JSS CORPORATION

Business Details

Under the management philosophy of "contributing to health promotion through water," the company operates membership-based sports clubs targeting a wide range of age groups from babies to seniors. It operates company-operated and contracted business locations nationwide, centered on the Kinki region. Approximately 80% of sales consist of membership fee income, and Swimming School Operations revenue (company-operated, contracted, and extracurricular programs) accounts for over 90% of net sales. Child members make up the majority of the membership base, with the remainder being adults (mainly middle-aged and elderly). The company is also promoting synergy creation through a business alliance with Tipness, a subsidiary of Nippon Television Holdings.

Recent Overview

While net sales showed a slight increase, operating profit rose sharply by 72% year on year. The number of members continued to decline, down 8.9% year on year.

For FY2026 (ending March 2026), full-year net sales were ¥8,541 million (up 1.9% year on year) and operating profit was ¥433 million (up 72.0% year on year), reflecting a significant improvement in profitability. Cost of sales decreased to ¥7,083 million (from ¥7,141 million in the prior period), improving the gross profit margin, while extraordinary losses included an impairment loss of ¥105 million and a litigation-related loss of ¥53 million. The number of members at period-end continued to decline, reaching 76,880 (down 8.9% year on year), falling short of initial expectations. Operating cash flow increased substantially to ¥686 million from ¥124 million in the prior period. The company repaid ¥989 million in long-term borrowings, improving its financial condition, with the interest-bearing debt ratio (cash flow to interest-bearing debt) sharply improving from 23.1 years in the prior period to 3.0 years. For FY2027 (ending March 2027), the company forecasts net sales of ¥8,668 million (up 1.5% year on year) and operating profit of ¥465 million (up 7.3% year on year).

Key Products

Growth Drivers

• Continued effect of higher unit prices from the membership fee revision (implemented June 2025)
• Expanding demand for contracted swimming classes against a backdrop of aging school pool facilities and instructor shortages
• Further area expansion through strengthened M&A strategy (plan to open approximately 2 business locations per year)
• Synergies from collaboration with Tipness, a subsidiary of Nippon Television Holdings (cost reduction through joint purchasing, improved customer satisfaction, provision of online fitness service "Torucha")
• Expanding sales of original aquatic exercise programs, such as the underwater bike "J Paddle Bike," to other companies' facilities
• Acquisition of new members through customer acquisition measures such as the referral campaign "Tsunagaro JSS" and one-day trial sessions
• Diversification of membership composition through expanded programs for seniors and adults

Risks

• Risk of a shrinking revenue base due to the continued decline in membership (76,880 at period-end, down 8.9% year on year)
• Increasing difficulty in acquiring and retaining members due to diversifying consumer lifestyles and a stronger savings mindset
• Rising costs such as personnel expenses, utility costs, and raw material costs (due to persistently high energy prices)
• Intensifying competition in the swimming school industry due to multi-store expansion by competitors and entry from other industries
• Shrinking potential market for child members (who make up the majority of the membership base) due to the declining birthrate
• Capital expenditure burden associated with pool facility maintenance and new store openings, and outstanding borrowings (long-term borrowings of ¥1,084 million plus ¥602 million due within one year)
• Risk of extraordinary losses such as impairment losses (¥105 million in the current period) and litigation-related losses (¥53 million in the current period)
• Uncertainty regarding the economic outlook due to geopolitical risks, trends in US trade policy, and surging resource and energy prices