Kyokuto Co., Ltd.

Business Details

The company builds its store network centered on dry cleaning and laundry services, operating through three formats: directly-managed stores, quasi-directly-managed stores, and agency stores. Based in Fukuoka Prefecture, it has expanded into Saga, Yamaguchi, Hiroshima, Shimane, Hyogo, Osaka, Kanagawa, Tokyo, and Saitama. The company promotes customer retention through its special membership program (Pelicans Coins) and is expanding value-added services such as stain removal, water-repellent treatment, mothproofing, sneaker cleaning, and clothing alterations. As of the end of Q1 of FY2027 (ending February 2027), the number of stores stood at 477 (1 new store opened, 2 unprofitable stores closed).

Recent Overview

Q1 saw declines in both revenue and profit due to rising fuel and raw material costs and weak consumer sentiment, while the Kurume plant began operations

In Q1 of FY2027 (ending February 2027) (March–May 2026), revenue was ¥1,854 million (down 4.3% year on year), operating profit was ¥372 million (down 10.7%), ordinary profit was ¥383 million (down 13.3%), and quarterly net profit was ¥273 million (down 10.7%), with declines in both revenue and profit across all metrics. The main causes were rising energy and raw material prices stemming from the Middle East situation and consumers holding back on cleaning services. On the other hand, the Kurume plant began operations in March 2026, and the company opened 1 new store and renovated 14 existing stores. In non-operating expenses, a newly recorded provision for doubtful accounts of ¥17,927 thousand was included. There is no change to the full-year earnings forecast (revenue of ¥5,350 million, operating profit of ¥100 million).

Key Products

Growth Drivers

• Operational efficiency gains from the start of operations at the Kurume plant and expansion of market share in Kurume City, Fukuoka Prefecture
• Increased visit frequency and membership numbers through special membership recruitment campaigns and SNS marketing initiatives
• Higher average customer spending through strengthened sales of value-added products such as mothproofing and deluxe finishing
• Strengthened sales foundation through new store openings and store renovations (1 new store and 14 renovated stores in Q1)
• Strengthening of specialized processing services such as stain removal, water-repellent treatment, and sneaker cleaning
• Improved convenience through higher utilization of 24-hour pickup/drop-off machines (robots) and expansion of app membership

Risks

• Continued reluctance among consumers to use cleaning services amid heightened cost-saving and defensive spending awareness
• Increased costs due to rising fuel and raw material prices stemming from the prolonged Middle East situation (currently difficult to reasonably estimate the impact on business performance)
• Profit pressure from rising labor and SG&A costs (full-year operating profit forecast remains low at ¥100 million)
• Risk of fluctuation in seasonal demand due to climate change (delayed temperature rises, record-breaking lingering summer heat, etc.), given the revenue concentration structure in Q1
• Decline in the potential customer base due to declining birthrate and aging population, making it harder to secure members
• Emergence of credit management risk, including the recording of provisions for doubtful accounts