Key Positives From The Results
Revenue reached JPY 12,493M (+12.4% YoY), achieving double-digit top-line growth, while the COGS ratio improved to 40.1% (▲3.7pt YoY) for the fifth consecutive period. A gross profit margin of 59.8% demonstrates simultaneous top-line expansion and margin improvement, underpinning the company's capacity for investment.
- Overseas operationsturned profitable with revenue of JPY 587M (+225.7% YoY) and operating income of JPY 135M (vs. an operating loss of JPY 62M in the prior year). The BOTANIST rollout across ~250 Costco stores in the US was the key driver
- Skincare & other categoriessurged to JPY 3,140M in revenue (+44.9% YoY). Combined 1Q revenue from health food brands (Teaflex / Befas / Collatein) reached ~JPY 1B
- BOTANIST standalone revenuerebounded sharply to JPY 3,109M (+63.1% YoY). Solid repeat demand for refill products confirms enduring brand equity
- COGS ratiocontinued to improve at 40.1% (▲3.7pt YoY), driven by a higher mix of skincare & other categories, optimized OEM arrangements, and the elimination of intermediary margins in beauty appliances
- BOTANIST and YOLUhold the #1 and #2 share positions in mid-price drugstore haircare, maintaining top-tier purchase-intent rankings
Key Concerns From The Results
Operating income declined to JPY 765M (▲13.8% YoY) and net income fell to JPY 173M (▲54.4% YoY), resulting in a top-line beat but profit miss. Full-year operating income guidance spans a range of JPY ▲500M to JPY 1,000M, implying an ambitious investment plan that includes the possibility of an operating loss—investors should note the inherent uncertainty around investment payback.
- Advertising & promotional expense ratiojumped to 21.3% (+5.5pt YoY). ~JPY 700M of incremental spend was deployed in 1Q alone, with ~JPY 3–4B in additional advertising investment planned for the full year
- Beauty appliancescontinued to decline with revenue of JPY 2,357M (▲8.5% YoY), still weighed down by reduced investment in lower-priced staple products
- Special investigation costsof JPY 109M were booked as an extraordinary loss. Management has undertaken a governance overhaul including recurrence-prevention measures—governance risk warrants attention
- Full-year operating income guidanceof JPY ▲500M to JPY +1,000M is an exceptionally wide range. The company also flags a potential JPY 700–800M negative impact from Strait of Hormuz geopolitical risk on raw material and packaging costs
- YOLUsaw a revenue decline due to prior-year renewal effects. Growth in the broader haircare portfolio remains heavily dependent on BOTANIST
Focus Areas / Items To Monitor Going Forward
- Sustainability and profitability of the health food brand portfolio(Teaflex: ~JPY 260M monthly revenue, Befas: ~JPY 110M monthly revenue). The company targets revenue of JPY 1B–9.9B for each brand during 2026; ROI trends on advertising spend will determine whether these can scale into a true business pillar
- Early sell-through trends and inventory turns at US Costco (~250 stores) and Korea's OLIVE YOUNG (~700 stores). Overseas revenue surged +225.7% YoY, but logistics and FX risk management as international operations scale warrants close monitoring
- Launch timing and initial traction of the new haircare brand slated for 2H FY2026. The extent to which IPTOS 2.0 can generate hits under the reorganized structure will define the medium- to long-term growth trajectory
- ROI benchmarks and investment decision framework for allocating JPY 3–4B in full-year advertising spend across categories
- Specific advertising initiatives and timeline for revenue recovery in lower-priced staple beauty appliance products
- Gross margin profile of the health food brand portfolio versus haircare and beauty appliances
- Concrete progress on hedging Strait of Hormuz risk (supplier diversification, price pass-through, etc.)
- Reorder trends at US Costco and status of local marketing infrastructure buildout
- Revenue recovery outlook for YOLU post-renewal and initial reception at Korea's OLIVE YOUNG
- Target price tier and positioning for the new haircare brand planned for 2H FY2026
- Development progress and expected launch timing for the premium beauty appliance brand
Key Financial Highlights
| Item | Value | YoY |
|---|---|---|
| Revenue | JPY 12,493M | +12.4% |
| EBITDA | JPY 1,199M | ▲8.9% |
| Operating Income | JPY 765M | ▲13.8% |
| Recurring Profit | JPY 706M | ▲14.8% |
| Net Income Attributable to Owners of Parent Company | JPY 173M | ▲54.4% |
| EPS | JPY 9.74 | ▲55.2% |
| Gross Profit | JPY 7,476M | +19.8% |
| Gross Profit Margin | 59.8% | +3.7pt |
| COGS Ratio | 40.2% | ▲3.7pt |
| Advertising & Promotional Expense Ratio | 21.3% | +5.5pt |
| Comprehensive Income | JPY 207M | ▲48.7% |
Revenue maintained double-digit growth, but ~JPY 700M in incremental advertising & promotional investment combined with JPY 109M in special investigation costs drove a ▲54.4% YoY decline in net income, effectively halving earnings. The improvement in gross profit margin (+3.7pt) partially absorbed the advertising cost increase.
