Three health food brands totaling JPY 2.3B drive company-wide growth; full-year revenue guidance raised to JPY 55.0–57.0B with continued large-scale strategic investment

Summary

1H cumulative revenue reached JPY 26.8B (+20.1% YoY), achieving double-digit top-line growth across all three categories and prompting an upward revision to full-year guidance. The CEO cited rapid growth of the health food brand portfolio and the hit launch of SALONIA's Face Current Pointer as the primary drivers for the first half. For 2H, the company has factored in JPY 500–600M in cost increases from the Strait of Hormuz impact and JPY 300M from yen depreciation, while planning incremental investment at roughly double the 1H level and maintaining range-based disclosure. Recurrence prevention measures are progressing on schedule, with institutional design to be completed in 3Q and operational rollout in 4Q. Management affirmed its intention to file for listing maintenance review within the grace period deadline of June 2027.

Key Points (Earnings Takeaways and Growth Actions)

• Corporate Strategy And Market Assessment
  • 2H plan is conservative, incorporating competitive intensification risk from rival new product launches in the haircare market
  • CEO explicitly stated that current-year investments are premised on a 2–3 year payback horizon, translating into future profit contributions in FY2027–2028
  • Geopolitical risks from the Strait of Hormuz and yen weakness could materially impact results, underpinning the decision to maintain range-based full-year disclosure
• Current Business Progress And Drivers
  • Three health food brands (Teaflex / Befas / Collatein) with combined revenue of ~JPY 2.3B drove the Skincare & Others category to +52.3%
  • Face Current Pointer achieved 401% of plan; 2Q standalone beauty appliance revenue of JPY 3.59B marked a quarterly all-time high
  • COGS ratio improvement of ▲3.7pt was attributed to clearance of slow-moving inventory, elimination of intermediary margins via Artemis distribution, and rising mix of higher-margin categories
• Strategic Initiatives And Inflection Points
  • New haircare brand UNIPLEX achieved 15 EC ranking top spots within one month of launch; Amprem (August launch) also slated for rollout
  • Oral care product G White showing strong test KPIs with solid results from LOFT's advance sales; nationwide drugstore distribution now under consideration
  • YOLU entering the fabric softener category for the first time (September launch) as part of brand extension strategy
  • BOTANIST commencing offline rollout at U.S. Costco, boosting global revenue; overall brand +20.9%

Outlook And Strategy

• Full-year guidance raised to revenue JPY 55.0–57.0B (+JPY 3.0B vs. initial plan), EBITDA JPY 1.7–3.2B, operating income JPY 0–1.5B
• 2H incremental investment expected at roughly double the 1H level of JPY 1.4B, with priority allocation to health food, haircare, and beauty appliance new products
• Profit plan for FY2027 onward remains undetermined, though the CFO indicated the company targets earnings growth relative to FY2026
• For listing maintenance, the company is considering filing a Prime Market re-examination application or market segment change application within the grace period deadline of June 18, 2027
• Advancing R&D infrastructure through proprietary research lab JBIST, including establishment of cuticle barrier membrane penetration technology
• Investment payback is targeted at 2–3 years, with a phased approach to profit expansion

Positive Factors

• Double-digit YoY growth achieved across all three categories; 1H revenue of JPY 26.8B represents an all-time high for a first-half period
• Health food brand portfolio has delivered sequential quarterly revenue growth since launch, establishing itself as a new growth driver
• Growth in SALONIA's mid-to-high price tier (JPY 6,000+) products and capture of inbound tourism demand are contributing to beauty appliance profitability improvement
• AI-driven operational efficiency reduced personnel cost ratio by ▲1.6pt, demonstrating effective fixed cost control even amid top-line growth
• Robust new category entry pipeline including oral care (G White), fabric softener (YOLU), and beauty parasol (XTGR)
• YOLU surpassed cumulative sales of 100M units; BOTANIST body soap foam +105.0%, confirming healthy extension of existing brands

Concerns And Risks

• Strait of Hormuz impact expected to increase 2H costs by JPY 500–600M; yen depreciation adds ~JPY 300M in cost inflation vs. initial plan
• 2H incremental investment expanding to roughly double the 1H level will significantly compress profits, from JPY 2.01B in 1H to JPY 0–1.5B on a full-year basis
• Listing maintenance risk persists as the company remains under a re-examination grace period (through June 18, 2027) due to oath violation
• Received a recommendation for an administrative monetary penalty payment order from the Securities and Exchange Surveillance Commission regarding material omissions in annual securities reports (June 2026)
• CFO explicitly stated that FX headwinds are unlikely to ease during 2H due to 3–4 month supply chain lead times
• CEO Onishi / COH's ownership ratio has been gradually declining from 60.13% to 56.96%, warranting attention to share liquidity and supply-demand dynamics

Performance Highlights

1H consolidated revenue was JPY 26.8B (+20.1% YoY), consolidated EBITDA JPY 2.89B (+13.5% YoY), and consolidated operating income JPY 2.01B (+19.2% YoY), delivering both top- and bottom-line growth. COGS ratio improved ▲3.7pt YoY to 38.5%, absorbing ~JPY 1.4B in incremental advertising and promotional investment while still achieving profit growth.

