Village Vanguard CO.,LTD.
2769・Standard Market・Retail Trade
Business
Village Vanguard Co., Ltd. is a retail company founded in 1986 under the concept of a "bookstore you can play in" (asoberu honya). It provides an original sales-floor space that appeals to customers' intellectual curiosity by displaying and selling books, SPICE (miscellaneous goods), new media (CDs, DVDs, etc.), food, apparel, and other items in an integrated manner. As of the end of May 2025, the company operated a total of 293 stores domestically, comprising 290 directly-managed stores and 3 franchise stores. It is listed on the Standard Market of the Tokyo Stock Exchange. Its consolidated subsidiary, Village Vanguard Co., Ltd., handles the retail business, while its two overseas subsidiaries have already closed their stores and are undergoing liquidation procedures. The company develops its business around three pillars: physical stores, pop-up events, and online sales.
Business Model
The company offers the enjoyment of discovering products through store spaces that uniquely blend and display books, general merchandise, food, and other items, with product sales revenue from store visitors as its main revenue source. Merchandise procurement is conducted based on a basic transaction agreement with its key business partner, TOHAN Corporation. The company operates primarily company-owned stores, alongside franchise stores, and is also cultivating pop-up events linked with content and events, as well as online sales, as additional revenue channels. The company has set management target indicators of ROA of 10.0%, ROE of 15.0%, and an ordinary profit margin on net sales of 10.0%.
Company Strengths
Since its founding in 1986, the company has consistently maintained the concept of a "bookstore where you can play" (Asoberu Honya), and as of the end of FY2025 (ended May 2025) operated a nationwide network of 293 stores in total, comprising 290 directly-managed stores and 3 franchise (FC) stores. It also maintains flagship stores in major commercial areas such as Shimokitazawa and Shibuya in Tokyo, establishing recognition as a distinctive sales-floor space brand.
In FY2025 (ended May 2025), inventory (merchandise) decreased by ¥4,554 million year on year, marking substantial progress in inventory optimization. Through strengthened purchasing control and promotion of inventory clearance at outlet stores, the company improved asset efficiency in line with its ROA-focused management indicators, which emphasize control of the inventory-to-total-assets ratio.
In addition to existing directly-managed and FC stores, the company has established a pop-up business leveraging content and event collaborations, as well as online sales, as revenue channels. It is strengthening its pop-up business, which appeals to "excitement and anticipation" not experienced at physical stores, while continuing to expand original product offerings and online sales.
ENVALITH's Perspective
Performance Trend
Revenue declined for five consecutive periods, from ¥26,758 million in FY2022 (ending May 2022) to ¥23,353 million in FY2026 (ending May 2026). Meanwhile, profitability improved significantly in FY2026 (ending May 2026), with operating profit of ¥919 million (versus a loss of ¥935 million in the prior period) and net income of ¥736 million (versus a loss of ¥4,247 million in the prior period). The main drivers of the improvement were: (1) an improvement in gross profit margin (up approximately 5.5 percentage points year on year, with gross profit of ¥10,436 million); (2) a reduction in SG&A expenses of ¥781 million (to ¥9,517 million); and (3) the disappearance of the ¥2,472 million inventory valuation loss recorded in the prior period. In terms of the external environment, consumers' increasing frugality and selectivity amid price inflation, along with intensifying cross-industry competition, continue to exert downward pressure on sales. The company forecasts a sharp decline in earnings again for FY2027 (ending May 2027), with revenue of ¥21,881 million and operating profit of ¥504 million, leaving the sustainability of the profitability improvement uncertain.
Growth Strategy
Achieving a high-profitability structure through the strengthening of the three businesses—Store, POPUP, and EC—and optimization of sales composition ratios
Improved gross profit margin through enhanced merchandising capability at existing stores and stronger purchasing control. In FY2026 (ending May 2026), the company achieved a gross profit margin of 44.7%, which, combined with SG&A cost reductions, contributed to a turnaround to operating profit. The company plans to continue reducing head office costs through personnel reallocation and operational efficiency improvements.
Aims to create new motivations for store visits and diversify revenue through limited-time pop-up stores linked with content and events. Positioned as a revenue source to offset declining sales in the store business, with the goal of achieving a high-profitability structure through changes in the sales composition ratio across businesses.
Aims to reduce reliance on physical stores and acquire new customer segments by expanding online sales channels. In response to external environmental changes such as rising prices and consumers' stronger preference for selective purchasing, the company plans to promote sales expansion through the convenient EC channel.
In FY2026 (ending May 2026), the company issued convertible bond-type bonds with stock acquisition rights (¥1,000 million) and stock acquisition rights (¥7 million) to raise funds. While continuing to secure support from financial institutions, the company aims to break free from the state of violating financial covenants by improving its earnings base. Resolving the cumulative unpaid dividends on Class A preferred shares (¥240 million) also remains a challenge.
Last updated: July 17, 2026