Revenue surged +69.3% driven by M&A contributions; Kanarabo and Fujiko performing well, but the timing of a recovery in core brand MiiS remains the key focus

Key Positives From The Results

New consolidation of Kanarabo (+JPY 645M) and clinic-related entities (+JPY 178M) drove top-line growth, lifting consolidated revenue to JPY 1,317M, up +69.3% YoY. Operating loss narrowed from a JPY 161M loss to a JPY 141M loss, while adjusted EBITDA improved from a JPY 113M loss to a JPY 63M loss, confirming the trajectory toward profitability. The company has entered a phase where its ability to scale the business portfolio and replicate brand-building success will be put to the test.

• Fujiko posted 1Q revenue of JPY 517M; hero product "Pore Odamari! Cream" achieved an 87.6% repeat purchase rate, establishing itself as a staple item
• b idol generated 1Q revenue of JPY 141M (+JPY 23M QoQ); following a double Best Cosmetics award win, award-winning product sales surged ~230%
• WinC slashed ad spend from JPY 194M to JPY 31M, improving business-level profit by +JPY 54M (from a JPY 109M loss to a JPY 55M loss)
• Matsumura Shoten delivered a gross margin of 47.3%, exceeding the 41.8% plan, with mall-based sales driving the outperformance
• bialne launched a loyalty program for subscription members, resulting in ~2.4x new sign-ups and ~2.6x reactivations of dormant subscribers

Key Concerns From The Results

Core brand MiiS posted revenue of JPY 108M (−33.3% YoY), underperforming its plan and serving as the single largest drag on operating profit. Disclosure of material events, etc. related to the going concern assumption continues to be included. Operating cash flow has been negative for two consecutive fiscal years, and cash on hand of JPY 521M warrants close monitoring from a liquidity standpoint.

• MiiS 1Q revenue came in at JPY 108M (−33.3% YoY), primarily due to timing slippage on a large wholesale deal and deteriorating promotional economics on e-commerce marketplaces
• Gross margin declined to 50.6% (−2.4pp YoY), reflecting a shift in revenue mix toward lower-margin businesses and COGS timing effects at MiiS
• Net loss widened to JPY 177M, driven by a swing from a JPY 52M tax refund in the prior year to JPY 26M in tax charges this period
• Equity ratio fell to 16.5% (vs. 19.2% at prior FYE), marking the fourth consecutive annual decline; goodwill of JPY 2,289M represents 42.9% of total assets
• Interest expense reached JPY 19M (+94.0% YoY), reflecting higher debt levels from M&A financing

Focus Areas / Items To Monitor Going Forward

• Sales trajectory of MiiS's new product "LIFT BRUSH" (JPY 39,800 incl. tax) following its general launch, and distribution expansion into new channels such as Qoo10 and Loft. Whether this high-price-point beauty device can penetrate the existing oral care user base will be key to a 2Q recovery
• Whether Kanarabo's Fujiko and b idol brands can sustain above-plan performance during the 2H mega-sale events on Amazon and Rakuten. Impact on gross margin from the rollout to ~3,000 drugstore locations via the wholesale channel
• Timeline for operating cash flow turning positive and potential need for additional fundraising. Achieving full-year operating income of JPY 50M requires an incremental JPY 191M contribution from 2Q onward — the trajectory of MiiS recovery and company-wide cost discipline will determine whether guidance is achievable

Key Financial Highlights

The widening of the net loss was primarily attributable to the reversal of a JPY 52M tax refund booked in the prior-year period and the recognition of JPY 26M in income taxes in the current period. At the recurring profit level, the company posted a JPY 16M improvement.

Performance By Business Segment

As the company operates under a single reportable segment (Brand Produce Business), no segment-level financial disclosure is provided in the statutory filings. However, the earnings presentation materials break out revenue across three business domains. The Proprietary Brands domain expanded +264.6% driven by new consolidation of Kanarabo and clinic-related entities, accounting for 77.7% of total revenue. The Planning & Contract Manufacturing domain declined −30.6% due to reduced shelf space at variety stores. The Other New Businesses domain contracted −46.3% following the divestiture of Rice Curry's lifestyle business.

Segment Performance Table

Progress Versus Full-Year Guidance

1Q revenue progress of 19.9% is broadly in line with the past two years (FY3/25: 21.5%, FY3/26: 18.8%). However, with an operating loss of JPY 141M booked in 1Q, achieving the full-year break-even target (JPY 50M operating income) requires an incremental JPY 191M from 2Q onward. The company has maintained its full-year guidance, citing above-plan performance at Kanarabo, Matsumura Shoten, and HaD, a MiiS recovery scenario (LIFT BRUSH launch and channel expansion), and corporate cost containment. While the earnings profile is structurally 2H-weighted, the probability of achievement will need to be reassessed based on 2Q results.

• The earnings profile is structurally 2H-weighted. Major e-commerce marketplace sales events (Amazon Prime Day, Black Friday, etc.) are concentrated in 2H, driving higher Proprietary Brands revenue
• Matsumura Shoten's Planning & Contract Manufacturing business sees peak demand in the January–March period tied to the back-to-school season

Changes To Guidance

No changes from the full-year guidance announced on May 14, 2026. Management views the MiiS 1Q shortfall as driven by temporary factors and expects to absorb the miss through above-plan performance at Kanarabo and Matsumura Shoten, along with new product launches and channel expansion from 2Q onward.

Commentary On Shareholder Returns

The annual dividend forecast for FY3/27 remains JPY 0.00 (unchanged from JPY 0.00 in the prior year). No share buybacks or changes to the shareholder return policy have been announced.

Financial Position

The equity ratio has declined for four consecutive years to 16.5%, reflecting goodwill accumulation from accelerating M&A activity and cumulative losses. Operating cash flow has been negative for two consecutive fiscal years, and material events, etc. related to the going concern assumption have been disclosed. However, the company has assessed that no material uncertainty exists given that funding arrangements are in place.

News Released Alongside The Earnings Announcement

None

Major Announcements During The Quarter

Large-Shareholding Filings / Material Proposals Over The Past Year

• ULTIMATE CLASSIC INVESTMENT LLC: 0% → 10.94% (reporting obligation triggered 2026/03/05; filed 2026/04/03, corrected 04/06) — Pure investment. Supports medium- to long-term corporate value enhancement while respecting the current management's policies
• Ryo Okubo (Representative Director): 36.84% → 37.46% (reporting obligation triggered 2025/08/07) — Pure investment. 220,000 shares pledged as collateral under a loan agreement with Tokai Tokyo Securities