Segment Performance

• BOTANIST Revenue: JPY 6,311M (+20.9% YoY)
• YOLU Revenue: JPY 7,170M (+13.1% YoY)
• Beauty Appliances 2Q Standalone Revenue: JPY 3,595M (+31.8% YoY)
• Health Food Brands Combined Revenue (3 brands): ~JPY 2,300M
• COGS Ratio: 38.5% (▲3.7pt YoY)
• Advertising / Promotional Expense Ratio: 22.3% (+5.4pt YoY)
• Personnel Cost Ratio: 7.1% (▲1.6pt YoY)
• EBITDA Margin: 10.8% (prior year: 11.4%)
• Global Revenue (1H Cumulative): JPY 989M (prior year: JPY 568M)

Q&A List

• Q: How does the CEO evaluate the 1H results?
  A: We achieved double-digit YoY growth across all categories, significantly exceeding expectations on both revenue and profit. The primary drivers were the rapid growth of our health food brand portfolio, which made a major contribution to company-wide results, and the strong performance of SALONIA's Face Current Pointer launched in March, which has been a significant hit contributing materially to earnings. We intend to continue pursuing strong growth in the second half.
• Q: Why does the full-year operating income plan of JPY 0–1.5B fall below the 1H result of JPY 2.0B?
  A: There are three main reasons why 2H profits will be lower than 1H. First, the Strait of Hormuz impact is expected to increase 2H costs by approximately JPY 500–600M. Second, yen depreciation is expected to add roughly JPY 300M in beauty appliance costs. Third, as communicated from the start of the fiscal year, strategic incremental investment in 2H is projected at roughly double the 1H level. Additionally, with competitor new product launches upcoming in the haircare market during 2H, we have incorporated a degree of risk into our disclosure. Depending on the performance of existing brands and potential new hits, profit could swing materially in either direction. We view this as a conservatively constructed plan.
• Q: What is management's view on the listing maintenance review? Is the intention to remain on Prime?
  A: We deeply apologize for the significant inconvenience and concern caused to our shareholders, investors, and all related parties. We are considering filing either a re-examination application based on criteria aligned with Prime Market initial listing standards, or a market segment change application, within the grace period ending June 18, 2027, and will continue working to ensure the continued listing of our shares. The entire board of directors takes this matter seriously and is united in its commitment to restoring trust.
• Q: Could you share the profit plan for FY2027 onward?
  A: We will continue to make incremental investments, but specific plans remain undetermined as they depend on the status of those investments and the performance of individual product launches. We would like to target an earnings increase relative to FY2026, but given negative external impacts such as the Strait of Hormuz situation over the full year, we will provide disclosure when conditions permit. As supplementary context, while we are investing significantly starting this year, we do so while monitoring ROI, with a baseline assumption of 2–3 year payback periods. By investing this year and next, we expect to see future profit growth materializing in FY2027 and FY2028, and we intend to continue investing with that conviction.
• Q: How is the company considering channel expansion for the oral care market entry? Are there synergies with existing products in channel acquisition?
  A: In oral care, G White in particular has demonstrated very strong test KPIs. We are seeing good results on e-commerce, and the product also performed very well during the advance sales period at LOFT. Since our existing retail partners—drugstores—have oral care shelf space nationwide, our longer-term plan is to achieve nationwide drugstore distribution, maximizing our strengths across both online and offline channels to grow our oral care category share.
• Q: What is the progress on the JPY 3.0–4.0B in incremental investment planned for this fiscal year as of the end of 1H?
  A: We have already deployed approximately JPY 1.4B in incremental investment during 1H. Based on our current disclosed outlook, we project total incremental investment of approximately JPY 4.0B, with allocation focused on new products across our strong-performing health food category, haircare, and beauty appliances. In terms of quantum, 2H investment is currently planned at roughly double the 1H level.
• Q: Regarding the JPY 300M yen depreciation impact—given recent trends toward yen strength, can the FX headwind be resolved in 2H?
  A: Due to supply chain dynamics, there are timing lags between order placement and lead times. Given current 3–4 month lead times, orders for 2H have already been placed, so rather than expecting further improvement, we anticipate absorbing this impact through the second half. That said, depending on subsequent FX movements, the impact on FY2027 onward could vary.