COTA CO., LTD.

Business Details

A single-segment company whose sole business is the manufacture and sale of hair cosmetics and quasi-drugs for beauty salons. Its customers are beauty salons nationwide. The company operates a unique business model combining a "salon retail strategy centered on toiletry sales" with "consulting and sales centered on the Junpoten System (Consulting & Sales)," differentiating itself from competitors by integrating support for improving salon management with product sales. A distinctive feature is the higher proportion of toiletries in net sales compared to peers. The financial base is solid, with zero interest-bearing debt and an equity ratio of 77.4%.

Recent Overview

Higher net sales and profit driven by strong sales of the flagship COTA I CARE brand and the success of the nationwide salon retail contest.

For the nine months ended Q3 of FY2026 (ending March 2026) (April 2025 to December 2025), the company achieved increases across all profit items: net sales of ¥7,626 million (up 2.6% year on year), operating profit of ¥1,789 million (up 5.3%), ordinary profit of ¥1,850 million (up 9.3%), and quarterly net profit of ¥1,271 million (up 8.8%). Strong sales of the flagship brand COTA I CARE, along with the favorable results of the "COTA National Salon Retail Contest" held in November-December 2025, contributed to the results. The full-year earnings forecast (net sales of ¥9,668 million, operating profit of ¥1,916 million) remains unchanged. In addition, the company resolved to conduct a stock split at a ratio of 1.05 shares for each share held, effective April 1, 2026 (subsequent event).

Key Products

Growth Drivers

• Strong toiletry sales centered on the flagship brand COTA I CARE (cumulative toiletry sales for the nine months ended Q3 of ¥5,825 million, up 4.9% year on year)
• Sales promotion effect from the favorable results of the "COTA National Salon Retail Contest" (held November-December 2025)
• Support for improving the performance of client beauty salons and building ongoing relationships through consulting and sales centered on the Junpoten System
• Tailwind for the company's business model, which offers retail strategy and management consulting, amid the ongoing bifurcation of beauty salon management
• Stable capacity for growth investment underpinned by a solid financial base with zero interest-bearing debt and an equity ratio of 77.4%
• Efforts to improve share liquidity and expand the investor base through a stock split (1:1.05) effective April 1, 2026

Risks

• Risk of deteriorating performance at client beauty salons due to declining customer visits and stagnant spending per customer amid the ongoing bifurcation of salon management
• Rising cost of sales ratio due to higher raw material and energy prices (cost of sales for the nine months ended Q3 of ¥2,288 million, up 3.6% year on year)
• Downward pressure on operating margin from increased selling, general and administrative expenses, primarily personnel costs (¥3,548 million for the nine months ended Q3, up 0.6% year on year)
• Risk of reduced motivation among hairdressers for in-salon retail sales and damage to the company's brand value due to unauthorized sales through the internet and retail stores (including instances of counterfeit product sales)
• Risk of a sales pullback following the launch of new styling and hair color products (hair color down 16.1% year on year and styling products down 3.6% year on year for the cumulative nine months of Q3)