in this area. It has only been a month, but it is going on as planned. That’s all from me. Takahashi [M]: I look forward to your presentation in April. Thank you. Wakabayashi [M]: Thank you. Now, we will continue with the next person. Kawano [Q]: My name is Kawano from Goldman Sachs. I look forward to your continued support this year. I have three questions. First of all, regarding goodwill, I thought the total amount of goodwill would be around JPY400 billion, but the provisional figure is JPY450 billion, which is not such a big difference, but at this stage, the reason it is provisional is that some of it will be allocated to trademark rights and so on. Is this understanding correct? Miyake [A]: First of all, I would like to answer about goodwill. As you mentioned, we are still working with the auditing firm to adjust the evaluation of the trademark rights and the BS of WELCIA HOLDINGS, whose integration date is currently December 1. These things are included in the provisional figures. In such areas, land and various other areas, such as market value assessment, are slightly inflated. In addition, there are procedures to re-evaluate the existing goodwill held by WELCIA HOLDINGS upon our acquisitions of the shares as of December 1, in accordance with this reorganization, so there will be some increase in this area. So, I am just saying that this is tentative. That is all. Kawano [Q]: I would like to add something, but I think it is kind of strange that the goodwill part that WELCIA is holding is expanding. Regarding that point—and I apologize for being so persistent about this, even though it’s all non-cash—previously, it seemed quite unlikely you could achieve 20 years, so it looked like it would settle around 15 years. Is it correct to understand that it now seems likely to be settled within 20 years?

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Miyake [A]: It’s quite difficult to state everything today, but we will evaluate the whole thing rather than the existing goodwill that I mentioned earlier, which will be inflated. Since the current goodwill of WELCIA HOLDINGS will be included in the evaluation, we are currently conducting the evaluation with the expectation that this portion of the goodwill will be included. As of now, there are already JPY30 billion and so on. Please keep in mind that the provisional figure of JPY440 billion includes these parts and is included in this performance figure. Yes, 20 years. In coordination with the auditing firms, we have reached a certain degree of agreement in this direction, although it has not yet been finalized. We have put 20 years on the premise that this is a rough estimate. Kawano [Q]: I understand. Thank you. Also, as you head into Q4, the remaining Q4 is important for your company, but what is even more important is the next fiscal year and beyond. In the revision announced by AEON yesterday, there was discussion of a portion of system depreciation occurring on WELCIA’s side. I believe that WELCIA has been recognizing various impairments related to Pupule, such as goodwill impairments, etc. Will there be any such extraordinary loss factors or other areas that will be dropped? This is the second question. Miyake [A]: I will answer this question as well. There was discussion about internal competition, leading to decisions such as store closures or partial impairment charges. Naturally, due to existing contracts, sudden closures aren’t possible in all cases. As much as possible, we have reached the integration date, so the forecast for earnings includes a small portion of such areas that we are looking at in Q4. Regarding your second question regarding the system, as mentioned in the integration vision the other day, it may take some time to integrate the two systems, so the current WELCIA and TSURUHA systems will continue to be used for some time. We have not included this in the impairment loss scope at the end of the fiscal year. Kawano [Q]: Thank you. Lastly, I would like to ask President Tsuruha or Director Kirisawa about future integration and synergies as a group. Looking ahead to the next three years, I believe the Group will devote considerable energy to this. Regarding store openings and closings and systems, rather than making sweeping changes to unify everything, I recognize that you need to take time and start with what is feasible. I understand that the vendors have made a good start so far, but what kinds of products, systems, and stores are you planning to open and close, and in what time frame, with what kind of initiatives? Let me doublecheck on this. Tsuruha [A]: Thank you. Let me answer. First of all, regarding store openings and closings, we hope to present the number of new store openings in our medium-term management plan, but our basic policy is to strengthen existing stores, mainly through scrap-and-build, without focusing on net growth. However, we will of course also be opening stores. There are many operating companies, and both TSURUHA and WELCIA have had rules, or rather definite rules, that this matter should be handled by this operating company, so to a certain extent, we will continue to follow these rules. Then, in store development, we will decide which of the two companies will open the stores, and which of the operating companies will focus on this matter, after deciding on the basic rules, and the store development manager will make the final judgment. Support Japan Tollfree

