KUSURI NO AOKI HOLDINGS CO.,LTD.

Business Details

Under the corporate philosophy of "aiming to build a company expected by society through health, beauty, and hygiene," the company operates a neighborhood retail business handling pharmaceuticals, cosmetics, daily sundries, food, and dispensing pharmacies. It operates drugstores across the Hokushinetsu, Tohoku, Kanto, Tokai, Kansai, and Shikoku regions, promoting one-stop shopping through the enhancement of its family-pharmacist function via co-located dispensing pharmacies and the expansion of its food category, including fresh food. As of the end of FY2026 (ending May 2026), the company operated a total of 1,144 stores, comprising 1,107 drugstores (of which 692 have co-located dispensing pharmacies), 6 dedicated dispensing pharmacies, and 31 supermarkets.

Recent Overview

Achieved net sales of ¥566,865 million, up 13.0%, but net profit declined 3.7% due to an increase in extraordinary losses

In FY2026 (ending May 2026), the company opened 111 new drugstores and established 38 new pharmacies, achieving net sales of ¥566,865 million (up 13.0% year on year). On the other hand, total extraordinary losses swelled to ¥3,712 million, including an impairment loss of ¥2,503 million and a provision for store closure losses of ¥468 million, leaving profit attributable to owners of parent at ¥17,133 million (down 3.7% year on year). The company also newly acquired 37 supermarkets (in Kagawa and Niigata) through M&A. Long-term borrowings expanded to ¥119,901 million (up ¥41,584 million from the prior period), and the equity ratio declined to 34.3% (from 41.4% in the prior period). The company paid an annual dividend of ¥56 per share (versus ¥14 in the prior period), including a commemorative dividend for its 40th anniversary, raising the payout ratio to 31.1%.

Key Products

Growth Drivers

• Expansion of dominant areas through aggressive new store openings (111 stores opened in FY2026 ending May 2026; 90 stores planned for FY2027 ending May 2027)
• Expansion of the Food division: promoting one-stop "Food & Drug" shopping through the introduction of fresh food (Fresh division up 21.4% year on year; Food division up 16.0%)
• Increasing the co-location rate of dispensing pharmacies and growth of the Pharmacy Dispensing Division (dispensing sales up 15.3% year on year; plans to open 31 new pharmacies in FY2027 ending May 2027)
• Acquisition and integration of the Supermarket Business through M&A (establishment of a 31-store supermarket network through the acquisition of food supermarkets in Kagawa and Niigata)
• Accelerated store openings in new areas such as Tohoku, Kansai, and Shikoku (in FY2026 ending May 2026: 17 stores in Tohoku, 18 in Kansai, 19 in Shikoku)
• Significant improvement in operating cash flow (¥37,321 million, up 68.4% year on year), expanding capacity for self-funded investment

Risks

• Intensifying competition and narrowing trade areas due to industry restructuring in the drugstore sector, accelerated by M&A, mergers among major players, and business and capital alliances
• Impact on average customer spending and gross margin from price inflation and consumers' heightened frugality and selective spending
• Constraints on dispensing pharmacy expansion and rising labor costs due to difficulty securing pharmacists and registered sales clerks
• Rising financial leverage and declining equity ratio (34.3%) due to increased long-term borrowings (¥119,901 million) associated with new store openings and M&A
• Risk of deteriorating profitability at existing stores, as indicated by the increase in impairment losses (¥2,503 million in FY2026 ending May 2026, up 88.3% year on year)
• Rising procurement costs and weakening consumer sentiment due to deteriorating external conditions such as US trade policy, yen depreciation, rising energy prices, and geopolitical risk