ALMADO, INC.

Business Details

A single business that processes chicken eggshell membrane using proprietary technology and sells it as cosmetics and health foods. Sales channels consist of four categories: Direct Sales (EC), TV Shopping, External Sales (General Distribution), and External Sales (OEM). Direct Sales (EC) is the core channel, accounting for 73.3% of net sales. All manufacturing is outsourced. Major customers are QVC Japan, Inc. (equivalent to 9.3% of net sales) and Ogio Co., Ltd. (equivalent to 8.2% of net sales).

Recent Overview

Net sales increased 19.4% while operating profit declined 27.6% due to a sharp rise in advertising expenses, resulting in higher revenue but lower profit

In FY2026 (ending March 2026), net sales reached ¥10,118 million (up 19.4% year on year). In Direct Sales (EC), TV commercials for men's skincare products proved effective, expanding this channel by 41.1% and increasing its share of net sales to 73.3%. External Sales (General Distribution) also performed well, growing 83.5%. On the other hand, advertising expenses surged to ¥3,992 million (up 50.9% year on year), bringing total SG&A expenses to ¥6,939 million, and as a result operating profit fell to ¥685 million (down 27.6% year on year). External Sales (OEM) declined 42.6% and TV Shopping declined 21.1%, both performing poorly. The earnings forecast for FY2027 (ending March 2027) remains undetermined due to uncertainty over raw material and logistics costs stemming from tensions in the Middle East. The dividend was reduced to ¥42.00 per share (from ¥65.00 in the prior period).

Key Products

Growth Drivers

• Increase in new customer acquisitions and expansion of the number of subscription members driven by aggressive TV commercials and advertising operations in Direct Sales (EC) (net sales of ¥7,418 million for the current period, up 41.1% year on year)
• Expansion in the number of stores carrying products at drugstores and variety shops in External Sales (General Distribution) (net sales of ¥866 million for the current period, up 83.5% year on year)
• Steady expansion of EC mall sales, increasing the share of net sales from the Direct Sales channel (73.3%)
• Maintenance and strengthening of product differentiation through the accumulation of scientific evidence on eggshell membrane (continued publication in international academic journals)
• Policy of developing new sales channels in Asia and Europe/US, centered on the Greater China region, and expanding domestic brick-and-mortar sales
• Securing working capital funding capacity through expansion of the overdraft facility limit to ¥3,900 million (from ¥2,900 million in the prior period)

Risks

• Increase in SG&A expenses due to aggressive advertising spending pressuring operating profit (advertising expenses of ¥3,992 million for the current period, 39.5% of net sales, with operating margin declining to 6.8%)
• Risk of declining sales in the TV Shopping channel due to large-scale programs failing to meet budget targets (down 21.1% year on year to ¥940 million for the current period)
• Risk of declining order volume from OEM clients in External Sales (OEM) (down 42.6% year on year to ¥895 million for the current period)
• Risk of rising raw material and logistics costs due to deterioration in the crude oil and naphtha procurement environment amid tensions in the Middle East (the main reason the earnings forecast for FY2027 (ending March 2027) remains undetermined)
• Constraints on financial flexibility due to a financial structure carrying ¥2,000 million in short-term borrowings and the continuation of a high dividend payout ratio (75.0%)
• Customer concentration risk due to dependence on major customers (QVC Japan and Ogio) for sales (equivalent to a combined 17.5%)
• Risk of deteriorating consumer sentiment due to external shocks in the health food market