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We have done this in the past, and we believe our basic approach will remain the same, which is to increase our market share with a strong, dominant trade name in this area. As mentioned on December 1, we are basically moving forward with the integration of our core systems in three years. Accounting and other systems have been put to one side, and some parts of the system have been put together, so we would like to sort out the parts that are rushed and the parts that are done carefully. That’s all from me. Kawano [Q]: Regarding the vendors, do you feel that you will proceed solemnly and rapidly? Negotiations with vendors, I mean. Tsuruha [M]: Is it the so-called [inaudible] of products? Kawano [M]: Yes. Tsuruha [A]: We will proceed solemnly there as well. Since this will be a rather large integration of two companies, we will discuss this with our business partners and proceed step by step. Kawano [Q]: In fact, during some negotiations, I think the synergy effects cited by third-party organizations are probably presented in a way that implies not all aspects would align if, for example, the lower-priced side of the former TSURUHA and former WELCIA were adopted. However, regarding whether there’s any tangible sense that a non-consolidated version—one based on one plus one equaling two—is feasible or not, what do you think? Tsuruha [A]: I can’t give you the details right now, but I can tell you that we are aiming for a form in which one plus one equals two or more, so we are not simply going to match one with the better of the two. Kawano [M]: I understand. Thank you. Wakabayashi [M]: Thank you. Now, we will continue with the next person. Please begin. Matsuo [Q]: Thank you. This is Matsuo from SMBC Nikko Securities. Now that you have shared various details about the post-merger integration, I would like to ask two questions to confirm the details. The first question is the landing of the gross margin and the idea of Q4, but I have seen some comments that are a bit bearish. I feel that the dispensing business is dragging a little, but the gross profit margin for pharmaceuticals and cosmetics in particular also struggled in Q3, and I think both WELCIA and TSURUHA struggled. I heard that WELCIA is also promoting price appeal in this area, so I wonder if the gross profit margin was reduced by the so-called discounting. The sluggish growth of seasonal products eventually occurred in Q3, and the Company saw a decline in sales. Also, can you tell us how you see this in Q4? Regarding the gross yields, I would like to ask both WELCIA and TSURUHA. This is my first question. Company Representative [M]: Would you like us to answer one at a time? Matsuo [M]: If you don’t mind, please. Company Representative [A]: I think it’s a similar trend, but we still saw a rebound from the previous year in Q3, for the so-called common cold remedies. Our analysis shows that the biggest reason for the decline in gross profit is that we were unable to fully offset the rebound from cold medicine-type products, face masks, the spread of influenza and COVID-19, etc. Support Japan Tollfree

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Company Representative [A]: On WELCIA’s side, as mentioned earlier, the same reason applies to pharmaceuticals and other products. On the other hand, regarding your question about price appeals, we have been slightly strengthening our measures to increase the number of customers for daily goods and food products. However, again, we are not doing this in the form of a discount, and of course, this is the [inaudible] part of the item structure, so even if we cut out the three months of Q3, we recognize that it is about 0.1% for the sale of goods. On the other hand, the rate for dispensing has decreased slightly, but this was due to a small number of highcost prescriptions and prescriptions with high unit prices. There are some places where the number of days is high, so the rate is decreasing depending on the content of such a structure. We would like to continue our efforts in such areas as the additional costs mentioned earlier in the dispensing section. Matsuo [Q]: I would like to ask for a supplement. If that is the case, is it correct to assume, for now, that the assumptions for Q4 will remain as they were in Q3? Company Representative [A]: Yes. As for the outlook for Q4, given the situation through Q3, we expect operating income to continue to trend toward the initial plan through cost control, despite a slight decline in gross profit margin. Matsuo [Q]: Thank you for your explanation. Secondly, and lastly, I know it is tentative, but the Company has revised its dividend policy. I’m not sure whether it is correct to use the dividend payout ratio, but it looks as if it falls between the existing dividend payout ratios of both TSURUHA and WELCIA. From President Tsuruha’s perspective, this is a decline, but I understand you are trying to offset it with gift certificates and the like. Is it correct that this will be mentioned again in a different form in the new year? Or will returns generally continue in this form in the next fiscal year and beyond? Company Representative [A]: This time, as you mentioned, there are very large movements in the total number of shares outstanding, such as splits and allotments of shares. Under such circumstances, the dividend amount will exceed the interim dividend, as the Company’s composition is changing, as we have considered. Once again, I would like to explain our dividend policy for the next and subsequent years by presenting our cash allocation at the medium-term management plan in April. Matsuo [M]: I understand. That’s all from me. Wakabayashi [M]: Thank you. Next person, please begin. Nishizawa [Q]: This is Nishizawa from Bank of America. Thank you. I would like to ask you two questions. Firstly, you mentioned that synergies are going well, though it’s only been one month so far. On the other hand, regarding the issues that have resurfaced, or the areas you need to finalize within the remaining three months for the medium-term plan in April, could you please let us know if there have been any updates on those points? Tsuruha [A]: Let me answer. In fact, since the start of December, it’s not like we have had no new issues, but there are always issues that need to be carefully discussed for the next medium-term plan, such as overseas strategies.

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We have strengthened our internal organization a little in the area of overseas strategy, and we are aware that it is a challenge to discuss and formulate plans and strategies for utilizing the resources of TSURUHA, WELCIA, and AEON overseas, including AEON. Nishizawa [Q]: Am I correct in understanding that not many challenges have occurred in a positive way in Japan this month? Tsuruha [A]: I am not aware of any new issues arising from the integration. Nishizawa [Q]: I understand. Thank you. Secondly, I would like to ask President Tsuruha about the relocation of TGMD to the Tokyo headquarters. Just three months ago, even within TSURUHA, I believe there was a discussion about how you could leverage scale to generate synergies in the first place. What results will you see from the move to the Tokyo headquarters, and how will you be able to make the best use of your scale within TSURUHA? This may be a little too early to tell, but if you have any comments, please let me know. Tsuruha [A]: Thank you. We discussed consolidating areas within TSURUHA where consolidation is feasible, and then further synergies through the integration with WELCIA. Given the timing now, however, these efforts are proceeding almost simultaneously. Therefore, I would like you to understand that the synergies from the integration with WELCIA will also incorporate synergies achieved within TSURUHA itself. That’s all from me. Nishizawa [M]: I understand. Thank you. Wakabayashi [M]: Thank you. Next person. Takayanagi [Q]: My name is Takayanagi from Citigroup Global Markets. Two brief questions, please. Both questions are about the concept of the forecast, referring to page 21 of the materials. First of all, when we look at the guidance, is it correct to assume that advisory fees or some other integrationrelated expenses, other than amortization of goodwill, will not appear in this Q4? I would like to hear your thoughts on the structure there. Thank you. Miyake [A]: I will answer. Since the integration is on December 1 and we are about to start Q4, I think we mentioned that there are about JPY4 billion in special integration costs per year. Regarding that portion, it is generally distributed evenly across each quarter. The remaining JPY1 billion or so in Q4 is included in the Tsuruha Group’s SG&A expenses on page 21. Takayanagi [Q]: Thank you. In that sense, is my understanding correct that there is not much deviation from the projections here? Miyake [A]: Yes, that is correct. Takayanagi [Q]: Thank you. The second is the tentative goodwill concept mentioned earlier, which I think amounts to JPY440 billion over 20 years, including BS valuation, market value valuation, and revaluation of WELCIA’s goodwill. In terms of the revaluation of the goodwill on the WELCIA side, is the breakdown of the JPY44 billion the portion that will grow as a result of the revaluation included in the JPY440 billion that you mentioned? Alternatively, I would appreciate clarification on whether the original portion of just over JPY30 billion is also included within this JPY440 billion figure. Thank you.

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Miyake [A]: We will provide the details in the disclosure documents in April, but it will be JPY440 billion, including the original goodwill of WELCIA, as mentioned earlier. It includes both positive and negative parts. Taking these factors into account, the total amount is estimated at around JPY440 billion, and we are tentatively proceeding with the evaluation. Takayanagi [M]: I understand very well. Thank you very much. Wakabayashi [M]: Thank you. Next person, please begin. Murata [Q]: Thank you. My name is Murata from JPMorgan Securities. Thank you for your help. Thank you for the detailed explanation. I look forward to your continued support in this year and beyond. Since a lot has been discussed about integration, I am afraid I have to go into details, but I would like to ask an additional question in addition to the one on dispensing. First of all, Mr. Shibazaki mentioned earlier the Q3 results of WELCIA’s dispensing business. Simply working backwards, I estimate WELCIA’s dispensing gross profit for the three months of Q3 has likely declined by around JPY0.7 billion. I think it was up in Q1 and Q2. Given that this reduction occurred despite efforts to add costs, I wonder if the impact of the decrease was quite significant. Specifically, did the effects of high-cost prescriptions and longer prescription durations contribute to a reduction of 1% or more? Also, I wonder if this effect will continue in the medium to long term. Also, on a quarterly basis, is this something that may or may not be disclosed on an ad hoc basis? This goes into a bit of the details, but I would like to hear your comments. Company Representative [A]: Let me answer. In Q3, we have not gone down to 0.7, as you asked. It has dropped by about 0.5. As for the contents, it will be a repetition, but as mentioned earlier, the contents of prescriptions with high drug ratios and similar factors are influencing the content of prescriptions. Regarding your question about how long this will continue, as this relates to prescription content, the future outlook is honestly quite uncertain. However, we are continuing our efforts to secure additional fees. We intend to continue addressing this by focusing on securing prescription volumes to increase gross profit amounts. Murata [Q]: I understand. Thank you. One more question related to dispensing. The revision of medical fees for 2026 is gradually coming into view, and the net revision rate this time is 2.22%, marking the first increase in 10 years. This applies to both the base fee and the drug price component. First of all, what is your take on the revised rate here? Is this the expected line, or perhaps the actual medical fees were a bit higher than anticipated? I am sure that many details will be released in the future but talks at the Central Social Insurance Medical Council and elsewhere include proposals such as raising the base fee for on-site pharmacies, lowering fees for pharmacies in medical malls, and eliminating generic drug surcharges, among others. Looking at these details alone, I feel they are quite negative. Do you think your company can cover this by adding various additional benefits? Please provide additional information on the revision of drug prices for dispensing.

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Company Representative [A]: Okay, I’ll answer. First of all, we expected the revision of the drug price to a certain extent. As for medical fees, we are still aware that the total is still positive, but the breakdown is not yet clear, so we will have to deal with this from now on. We have not yet received any details on other on-site pharmacies. We will continue to handle this as we have in the past, and I believe we will implement these measures as countermeasures. That is our understanding at this time. Murata [Q]: By measures, do you mean regional support or making sure that the self-help efforts pay off, as DX has done in the past? Company Representative [A]: Yes. We believe there is still room for adjustment in the ratio of the regional support system surcharge. Furthermore, considering the group as a whole, we see potential for opening dispensing pharmacies as part of group synergies. We intend to pursue these measures accordingly. Murata [M]: I understand very well. Thank you very much. Wakabayashi [M]: Thank you. With that, we would like to conclude today’s briefing. Thank you for your questions. This concludes TSURUHA HOLDINGS INC.’s financial results briefing for Q3 of the fiscal year ending February 28, 2026. Thank you very much for joining us today. [END]

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Document Notes 1. 2. 3. 4.

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Portions of the document where the audio is unclear are marked with [inaudible]. Portions of the document where the audio is obscured by technical difficulty are marked with [TD]. Speaker speech is classified based on whether it [Q] asks a question to the Company, [A] provides an answer from the Company, or [M] neither asks nor answers a question. This document has been translated by SCRIPTS Asia.

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