Performance By Business Segment
| Segment | Revenue | YoY | Operating Income | YoY | Margin |
|---|---|---|---|---|---|
| Domestic | JPY 11,905M | +8.9% | JPY 1,486M | ▲12.8% | 12.5% |
| Overseas | JPY 587M | +225.7% | JPY 135M | Turned profitable | 23.0% |
| Adjustments (Corporate expenses) | - | - | JPY ▲856M | - | - |
| Total | JPY 12,493M | +12.4% | JPY 765M | ▲13.8% | 6.1% |
- Haircare: Revenue of JPY 6,995M (+9.8% YoY). BOTANIST at +63.1% was the primary driver. BOTANIST's global revenue surged +395.8% on the back of the US Costco rollout. Expanding repeat demand for refill products was solid
- Skincare & Other: Revenue of JPY 3,140M (+44.9% YoY). Combined health food brand revenue of ~JPY 1B was the key contributor. Teaflex reached ~JPY 260M and Befas ~JPY 110M in monthly revenue, both growing rapidly
- Overseas: Revenue of JPY 587M (+225.7% YoY). The launch of BOTANIST across ~250 US Costco stores and YOLU across ~700 Korean OLIVE YOUNG stores drove the swing to profitability
- Beauty Appliances: Revenue of JPY 2,357M (▲8.5% YoY). Reduced investment in lower-priced staple products weighed on sales. Mid-to-high-priced products grew +18.3%, but this was insufficient to offset the decline in the lower-price tier
Progress Versus Full-Year Guidance
1Q revenue of JPY 12,493M represents 23.1–24.0% progress against full-year guidance of JPY 52,000–54,000M. This is in line with prior-year 1Q progress (11,116 / 48,975 = 22.7%) and marks a solid start even accounting for seasonality. Operating income of JPY 765M, however, has already reached 76.5% of the upper end of the full-year guidance range of JPY ▲500M to JPY 1,000M. With the ramp-up in advertising investment expected from 2Q onward, 2H profit levels require close monitoring.
| Item | Value (1Q Cumulative) | Full-Year Forecast | Progress Rate |
|---|---|---|---|
| Revenue | JPY 12,493M | JPY 52,000–54,000M | 23.1–24.0% |
| EBITDA | JPY 1,199M | JPY 1,200–2,700M | 44.4–99.9% |
| Operating Income | JPY 765M | JPY ▲500–1,000M | 76.5% (vs. upper end) |
- Revenue skews toward 2H due to year-end holiday and bonus-driven demand in 4Q (prior-year 4Q revenue of JPY 14,610M was +31.4% vs. 1Q)
- The company plans JPY 3–4B in incremental advertising investment for the full year, with the cost ramp expected to intensify into 2H
Changes To Guidance
No revision to guidance. The full-year plan (revenue JPY 52,000–54,000M, EBITDA JPY 1,200–2,700M, operating income JPY ▲500–1,000M) was maintained. The range-format disclosure is being continued as it remains difficult to reasonably estimate the impact of Strait of Hormuz geopolitical risk.
Commentary On Shareholder Returns
The annual dividend forecast of JPY 15.0/share is maintained (interim JPY 7.0, year-end JPY 8.0). The company shifted from an annual single payment (year-end JPY 15.0) to semi-annual dividends. The shareholder benefit program (digital gift) was also split from once per year to twice per year (record dates: end of June and end of December). Share buybacks will be considered flexibly based on share price levels and free-float market capitalization.
Financial Position
The equity ratio improved to 52.6% (+2.8pt from prior fiscal year-end of 49.8%). M&A-related borrowing repayments are progressing, though goodwill and intangible non-current assets account for 33.5% of total assets, warranting attention to impairment risk contingent on earnings trends.
