Happiness and D Co.,Ltd.

Business Details

The Group consists of three companies: Happiness & D Co., Ltd. (core business), AbHeri Co., Ltd. (jewelry manufacturing and directly operated stores), and No. Co., Ltd. (new jewelry brand). The Group sells jewelry, bullion products, and imported brand items primarily through shopping centers nationwide. As of the end of May 2026, the Group operated 57 stores (54 Happiness stores plus 3 AbHeri directly operated stores). As a single segment, the Group manufactures and sells jewelry, watches, bags, accessories, and other items.

Recent Overview

Losses narrowed significantly; existing-store sales and gross profit increased year on year as structural reforms took effect

Revenue for the cumulative Q3 period of FY2026 (ending August 2026) (September 2025 to May 2026) was ¥6,332 million (down 5.6% year on year). While the reduction in store count (from 71 to 57 stores) contracted overall sales scale, on an existing-store basis for Happiness & D on a standalone basis, revenue rose to 100.7% and gross profit to 108.9% of the same period of the prior year. Operating loss narrowed significantly to ¥114 million (from ¥247 million in the same period of the prior year), and net loss narrowed to ¥158 million (from ¥434 million in the same period of the prior year). The completion of the exercise of the 13th stock acquisition rights (February 2026) increased capital stock and capital reserves by ¥163 million each. Furthermore, on June 25, 2026, the company issued the 14th stock acquisition rights (600,000 shares of potential stock) and the 2nd series of unsecured straight bonds (total of ¥150 million), raising additional funds. The full-year earnings forecast remains unchanged, maintaining revenue of ¥8,481 million and operating profit of ¥30 million.

Key Products

Growth Drivers

• Strengthening jewelry and bullion products: Bullion products performed strongly on the back of rising gold prices, with cumulative Q3 jewelry revenue up 2.9% and gross profit up 4.3% year on year, the only category to achieve both revenue and profit growth
• Expanded handling of vintage (resale) items: Now handled at nearly all stores, expanding sales results, with the brand-name buyback business at each store also being progressively expanded
• Improved earnings structure following completion of unprofitable store closures: The effects of closing 14 stores in the previous fiscal year have become apparent, with selling, general and administrative expenses trending below the same period of the prior year, and gross profit on an existing-store basis increasing year on year
• Improved gross profit margin: A shift in product mix from high-priced brand goods toward higher-margin jewelry and bullion products improved gross profit margin to 41.3% (up 0.7 points year on year)
• Capital reinforcement and fundraising through stock acquisition rights and bonds: Completion of the exercise of the 13th stock acquisition rights improved the equity ratio from 2.7% to 5.3%, with additional funds secured through issuance of the 14th stock acquisition rights and the 2nd series of bonds
• Acquisition of the pure gold jewelry business: Acquired the pure gold jewelry business from RAIN Co., Ltd., building a foundation for medium- to long-term growth

Risks

• Material events related to going-concern assumptions: The company has recorded operating losses, ordinary losses, and net losses continuously since FY2023 (ending August 2023), with ongoing support from lending financial institutions regarding loan modification (however, management has determined that no material uncertainty exists)
• High level of interest-bearing debt: Current liabilities of ¥4,407 million, including ¥2,858 million in long-term debt due within one year, against equity of ¥314 million, resulting in extremely high financial leverage
• Rising prices of imported brand items due to yen depreciation and inflation: Price increases in overseas brand items have dampened consumer purchasing appetite, leading to significant revenue declines in the watches segment (down 29.9% year on year) and the bags segment (down 5.9% year on year)
• Risk of fluctuations in inbound demand: Declining inbound demand amid worsening Japan-China relations has affected the performance of the AbHeri Osaka store, requiring a shift in sales strategy toward domestic customers
• Geopolitical risk and weak consumer sentiment: Prolonged Russia-Ukraine situation, escalating Middle East conflict, and concerns over rising crude oil prices following the start of military action against Iran pose risks of deteriorating the consumption environment
• Dilution risk from exercise of the 14th stock acquisition rights: Potential dilution of 600,000 shares of potential stock (equivalent to approximately 18.8% of the current 3,191,600 outstanding shares)