VISION2029 Launched: Leveraging Proven PMI Playbook Post-M&A and Pivoting to Proprietary E-Commerce with MiiS High-ASP Product LIFT BRUSH

Summary

For FY2026/3 (full year), the company delivered revenue of JPY 4,129M (+38.3% YoY), achieving top-line growth. However, operating income fell to JPY -399M as multiple headwinds converged: disposal of unprofitable inventory discovered post-Kanarabo acquisition, goodwill impairment related to RiLi, and restructuring charges associated with the divestiture of the lifestyle business. Management characterized FY2026/3 as "a year to flush out all the problems," committing to an operating income turnaround (guidance: JPY 50M) and adjusted EBITDA recovery to JPY 324M in FY2027/3. During the earnings call, management candidly acknowledged shortcomings in due diligence during the Kanarabo acquisition, while pointing to tangible signs of a growth inflection—citing strong momentum for Fujiko's new product "Keana Odamari! Cream" and MiiS's high-ASP electric toothbrush "LIFT BRUSH" exceeding JPY 10M on its first day on Makuake.

Key Points (Earnings Takeaways and Growth Initiatives)

• Business Strategy and Market Positioning
  • Emphasized that in niche markets, cross-channel coverage (proprietary EC + third-party EC + retail + directly-operated stores) creates a defensive moat by capturing market share across all touchpoints
  • Expanding M&A scope beyond branded companies to include unbranded manufacturers and service businesses, aiming to unlock value through brand-building
  • Repeatedly highlighted the leverage inherent in parent company management costs not scaling proportionally with revenue, and referenced AI-driven efficiencies to further optimize administrative costs
• Current Business Progress and Key Drivers
  • Post-acquisition of Kanarabo, the company discovered unprofitable inventory exceeding initial expectations; b idol return rate improved from 24.5% in Q3 to 9.2% in Q4, though management openly acknowledged the due diligence shortfall
  • Matsumura Shoten's deterioration in COGS ratio was primarily driven by a time lag in passing through yen depreciation to selling prices; systems are now in place, with normalization expected from the current fiscal year
  • MiiS Q4 revenue of JPY 179M reflected temporary transaction restrictions related to clinic operations during the medical corporation consolidation process
• Strategic Initiatives and Key Inflection Points
  • MiiS launched its first high-ASP product "LIFT BRUSH" via advance sales on Makuake, exceeding JPY 10M on day one; aimed at improving proprietary EC advertising CPA and lifting AOV
  • Fujiko's "Keana Odamari! Cream" achieved ~3x initial sales projections during pre-launch, with nationwide rollout commencing across ~3,600 stores
  • Acquired distribution rights for "WHOMEE," the cosmetics brand by Shinobu Igari; launch planned after rebranding is completed in the next fiscal year
  • Divested the lifestyle segment's SNS marketing support business to Lovable Marketing Group for JPY 700M, concentrating management resources on proprietary brand operations

Outlook and Strategy

• FY2027/3 full-year guidance calls for revenue of JPY 6,602M (+59.9% YoY) and operating income of JPY 50M, targeting a return to profitability. The full-year consolidation of Kanarabo is the primary driver
• VISION2029 targets for FY2029/3: revenue of JPY 15B, operating income of JPY 1.5B, and market capitalization of JPY 30B
• Plans for 2+ M&A transactions in FY2027/3, but shifting to a conservative approach of incorporating deals into guidance only after confirming PMI progress
• Overseas expansion strategy centers on leveraging Fujiko's Greater China distribution channels (13.0% of H2 revenue) as a shared group platform, with Middle East entry via the UCI investment to be pursued once geopolitical conditions stabilize
• Organic growth assumptions are conservatively set at 10% annually, with M&A-driven upside targeted to deliver both top-line expansion and OPM improvement
• Existing brand support operations (Matsumura Shoten contract manufacturing + Rice Curry Plus) to be managed as cash cows, maintaining ~JPY 1.4B in annual revenue while improving margins

Positive Factors

• Fujiko proprietary EC revenue +48.6% pre/post-PMI and Matsumura Shoten EC revenue +538.6%, building a compelling track record of PMI repeatability
• MiiS "LIFT BRUSH" surpassed JPY 10M on its Makuake launch day, positioned as a catalyst for proprietary EC revenue expansion via high-ASP products
• bialne subscription retention rate remains elevated at 94.8%, underpinned by a healthy D2C model with no first-month discounting
• Proprietary brand revenue mix reached 63.4% in H2, demonstrating continued shift toward higher-margin operations
• Adjusted net income of JPY 310M (+95.0% YoY) marked a record high, partly driven by JPY 652M gain on the sale of Rice Curry LS
• Secured ~JPY 300M in funding from UCI (Middle East-focused fund), providing financial backing for Middle East market entry

Concerns and Risks

• Goodwill balance of JPY 2,311M is elevated relative to net assets of JPY 1,086M, with potential for further accumulation as M&A activity accelerates
• Interest-bearing debt expanded to JPY 3,541M (+78.5% YoY), with equity ratio declining to 19.2%
• Management's own admission of insufficient due diligence during the Kanarabo acquisition raises the risk of similar issues in future M&A transactions
• Achieving VISION2029 requires accelerating both the volume (10+ deals over three years) and scale of M&A, leaving meaningful pipeline uncertainty
• Middle East expansion timeline remains unclear due to geopolitical risk; management explicitly stated during the call that full-scale entry would proceed only once the regional situation stabilizes
• Consolidated gross profit margin edged down to 53.6% (vs. 54.3% prior year), with FX fluctuations and raw material cost inflation potentially sustaining this trend

Performance Highlights

FY2026/3 consolidated revenue reached JPY 4,129M (+38.3% YoY), achieving top-line growth. The proprietary brand segment surged to JPY 2,266M (+125.5% YoY), driven by the full-year contribution of Matsumura Shoten and the addition of Kanarabo to the group. However, FX headwinds, cost increases, and impairment charges on unprofitable operations resulted in an operating loss of JPY -399M and net loss attributable to owners of parent company of JPY -368M. Adjusted net income came in at JPY 310M (+95.0% YoY), supported by gains on the sale of affiliate shares.

• Fujiko Proprietary EC Buyers: 6,334; AOV: JPY 3,894 (Nov 2025–Mar 2026)
• Fujiko Wholesale Store Count: 10,356 stores
• MiiS Proprietary EC Buyers: 17,623; AOV: JPY 7,025 (full year)
• MiiS Third-Party EC Buyers: 97,693; AOV: JPY 3,495 (full year)
• bialne Subscription Members: 5,157; Retention Rate: 94.8%
• b idol Return Rate: Improved from 24.5% in Q3 → 9.2% in Q4
• Adjusted EBITDA: JPY -118M (prior year: JPY 235M)
• Adjusted Net Income: JPY 310M (+95.0% YoY)