- Key Figures
- Leverage Metrics
| Item | Value | Additional Information |
|---|---|---|
| Cash and Deposits | JPY 8,416M | ▲1.3% vs. prior FY-end |
| Total Assets | JPY 34,842M | ▲6.0% vs. prior FY-end |
| └ Total Current Assets | JPY 20,488M | ▲7.9% vs. prior FY-end |
| └ Total Non-Current Assets | JPY 14,354M | ▲3.1% vs. prior FY-end |
| Shareholders' Equity | JPY 18,332M | ▲0.6% vs. prior FY-end |
| Total Interest-Bearing Debt | JPY 6,320M | Current portion 1,285 + Long-term borrowings 5,035 |
| └ Current Portion of Long-Term Borrowings | JPY 1,285M | - |
| └ Long-Term Borrowings | JPY 5,035M | ▲6.0% vs. prior FY-end |
| Goodwill | JPY 5,591M | ▲2.8% vs. prior FY-end |
| Total Intangible Non-Current Assets | JPY 11,687M | ▲2.6% vs. prior FY-end |
| EBITDA | JPY 1,199M | Company-disclosed (Operating income + depreciation + goodwill amortization) |
News Released Alongside The Earnings Announcement
- 2026/05/15Following the special investigation committee's report, the Board resolved on recurrence-prevention measures. The Representative Director, President & CEO will voluntarily forfeit 100% of executive compensation; the company announced a transition to a governance structure with an independent outside director serving as Board Chair Notice Regarding Formulation of Recurrence Prevention Measures
- 2026/05/15An extraordinary general meeting of shareholders will be held on June 12, 2026. Agenda items include amendments to the articles of incorporation (enabling an outside director to serve as Board Chair) and the election of an outside director candidate as a member of the Audit and Supervisory Committee Notice Regarding Convocation of Extraordinary General Meeting of Shareholders, Determination of Agenda Items, and Partial Amendment of Articles of Incorporation
- 2026/05/15The shareholder benefit program was changed from once per year to twice per year (record dates: end of June and end of December). Total annual benefit value is maintained Notice Regarding Change (Split Implementation) of Shareholder Benefit Program
Major Announcements During The Quarter
- 2026/02/27BOTANIST haircare products launched at ~250 US Costco stores from March. A key first step in full-scale expansion into the US, a medium- to long-term priority market Notice Regarding Launch of BOTANIST at US Costco
- 2026/03/24YOLU haircare products launched at ~700 OLIVE YOUNG stores, Korea's largest health & beauty retailer. Accelerating global expansion across Asian markets I-ne Makes First Entry into Korea's Largest Health & Beauty Store "OLIVE YOUNG," Launching Night Care Beauty Brand "YOLU"
- 2026/03/31Combined monthly revenue for the health food category (Collatein / Teaflex / Befas) exceeded JPY 300M in February 2026. Confirmed rapid growth as a fourth business pillar I-ne Health Food Category Surpasses JPY 300M in Single-Month Revenue, Rapidly Growing as the "Fourth Pillar" Following Haircare, Beauty Appliances, and Skincare
- 2026/04/09SALONIA's pen-type facial device "Face Current Pointer" achieved 310% of plan within ~1 month of launch and won a cumulative 20 Rakuten ranking awards Pen-Type Facial Device Achieves 310% of Plan Within Approximately One Month of Launch, Wins 20 Rakuten Ranking Awards
- 2026/04/09New skincare brand "REPROID" to launch in May as a Category 2 OTC pharmaceutical dry skin treatment cream. Marks the company's new entry into the OTC pharmaceutical space Dry Skin Treatment Face Cream "REPROID" to Launch in May, Treating Recurring Dryness and Skin Troubles with Five Active Ingredients for Calming, Repair, and Moisturizing
Large-Shareholding Filings / Material Proposals Over The Past Year
- Onishi Yohei (co-held with: COH): 60.13% → 56.97% (gradual decrease from Aug 2025 to Jan 2026) — Held as Representative Director for management stabilization purposes. Sold pursuant to a share trading agreement with SMBC Nikko Securities
- Resona Asset Management: 6.64% → 4.93% (2025/11/14) — Held for investment trust and discretionary investment advisory purposes. Fell below the 5% threshold
- Sparx Asset Management: 6.15% → 4.68% (2025/11/14) — Pure investment held under discretionary and investment trust mandates. Fell below the 5% threshold
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