Operator: Good day, ladies and gentlemen. Thank you for standing by and welcome to Yoshitsu's Fiscal Year 2024 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. This conference is being recorded today, July 16, 2024. If you have any objections, you may disconnect at this time.

Joining us from Yoshitsu are the company's Principal Executive Officer, Mr. Mei Kanayam; the company's Principal Accounting and Financial Officer, Mr. Youichiro Haga; and the company's representative, Ms. Sissi Huang. Ms.

Sissi Huang will deliver the remarks of the company's Principal Executive Officer and company's Principal Accounting and Financial Officer in English. Before we continue, I would like to remind you that some information discussed on this call will contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward looking statements involve known and unknown risks and uncertainties. The company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances or changes in its expectations, except as may be required by law.

Although the company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct. The company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the company's registration statement and in its other filings with the SEC. With that, I will now turn the call over to Sissi Huang, the company's representative. Ms. Huang, please go ahead.

Sissi Huang: Thank you, operator and everyone for joining Yoshitsu's fiscal year 2024 earnings conference call today. On our call today, I will give an overall of our performance for fiscal year 2024 and then share the details of the company's financial review. In fiscal year 2024, we are pleased that we have achieved remarkable success in our newly-launched luxury products as well as our expansion in key markets like Japan and Hong Kong, the United States and Canada. Our total revenue surged by 50.3% to $195.7 million in fiscal year 2024. Our strategic expansion into North America incorporating several new subsidiaries and opening new stores in the U.S.

and Canada, which has made significant contribution to our revenue growth. We also introduced luxury products, significant boost in sales in our directly operated physical stores, franchise store and among wholesale customers. Furthermore, we decided to concentrate our management resources on core businesses and improve operation efficiency. To mitigate online sales volatility, we have strengthened our wholesale and franchise store network. These measures have enhanced our adaptability and resilience, enable us to withstand economic headwinds in the current market environment.

Looking ahead, we are dedicated to driving sustainable growth and creating long-term value for our shareholders. We believe in our revolving strategy and constant endeavors to execute dedication of our employees and unwavering support and trust from our partners and shareholders. We are continuing our efforts to explore sales opportunities. We also continue exploring new markets, while enhancing our current presence by analyzing customer trends in different regions, focusing on improving customer install experience, further expanding our distribution network and exploring new partnership opportunities. In particular, during the next three years, we intend to open 10 additional directly operated physical stores in Hong Kong and 50 new franchise stores in the U.S., Canada, Australia, New Zealand, the UK, Singapore, Malaysia, Thailand and Taiwan.

Furthermore, we strive to improve our profitability by saving operating expenditure and transforming some of the directly operated physical store into franchise stores. In addition, we continue expanding our product offering by cooperating with beauty products and other product suppliers to develop our new private label products. We believe, this can help us attract new customers and encourage repeat visits, which will eventually support our revenue growth. Next, I will turn to a closer review of our financials of fiscal year 2024 on behalf of the management team. Our total revenue increased by 50.3% to $195.7 million for fiscal year 2024.

Our revenue from directly operated physical stores was up by a double-digit growth of 28.8% to $15 million for fiscal year 2024. During fiscal year 2024, we started to offer luxury products, which contributed a significant portion of increased directly operated store sales in fiscal year 2024. The increase in directly operated store sales was also due to revenue contributed from our newly opened physical stores in the United States and Canada, which was partially offset of the decreased revenue as a result of the transformation of four physical stores in Japan during fiscal year 2024. The transformation of the physical store in Japan was because this store has been underperformant and we transformed this store into franchise stores to improve our cash flow and working capital. After the change, these physical stores purchased products from us, like other franchise store and hence, this portion of revenue was recorded under franchise stores and wholesale customers.

Revenue from franchise stores and wholesale customers was up by 23.7% to $117 million for fiscal year 2024. The increase was mainly due to expansion of product offering, as we started to offer luxury products and electronic products that have higher unit selling price. Meanwhile, the increase was also due to increase the revenue generated from franchise stores, when previously was recognized on their physical stores, as mentioned above, as well as increased revenue from some new wholesale customers, whom we entered into business relationship during fiscal year 2024. The increase was partially offset by the decreased sales of beauty products to wholesale customers as the demand of Japanese beauty products declined in China market. Gross profit was $23.4 million for fiscal year 2024.

Gross margin was 11.9% for fiscal year 2024. Operating expenses down by 38.4% to $17.6 million for fiscal year 2024. The decrease in operating expenses was primarily attributable to decrease in allowance for credit loans, shipping expenses, promotion and advertising expenses, payroll employee benefits expenses and bonus expenses and transaction commission, which was partially offset by an increase in professional service fees. Net income increased to $7.5 million for fiscal year 2024 from a net loss of $8 million for fiscal year 2023. Basic and diluted earnings per share was $0.2 for fiscal year 2024, compared to a loss per share of $0.22 for fiscal year 2023.

As of March 31, 2024 the company had cash of $2.5 million. As of March 31, 2024 the company had $105.4 million accounts receivable balance due from third parties. Approximately 35.4% of the March 31, 2024 balance has subsequently been collected and the majority of the remaining balance is expected to be collected by December 31, 2024. The collection of such receivable made cash available for use in operation as working capital if necessary. As of March 31, 2024 the company had merchandise inventory of $4.4 million, which we believe can be sold quickly based on its analysis of current trend in demand for its products.

For fiscal year 2024, net cash provided by operating activities was $1.9 million. Net cash provided by investing activities amounted to $2.7 million. Net cash used in financing activities was $1.7 million. We are pleased to see substantial improvement in our financial performance for fiscal year 2024. This positive outcome is a result of our focused efforts on cost management, strategic investment and revenue growth.

We also achieved a notable reduction in interest expenses. Thanks to our strategic debt management and favorable loan conditions and we saw a significant increase in other income, mainly from the disposal of property and equipment. Looking forward, we will continue to focus on enhancing our financial performance through disciplined cost management, strategy investment and exploring new revenue streams. We are confident that these efforts will drive long-term value for our shareholders and stakeholders. Thank you so much for joining this conference call.

If you have any questions, please contact us through e-mail at ir@ystbek.co.jp or reach our IR counsel Ascent Investor Relations at investors@ascent-ir.com. Management will respond to your questions as soon as possible. We appreciate your interest and support in Yoshitsu and look forward to speaking with you again next time.

Operator: Thank you again for attending the Yoshitsu’s fiscal year 2024 earnings conference call. This concludes our call today, and we thank you all for listening in.

Goodbye. End of Q&A: