I-ne Co., Ltd.

Business Details

This segment mainly consists of wholesale sales to retail stores and mass merchandisers through domestic wholesale distributors in Japan, as well as direct-to-consumer (D2C) sales to general consumers via the internet. The company operates multiple beauty brands including BOTANIST, YOLU, SALONIA, and TOUT VERT, focusing on hair care, beauty appliances, skin care, and other categories. In FY2025 (ending December 2025), significant growth of new brands (ReWEAR, Teaflex, etc.) drove expansion in the skin care and other categories.

Recent Overview

Revenue grew 9.3%, but operating income declined 8.0% due to higher SG&A expenses

In FY2025 (ending December 2025), Domestic Business revenue reached ¥47,736 million (up 9.3% year on year), achieving revenue growth. In addition to the three core brands BOTANIST, YOLU, and SALONIA, skin care brands TOUT VERT and Wrinkfade, as well as new brands ReWEAR and Teaflex, grew significantly, driving the skin care and other categories. On the other hand, segment operating income declined to ¥7,298 million (down 8.0% year on year). The increase in company-wide cost adjustments (SG&A) from ¥2,657 million in the prior period to ¥3,292 million weighed on consolidated operating income. Goodwill amortization also increased substantially, from ¥108 million to ¥648 million.

Key Products

Growth Drivers

• Continued revenue expansion through the renewal of the BOTANIST brand and introduction of new lines
• Deepening of the hair care category through expansion of the YOLU hair care series (fourth series launch)
• Strengthening of beauty appliance earnings through continued strong sales of SALONIA's mid-to-high price range products and new items such as accessories
• Diversification of categories driven by the strong performance of skin care brands such as TOUT VERT and Wrinkfade
• Significant growth of new brands such as ReWEAR (regenerating fabric softener) and Teaflex (functional tea)
• Maintaining a rapid new product development and market launch cycle through the IPTOS model
• Promotion of an OMO strategy combining wholesale (Arata, Ohki, etc.) with direct e-commerce (D2C) sales

Risks

• Profit margin pressure from increased SG&A expenses (segment operating income down 8.0% in FY2025)
• Planned large-scale strategic additional investment of approximately ¥3.0 billion in FY2026, posing a risk of a significant decline in profit (operating income forecast: -¥500 million to -¥1,000 million)
• Risk of revenue concentration in specific brands (BOTANIST, YOLU, SALONIA)
• Risk of dependence on a major wholesale distributor (Arata Corporation)
• Increased amortization burden of goodwill and intangible fixed assets related to M&A (Tout Vert, Artemis, etc.) (goodwill amortization increased by ¥543 million year on year to ¥648 million)
• Establishment of a special investigation committee and response to restatement of past financial results related to transactions with a company founded by a former employee (RH Company) (planned expense recognition of ¥178 million in FY2026)
• Risk of rising raw material and logistics costs due to geopolitical risk surrounding the Strait of Hormuz
• Risk of market share decline due to intensifying competition in the hair care market

Business Details

The company sells brand products it has developed, such as BOTANIST, YOLU, and SALONIA, through direct-to-consumer internet sales to overseas general consumers, as well as wholesale sales to overseas internet retailers, sales agents, beauty specialty stores, and drugstores. Major markets include Hong Kong, Taiwan, Singapore, Malaysia, South Korea, and other Asian regions. Following the commencement of liquidation procedures for Ai'enyi (Shanghai) Cosmetics Co., Ltd. in December 2024, revenue from the China region declined, while operating loss improved significantly.

Recent Overview

Revenue declined due to liquidation of the Chinese subsidiary, but operating loss improved by ¥618 million

Following the decision in December 2024 to commence liquidation procedures for Ai'enyi (Shanghai) Cosmetics Co., Ltd., revenue from the China region declined, resulting in revenue of ¥1,239 million (down 7.8% year on year). On the other hand, due to the effect of withdrawing from unprofitable operations, operating loss improved significantly to ¥125 million (from a loss of ¥743 million in the prior period). Sales efforts continue in Asian markets including Hong Kong, Taiwan, Singapore, Malaysia, and South Korea through cosmetics shops and retail stores.

Key Products

Growth Drivers

• Continued expansion of distribution to cosmetics shops and retail stores in Asian markets including Hong Kong, Taiwan, Singapore, Malaysia, and South Korea
• Improvement in operating loss through the liquidation and restructuring of unprofitable operations at the Chinese subsidiary
• Utilization of direct-to-consumer sales channels to overseas general consumers via cross-border e-commerce
• Geographic diversification through expansion of sales channels into Southeast Asia, the United States, and other regions
• Continued initiatives to improve brand awareness of BOTANIST in the Asia region

Risks

• Operating loss continued in the Overseas Business in FY2025 (ending December 2025), with an unclear outlook for profitability
• Risk of revenue decline due to loss of sales channels for the Chinese market following the liquidation of the Chinese subsidiary
• Uncertainty in the business environment due to heightened global geopolitical risk (including the situation surrounding the Strait of Hormuz)
• Risk of intensifying competition with rival companies and the rise of local brands across Asian countries
• Impact on earnings from foreign exchange fluctuations (yen depreciation, local currency depreciation)
• Limited contribution to overall group performance, as the segment accounts for only about 2.5% of total company revenue