Tokyo Lifestyle Co., Ltd. Issues 2026 Chairman’s Letter to Shareholders

-- Global Expansion Delivers Significant Progress, Operational Efficiency Substantially Enhanced

TOKYO, Dec. 29, 2025 (GLOBE NEWSWIRE) -- Tokyo Lifestyle Co., Ltd. (Nasdaq: TKLF) (“Tokyo Lifestyle” or the “Company”), a retailer and wholesaler of Japanese beauty and health products, sundry products, luxury products, electronic products, collectible cards, trendy toys as well as other products in Hong Kong, Japan, North America, Thailand, Vietnam, the United Kingdom and Australia, today announced that Mr. Mei Kanayama, Representative Director and Principal Executive Officer of the Company, has issued a letter to shareholders.

In the letter, Mr. Kanayama reviews the Company’s operational resilience amid a complex and volatile macroeconomic environment in 2025 and outlines Tokyo Lifestyle’s strategic vision for 2026 and beyond.

The full text of the letter to shareholders is as follows:

To Our Esteemed Shareholders,

As 2026 approaches, on behalf of the management of Tokyo Lifestyle Co., Ltd., I would like to review our strategic execution in 2025 and outline the strategic priorities that will guide us in 2026 and beyond.

In 2025, the global macroeconomic environment remained challenging, shaped by geopolitical tensions, supply chain realignments, and volatile foreign exchange fluctuations. Rather than retreating defensively in the face of these pressures, the Company pursued proactive, forward-looking strategic adjustments coupled with disciplined execution. We successfully transitioned from a strategy of “scale expansion” to one centered on “quality improvement and efficiency enhancement.” As a result, we demonstrated strong operational resilience amidst uncertainties while achieving meaningful progress in key financial metrics and building a more sustainable and diversified global footprint.

Core Achievements in 2025: Globalization and Diversification in Tandem

Over the past year, we adhered to our strategy of “multi-regional layout and differentiated operations,” driving solid growth across our core global markets:

1. Deepening Existing Markets and Exploring New Opportunities (East Asia and Southeast Asia)

• Core Markets - Hong Kong and Japan: We continued to strengthen our position and presence in Hong Kong and Japan, which serve as our primary cash flow markets. By adding two new directly operated stores in Hong Kong and expanding wholesale channels, we further reinforced our local sales network. Benefiting from the recovery of tourism, sales of high-margin categories, such as cosmetics and luxury goods, rebounded significantly.

• Strategic Extension of Product Category: By accurately capturing consumption trends among Generation Z, we rapidly introduced pop toys and trading cards into our product portfolio. This initiative not only optimized the stock-keeping unit (“SKU”) mix but also meaningfully lowered the average age of our customer base, injecting renewed youthful vitality into our brand.

• Mainland China and Southeast Asia: In June 2025, we established a wholly-owned subsidiary in Shenzhen, marking a deliberate step toward broader and deeper penetration of the mainland Chinese market. In Southeast Asia, we adopted a capital-efficient model combining “direct-operated flagship benchmarks with franchise replication,” successfully launching flagship stores in Bangkok (February) and Ho Chi Minh City (October). We believe that these milestones laid a strong foundation for future expansion in these markets.

2. Expanding into Developed Markets (North America and Oceania)

• North American: The opening of our new store in Toronto (May) expanded our North American direct-operated network to seven locations, further validating the scalability and replicability of our Asian retail model in the North American market.

• Oceania: In May, we formed a joint venture and subsequently launched our first direct-operated store in Sydney, Australia in November, while introducing external strategic capital. This milestone not only strengthened our global footprint but also established the operational and financial foundation for future expansion in the Southern Hemisphere.

A Qualitative Leap in Operational Efficiency and Balance-Sheet Strength

Through digital transformation and refined management practices, we achieved a step-change improvement in operational efficiency in 2025:

• Significant Improvement in Inventory Turnover Rate: Supported by optimized supply-chain management and diversified sales channels, inventory turnover increased sharply to 35 times in the first half of fiscal year 2026, compared with 13 times in the same period of fiscal year 2025. This strong performance highlights our strong ability to monetize inventory and deploy capital efficiently.

• SKU Expansion with Stable Profitability: Despite a substantial increase in total SKUs to approximately 219,800 in the first half of fiscal year 2026, up from 165,120 in the first half of fiscal year 2025 and 201,300 for fiscal year 2025, gross profit margins remained at healthy high single-digit levels, underscoring our ability to preserve profitability quality during scale expansion.

• Asset-Light Digital Transformation: Through our strategic partnership with HK Artemis Limited (“HK Artemis”), we introduced specialized capabilities in e-commerce and live streaming. This “authorized operation plus performance-based compensation” model significantly reduced trial-and-error costs and opened a new, low-risk growth avenue for the Company.

• Optimized Capital Structure: With a revolving credit facility secured in Hong Kong in June and the introduction of a Hong Kong-based strategic private investor in December, we further optimized our capital structure, strengthened liquidity and enhanced financial flexibility to support future mergers, acquisitions and global expansion.

Strategic Outlook for 2026: Long-Term Perspective and Sustainable Value Creation

Looking ahead to 2026, while macroeconomic uncertainties are gradually easing, competitive intensity remains high. Tokyo Lifestyle will continue to adhere to its operating philosophy of “bold planning, prudent validation and decisive execution.” Building on our global footprint and superior operational efficiency, we will focus on:

1. Continuously improving store-level profitability (unit economics);

2. Deepening supply chain integration to further unlock margin potential; and

3. Expanding asset-light partnership models to accelerate global brand penetration.

I would like to express my sincere gratitude for your continued support, confidence and trust. Our performance to date demonstrates our ability to navigate economic cycles, both upcycles and downcycles. Together, we will continue to shape the Company’s future and remain firmly committed to delivering sustainable, long-term value for our shareholders.

Sincerely,

Mei Kanayama

Representative Director and Principal Executive Officer

Tokyo Lifestyle Co., Ltd.

About Tokyo Lifestyle Co., Ltd.

Headquartered in Tokyo, Japan, Tokyo Lifestyle Co., Ltd. (formerly known as Yoshitsu Co., Ltd) is a retailer and wholesaler of Japanese beauty and health products, sundry products, luxury products, electronic products, collectible cards, trendy toys, and other products in Hong Kong, Japan, North America, Thailand, Vietnam, the United Kingdom and Australia. The Company offers various beauty products (including cosmetics, skincare, fragrance, and body care products), health products (including over-the-counter drugs, nutritional supplements, and medical supplies and devices), sundry products (including home goods), collectible cards and trendy toys (including Pokémon cards, BE@RBRICK and other trendy products) and other products (including food and alcoholic beverages). The Company currently sells its products through directly-operated physical stores, through online stores, and to franchise stores and wholesale customers. For more information, please visit the Company's website at .

Forward-Looking Statements

Certain statements in this press release are 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 and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy, and financial needs. Investors can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to,” or other similar expressions. 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, and 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 filings with the U.S. Securities and Exchange Commission.

For more information, please contact:

Tokyo Lifestyle Co., Ltd.

Investor Relations Department

Email:

Ascent Investor Relations LLC

Tina Xiao

President

Phone: 1-646-932-7242

Email: