Key Positives From The 3Q Results
9M revenue was JPY 42,814M (+24.6% YoY). Hair Care, Beauty Appliances and Skincare & Others all grew, which shows in the numbers that the company's "brand-creation capability" is repeatable as it launches new brands and products in quick succession. Gross profit margin rose to 59.7% (57.6% in the prior-year period), so the top-line gains are carrying through to gross profit.
- Skincare & Others +67.0%: The health food brands launched in 2025 (Teaflex, Befas, Collatein) are scaling up. A growth pillar is taking shape beyond Hair Care and Beauty Appliances.
- Beauty Appliances +29.1%: The Face Current Pointer passed 100,000 cumulative units shipped within six months of launch. New SALONIA products drove sales higher.
- Gross Profit Outpacing Revenue: Gross profit reached JPY 25,540M (+29.0% YoY), growing faster than revenue and lifting gross margin. Profitability at the gross level is improving as the category mix shifts.
- Artemis Now Wholly Owned: Artemis became a wholly owned subsidiary in May 2026, eliminating non-controlling interests (JPY 1,467M at the prior fiscal year-end). More profit now accrues to owners of the parent, and the move strengthens the beauty appliance supply chain.
- Hair Care Brand Momentum: New brands UNIPLEX and Amprem launched strongly. BOTANIST's revamped out-bath series won a combined eight No. 1 e-commerce rankings, showing progress in refreshing existing brands.
Key Concerns From The 3Q Results
SG&A rose to JPY 23,526M (+33.7% YoY), outpacing revenue growth. As a result, 9M operating income was only JPY 2,013M (-8.8% YoY). Standalone 3Q operating income was JPY 1M (our estimate), effectively breakeven. The full-year plan assumes a 4Q operating loss, so the trade-off between growth investment and profit generation is now a key issue.
- SG&A Ratio Up: The SG&A ratio rose 3.7pt to 54.9% (51.2% in the prior-year period), and OPM fell 1.7pt to 4.7%. Corporate expenses also increased to JPY 2,636M (+18.3% YoY).
- 3Q Margin Pressure: Standalone 3Q gross margin was 56.8%, down from 61.3% in 1H (our estimate). Standalone 3Q SG&A rose to JPY 9,096M (+41.8% YoY).
- Implied 4Q Loss: Working back from the full-year operating income plan of JPY 500M–1,500M, standalone 4Q implies an operating loss of JPY -1,513M to -513M (our estimate). 4Q last year generated a profit of JPY 1,673M.
- Extraordinary Losses: The company booked JPY 283M in extraordinary losses: JPY 219M in special investigation costs and related items, JPY 33M in a listing agreement penalty and JPY 6M in an administrative monetary penalty. Net income was JPY 932M (-15.7% YoY).
- Lower Liquidity: Cash and deposits were JPY 5,467M, down JPY 3,064M from the prior fiscal year-end. The main driver was the additional purchase of Artemis shares (JPY 2,910M).
Focus Areas / Items To Monitor Going Forward
- Nature of the Expected 4Q Operating Loss: Our view of FY2027 profit levels depends on whether the loss reflects advertising and promotional investment in new brands or one-off costs.
- Sustainability of High Growth: We will watch whether Skincare & Others (+67.0%, mainly health foods) and Beauty Appliances (+29.1%) keep growing at this pace. The key question is how their expansion affects company-wide gross margin and OPM.
- Internal Controls: We will track progress on strengthening internal controls after the special investigation and monetary penalty, and whether related costs taper off.
- Cost breakdown behind the planned 4Q operating loss, and the scenario for margin recovery in FY2027
- Drivers of the sharp rise in standalone 3Q SG&A, and the expected payback period for advertising spend
- Subscription ratio for the health food brands, and the profit contribution of the Skincare & Others category
- Quantified cost-reduction and gross margin benefits for beauty appliances from making Artemis wholly owned
- Progress on preventive measures following the special investigation, and the risk of further costs
Key Financial Highlights
| Item | Value | YoY |
|---|---|---|
| Revenue | JPY 42,814M | +24.6% |
| └ Standalone 3Q Revenue (Our Estimate) | JPY 16,006M | +32.9% |
| Gross Profit | JPY 25,540M | +29.0% |
| └ Gross Profit Margin | 59.7% | Prior-year period: 57.6% |
| SG&A | JPY 23,526M | +33.7% |
| └ SG&A Ratio | 54.9% | +3.7pt |
| EBITDA (Company-Disclosed) | JPY 3,355M | -4.3% |
| Operating Income | JPY 2,013M | -8.8% |
| └ Standalone 3Q Operating Income (Our Estimate) | JPY 1M | -99.8% |
| Recurring Profit | JPY 1,889M | -10.5% |
| Extraordinary Losses | JPY 283M | Prior-year period: JPY 97M |
| └ Special Investigation Costs, etc. | JPY 219M | - |
| Quarterly Net Income Attributable to Non-Controlling Interests | JPY 125M | Prior-year period: JPY 80M |
| Quarterly Net Income Attributable to Owners of Parent Company | JPY 932M | -15.7% |
| EPS | JPY 52.42 | -17.1% |
- Revenue grew 24.6%, but operating income declined. Higher SG&A more than offset the gross profit gain from revenue growth.
- Non-operating expenses included new rental expenses of JPY 47M. FX losses narrowed from JPY 105M to JPY 20M.
Performance By Business Segment
All three categories grew revenue. Skincare & Others grew fastest, followed by Beauty Appliances and then Hair Care. Profit by category is not disclosed. Total reportable segment profit was JPY 4,650M (+4.8% YoY). Higher corporate expenses of JPY 2,636M (+18.3% YoY) weighed on operating income.
Segment Performance Table
| Segment | Revenue | YoY | Operating Income | YoY | Margin |
|---|---|---|---|---|---|
| Hair Care | - | +9.7% | - | - | - |
| Beauty Appliances | - | +29.1% | - | - | - |
| Skincare & Others | - | +67.0% | - | - | - |
| Consolidated Total | JPY 42,814M | +24.6% | JPY 2,013M | -8.8% | 4.7% |
- Skincare & Others: +67.0%. The health food brands launched in 2025 (Teaflex, Befas, Collatein) expanded. In July, recycled fabric care brand ReWEAR released a limited-edition product, broadening the customer base.
- Beauty Appliances: +29.1%. New products launched from 4Q 2025 onward contributed, including a cordless straightening iron, the Face Current Pointer and a metal gua sha comb. These captured demand for quick touch-ups on the go and for facial beauty devices.
- None
Progress Versus Full-Year Guidance
Revenue reached 72.6–73.8% of the revised plan, ahead of the 70.2% achieved at the same point last year against full-year actuals. 9M operating income already exceeds the top of the revised range (JPY 1,500M), so the plan assumes a 4Q operating loss. 4Q last year delivered an operating profit of JPY 1,673M. How much the company spends in 4Q will therefore decide whether it lands within the plan.
| Item | Value (9M Cumulative) | Full-Year Forecast | Progress Rate |
|---|---|---|---|
| Revenue | JPY 42,814M | JPY 58,000M–59,000M | 72.6–73.8% |
| EBITDA | JPY 3,355M | JPY 2,200M–3,200M | 104.8–152.5% |
| Operating Income | JPY 2,013M | JPY 500M–1,500M | 134.2–402.6% |
Changes To Guidance
The company revised its full-year consolidated guidance. The earnings summary attributes the revision to growth across all categories: Hair Care, Beauty Appliances and Skincare & Others. Revenue is now expected to grow 18.4–20.5% YoY, while operating income is guided at -87.1% to -61.3% YoY. The plan concentrates the cost burden in 4Q.
- Revenue: Previous: figure announced 2026/8/7 → New: JPY 58,000M–59,000M
- EBITDA: Previous: figure announced 2026/8/7 → New: JPY 2,200M–3,200M
- Operating Income: Previous: figure announced 2026/8/7 → New: JPY 500M–1,500M
- Reason for Revision: Sales grew across all categories (Hair Care +9.7%, Beauty Appliances +29.1%, Skincare & Others +67.0%). Details are in the Notice Regarding Revision of Full-Year Consolidated Earnings Forecast for the Fiscal Year Ending December 2026, released the same day.
Commentary On Shareholder Returns
The annual dividend forecast is unchanged at JPY 15 (interim JPY 7, year-end JPY 8). Last year the company paid a single year-end dividend of JPY 15. This year it introduced an interim dividend, moving to twice-yearly payments while holding the annual amount flat.
Financial Position
Cash fell due to the additional purchase of Artemis shares and debt repayment. As a result, the company moved from an effectively debt-free position at the prior fiscal year-end to a small net debt position. The equity ratio nonetheless rose to 53.0%, and the balance sheet remains sound.
- Key Figures
- Leverage Metrics
| Item | Value | Additional Information |
|---|---|---|
| Cash and Deposits | JPY 5,467M | -35.9% vs. prior fiscal year-end |
| Accounts Receivable | JPY 6,555M | -11.4% vs. prior fiscal year-end |
| Inventories (Merchandise + Raw Materials and Supplies) | JPY 5,521M | +2.9% vs. prior fiscal year-end |
| Goodwill | JPY 5,265M | Down on amortization of JPY 488M |
| Total Assets | JPY 33,007M | -10.9% vs. prior fiscal year-end |
| Shareholders' Equity | JPY 17,498M | -5.1% vs. prior fiscal year-end; capital surplus down JPY 1,507M due to Artemis acquisition |
| Interest-Bearing Debt | JPY 5,677M | -14.5% vs. prior fiscal year-end |
| └ Current Portion of Long-Term Borrowings | JPY 1,285M | Unchanged from prior fiscal year-end |
| └ Long-Term Borrowings | JPY 4,392M | -JPY 964M vs. prior fiscal year-end |
| EBITDA (LTM) | JPY 5,475M | Our estimate: prior full year 5,625 + current 9M 3,355 − prior-year 9M 3,505 |
| Metric | Value | Notes |
|---|---|---|
| Net Debt/EBITDA | 0.04x | Our estimate. Net interest-bearing debt of JPY 210M on an LTM EBITDA basis. Net cash at prior fiscal year-end |
| Debt/Equity | 0.32x | Our estimate. 0.36x at prior fiscal year-end |
| Interest Coverage Ratio | 30.5x | Our estimate. Operating income ÷ interest expense of JPY 66M. 46.0x in prior-year period |
| Equity Ratio | 53.0% | Company-disclosed. 49.8% at prior fiscal year-end |
Disclosures Released Alongside The Earnings Announcement
- 2026/11/11Full-year guidance revised to revenue of JPY 58,000M–59,000M and operating income of JPY 500M–1,500M. The plan keeps revenue growing but loads costs into 4Q (Notice Regarding Revision of Full-Year Consolidated Earnings Forecast for the Fiscal Year Ending December 2026)
Major Announcements During The Quarter
- 2026/09/17Announced the Financial Services Agency's order to pay an administrative monetary penalty. 9M extraordinary losses include the JPY 6M penalty and JPY 219M in special investigation costs and related items
- 2026/09/30Published key investor questions and answers on the 2Q results to enhance disclosure
Large-Shareholding Filings / Material Proposals Over The Past Year
- Baillie Gifford & Co.: 5.1%→4.0% (2026/10/15) - Held as client assets under discretionary investment contracts
- WILL FIELD CAPITAL PTE LTD: New→5.1% (2026/09/24) - Pure investment. Views the shares as undervalued and plans additional purchases to take its holding above 5% within three months
- Yohei Onishi: 57.0%→57.0% (2026/07/11) - Held as Representative Director to support management stability. Filing triggered by change of address
- Yohei Onishi: 57.0%→57.0% (2025/12/24) - Held as Representative Director to support management stability. Filing triggered by execution of a share lending agreement
- Resona Asset Management: 6.6%→4.9% (2025/11/14) - Investment trusts and discretionary investment contracts
- SPARX Asset Management: 6.2%→4.7% (2025/11/14) - Pure investment under discretionary investment contracts and investment trust management contracts
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