HONEYS HOLDINGS CO., LTD.

Business Details

The domestic women's apparel business operated by Honeys Holdings Co., Ltd. and its consolidated subsidiary Honeys Co., Ltd. Under the key concept of "high sensitivity, high quality, reasonable price," the segment operates in-shop stores mainly in large suburban shopping centers and station buildings nationwide. Most products are self-planned, employing an SPA model manufactured at the company's own factory in Myanmar and overseas contract manufacturing plants. The segment also operates its own e-commerce site, selling to a broad range of female customers across age groups through both physical stores and EC. From the current fiscal year, the Myanmar segment has been integrated, resulting in a change to a single reportable segment of Japan.

Recent Overview

Both revenue and all profit levels declined, with impairment losses doubling year on year

In FY2026 (ending May 2026), net sales were ¥56,182 million (down 2.6% year on year) and operating income was ¥4,619 million (down 21.8% year on year), representing a substantial decline in profit. While the number of items purchased per customer improved somewhat due to more reasonable pricing, customer traffic remained sluggish; the extended summer season through mid-October led to weak proper-price sales of autumn merchandise, and inventory adjustments for spring items were carried out in the second half. Gross profit margin fell to 58.9% (down 0.3 points year on year) due to rising procurement costs from yen depreciation and an increased proportion of sale-priced merchandise. Impairment losses doubled to ¥452 million from ¥224 million in the prior period. In addition, the Myanmar segment was integrated from the current period, resulting in a change to a single reportable segment. The medium-term management plan (FY2026 (ending May 2026) - FY2028 (ending May 2028)) was also revised.

Key Products

Growth Drivers

• Continued growth of the EC business (improved usability, SNS utilization, and enhanced OMO strategy driving improved in-store pickup services and new member acquisition)
• Stable product supply and cost competitiveness maintained through a high ASEAN production ratio and utilization of the company's own factory in Myanmar
• Improvement in items purchased per customer and average customer spending through pursuit of appropriate pricing and added value
• Optimization of the store portfolio through scrap-and-build and flexible product placement suited to location conditions
• Expectations of a gradual recovery in personal consumption backed by improving income conditions amid continued wage increases

Risks

• Rising procurement costs due to continued yen depreciation (although the balance of forward exchange contracts has increased, continued yen weakness would sustain upward pressure on procurement costs)
• Sluggish customer traffic and bifurcation of consumption stemming from consumers' continued thrift-conscious spending amid rising prices
• Loss of sales opportunities and inventory adjustment costs for seasonal merchandise (particularly autumn and spring outerwear) due to temperature fluctuations and unusual weather
• Rising SG&A expenses from wage increases and higher EC-related advertising costs, cashless payment fees, and system operating costs (SG&A ratio rose 1.7 points year on year to 50.7%)
• Risk of deteriorating profitability at existing stores, as evidenced by the increase in impairment losses (from ¥224 million in the prior period to ¥452 million in the current period)
• Rising procurement costs and delivery schedule volatility from higher crude oil prices and ocean freight costs due to instability in the Middle East
• Risk of higher-than-expected store exit costs, exemplified by the ¥175 million increase resulting from a change in the estimate of asset retirement obligations (due to construction cost inflation, etc.)

Business Details

The consolidated subsidiary has operated a manufacturing business for women's apparel and other products in Myanmar, functioning as a manufacturing base supporting the group's high ASEAN production ratio. However, from FY2026 (ending May 2026), the Myanmar segment's proportion of total segments became minimal, and, deemed to have diminished significance as disclosed information, it was integrated into the single reportable segment of Japan. As a result, disclosure of independent segment performance figures has been omitted, making individual monitoring of the Myanmar subsidiary's performance impossible through the financial results summary.

Recent Overview

From FY2026 (ending May 2026), the Myanmar segment was integrated into the single Japan segment, discontinuing independent disclosure

In the FY2026 (ending May 2026) financial results summary, it was noted that the Myanmar segment's proportion of total segments had become minimal, and, deemed to have diminished significance as disclosed information, the reportable segment was changed to a single segment of Japan. As a result, segment information for both the prior consolidated fiscal year and the current consolidated fiscal year has been omitted from the disclosure. Meanwhile, the management overview states that stable product supply was achieved through effective utilization of the Myanmar subsidiary's production system and maintenance of a high ASEAN production ratio, indicating that its function as a manufacturing base continues. The group's overall gross profit margin was 58.9% (down 0.3 points year on year), with the impact of rising procurement costs from yen depreciation continuing to weigh on earnings.

Key Products

Growth Drivers

• Continued stable production and product supply utilizing the company's own Myanmar factory, maintaining the group's high ASEAN production ratio overall
• Continued policy of maximizing the ASEAN-centered production system to preserve the group's core strengths based on "high sensitivity, high quality, reasonable price"
• Continued utilization of the ASEAN production system explicitly stated as an ongoing policy in the revision of the group's medium-term management plan (FY2026 (ending May 2026) - FY2028 (ending May 2028))

Risks

• Political and social conditions risk in Myanmar (unstable business environment continuing since the coup)
• Rising procurement costs due to continued yen depreciation, pressuring the group's overall gross profit margin (FY2026 (ending May 2026): 58.9%, down 0.3 points year on year)
• Integration into a single segment has made it impossible for external parties to monitor the Myanmar subsidiary's standalone performance, assets, and capital expenditure, significantly restricting investor access to information
• Structural risk of complete revenue dependence on order trends from the Japan segment, given zero sales to external customers
• Possibility that rising logistics costs, driven by higher crude oil prices and ocean freight uncertainty stemming from conditions in the Middle East, could depress earnings through increased procurement costs and delivery schedule volatility