OCEAN SYSTEM CORPORATION

Business Details

A business in which the Company's Challenger Business Division operates the food supermarket "Challenger" within Niigata Prefecture. It offers a wide variety of food products, including fresh and non-fresh items, to general consumers, and attracts customers through promotional measures such as limited-time sales of spot items and bargain products, fresh produce with an emphasis on freshness, fair events, value packs and bulk-purchase sales, and monthly special sales and tasting events. It accounted for approximately 28.6% of consolidated net sales of ¥96,055 million in FY2026 (ending March 2026).

Recent Overview

Sales edged up slightly, but segment profit fell 3.2% due to intensifying competition and impairment loss

In FY2026 (ending March 2026), segment sales secured a slight increase to ¥27,472 million (up 0.8% year on year), but segment profit was limited to ¥761 million (down 3.2% year on year). Although the number of customers declined slightly year on year, higher average customer spending supported sales. In February FY2026, the annex building of "Challenger Tsubame-Sanjo store" was renovated and reopened, significantly expanding sales floor space. Meanwhile, the Company recorded an impairment loss of ¥68 million on fixed assets in light of the current business environment. Competition has intensified further as competitors have continued to open stores within the trading area.

Key Products

Growth Drivers

• Maintaining sales through higher average customer spending (boost effect from price increases in fresh produce and other items)
• Enhanced customer-drawing power through expanded sales floor space from the Tsubame-Sanjo store annex renovation and the handling of Gyomu Super products
• Promotional measures leveraging flexibility, such as limited-time sales of spot items and bargain products
• Increased store visit frequency through monthly special sales, tasting events, and fair events
• Increased number of items purchased through value packs and bulk-purchase sales

Risks

• Intensifying competitive environment due to a series of store openings by competitors within the trading area
• Risk of continued slight year-on-year decline in the number of customers
• Renewed acceleration of price increases in fresh produce due to petrochemical product supply concerns from geopolitical risks and abnormal weather
• Cost increase pressure from persistently high labor costs, logistics costs, and utility costs
• Risk of declining profitability as seen in the impairment loss on fixed assets recorded (¥68 million in FY2026 (ending March 2026))
• Downward pressure on average customer spending from continued consumer thrift and selective spending tendencies