Intermestic Inc.

Business Details

This is the domestic eyewear/eyeglass retail segment, comprising Zoff Co., Ltd., which operates the "Zoff" brand (335 stores), and, from January 2026, the Horus HD Group (Meganesuper, 301 stores), whose results have been incorporated into consolidated performance. The segment has grown on the back of low-price, high-quality models based on the SPA (Specialty store retailer of Private label Apparel) model, combined with aggressive promotional activities. With the Horus HD Group contributing to results from the cumulative 1Q FY2026 consolidated period, revenue expanded significantly, up 81.9% year on year.

Recent Overview

Revenue surged 81.9% year on year due to the consolidation of the Horus HD Group. Margin declined.

From 1Q FY2026, the Meganesuper business (Horus HD Group, 301 stores) contributed to results, with segment revenue reaching ¥20,963 million (up 81.9% year on year) and segment operating profit reaching ¥2,454 million (up 30.1% year on year). Meanwhile, due to cost burdens associated with the Horus HD Group integration, the operating margin declined to 11.7% from 16.4% in the same period a year earlier. In addition, the provisional accounting treatment related to the business combination was finalized in this 1Q, revising goodwill from ¥23,865 million to ¥14,178 million (a decrease of ¥9,687 million). In the Zoff business, demand was stimulated through the launch of "Galileo S01" and "Galileo lenses" and the holding of the 25th anniversary fair.

Key Products

Growth Drivers

• Scale expansion through consolidation of the Horus HD Group (Meganesuper, 301 stores), contributing to results from 1Q FY2026
• Appeal to a broad customer base through new product launches such as the "Galileo" series and collaboration eyewear in the Zoff business
• Demand generation through marketing initiatives such as the 25th anniversary fair
• Strong sales of SUNCUTGlasses and photochromic lenses (margin improvement from higher paid lens purchase rate and product price revisions)
• Continued expansion of trading area coverage through ongoing new store openings (4 Zoff stores, 3 Meganesuper stores)
• Expansion of high-value-added offerings through e-commerce growth and collaboration products (UNITED ARROWS, MAQuillAGE, etc.)
• Synergies expected between the two brands toward the full-year revenue forecast of ¥85,800 million (up 71.1% year on year)

Risks

• Impairment risk and amortization burden (¥208 million amortized in 1Q) related to goodwill (¥14,178 million after PPA finalization) arising from the Horus HD Group integration
• Increased financial leverage and interest rate risk due to execution of a syndicated loan (long-term borrowings of ¥10,284 million) and remaining short-term borrowings (¥6,000 million)
• Risk of delays or cost overruns in the integration and PMI (post-merger integration process) with the Horus HD Group
• Risk of cautious consumer sentiment and stalling personal consumption amid continued price increases
• Impact on consumption from uncertainty in the domestic and overseas economy stemming from changes in US trade policy and geopolitical risks
• Risk of loss of market share due to intensifying price competition with rivals and changing consumer needs
• Risk of margin pressure from increased fixed costs (depreciation of ¥549 million in 1Q, personnel expenses, advertising expenses) associated with new store openings and renovations
• Risk of declining margins due to increased SG&A expenses (¥12,388 million in 1Q, up 77.3% year on year) resulting from the Horus HD Group integration