HABA LABORATORIES,INC.

Business Details

The manufacturing and sales business of cosmetics and health foods operated by the Haba Laboratories Group, founded in 1983. All products thoroughly adhere to the "Five Additive-Free" principle, excluding paraben preservatives, petroleum-based surfactants, synthetic fragrances, mineral oil, and tar-based dyes. While Mail Order (Including EC) Channel serves as the primary channel, sales are also conducted through four routes: Wholesale to Department Stores & Directly-Operated Stores (Store Sales Business), Other Wholesale, and directly-operated stores. The company has built an integrated system spanning R&D, manufacturing (both in-house within the group and outsourced), logistics, and sales. Domestic sales account for over 90% of the total, while overseas expansion continues, focused primarily on the Chinese and broader Asian markets.

Recent Overview

Profit structure reforms bore fruit, driving a 23.4% increase in operating profit; the following fiscal year is expected to see a profit decline due to upfront investments

In FY2026 (ending March 2026), sales were largely flat at ¥12,141 million (up 0.7% year on year), but fixed cost reductions from closing four unprofitable stores and suspending operations at and selling the Komoro plant, along with optimized inventory management and a 1.9% reduction in SG&A expenses (¥7,359 million), contributed to operating profit of ¥727 million (up 23.4% year on year) and net profit of ¥760 million (up 31.9% year on year). A gain of ¥132 million on the sale of fixed assets related to the Komoro plant sale was also recorded as extraordinary income. For FY2027 (ending March 2027), sales are projected to reach ¥12,800 million (up 5.4% year on year), while upfront investments in customer base expansion, product development, and IT are expected to result in a significant profit decline, with operating profit of ¥610 million (down 16.1% year on year) and net profit of ¥470 million (down 38.2% year on year). As a subsequent event, effective April 1, 2026, the company absorbed Haba Cosmetics Co., Ltd. through merger, establishing an integrated operational structure spanning logistics through sales.

Key Products

Growth Drivers

• Continued recovery of inbound demand in wholesale to department stores (up 8.7% year on year to ¥1,932 million in FY2026 ending March 2026)
• Improved sales efficiency in overseas wholesale through consolidation of Chinese distributors (Other Wholesale overall up 10.1% year on year to ¥2,895 million)
• Improved profit structure through closure of unprofitable stores and sale of the Komoro plant (SG&A expenses down 1.9%, ¥132 million gain recorded on sale of fixed assets)
• Increased sales and improved LTV among the premium tier (Diamond and Platinum members) resulting from revisions to the Club Haba program
• Strengthened digital promotion targeting the millennial generation (including video content through collaborations with creators)
• New development and launch of foods with function claims and beauty supplements, and the start of rollout of products exclusive to self-selection channels
• Development of new customer segments and sales channels through the launch of a new brand for general distribution ahead of FY2027 (ending March 2027)
• Improved management efficiency through integrated logistics and sales operations following the absorption merger of Haba Cosmetics (April 2026)

Risks

• Declining trend in new customer acquisition in mail order (the resulting decline in sales from the basic tier directly contributed to the primary channel's 2.5% year-on-year decline)
• Suppressed purchasing among the basic tier (Friend and Standard members) due to rising prices and heightened cost-consciousness
• Forecast of a significant profit decline in FY2027 (ending March 2027) due to upfront investment (operating profit of ¥610 million, down 16.1% year on year; net profit of ¥470 million, down 38.2% year on year)
• Intensifying competition in the EC market and rising advertising costs and customer acquisition costs (CPA)
• Declining sales in Other Wholesale (Domestic) due to store closures among major domestic wholesale clients and a decrease in large-lot orders
• Risk of procurement constraints for key raw materials such as squalane and Chishima bamboo grass water (due to fishing restrictions, environmental changes, etc.)
• Impact on inbound demand and overseas business from prolonged geopolitical risk and exchange rate fluctuations
• Risk of personal information leakage (given the large volume of customer information held due to the mail-order-centric business model)
• Risk of additional impairment of fixed assets (the company recorded an impairment loss of ¥1,576 million in FY2024 (ended March 2024))