CUBE CO., LTD.

Business Details

Centered on the flagship brand MARK&LONA, the company plans golf casual wear, accessories, and related items, and operates across seven channels: Domestic Retail (Directly-Managed Stores), Domestic EC, Overseas EC, Korea Wholesale, China Wholesale, Overseas Wholesale, and Domestic Wholesale. As a high-end luxury brand targeting affluent consumers, it operates stores in commercial facilities, department stores, and street-level locations in major cities, in addition to EC sales through its official online store and ZOZOTOWN. The full-year earnings forecast for FY2026 (ending December 2026) remains unchanged, with net sales of ¥4,965 million (up 2.1% year on year) and operating profit of ¥115 million (up 93.8% year on year).

Recent Overview

Q1 net sales declined 2.2% year on year, and increased SG&A expenses pushed the segment into an operating loss of ¥43 million

Net sales for Q1 FY2026 (January to March) were ¥1,111 million (down 2.2% year on year). Domestic Retail performed well at ¥494 million (up 16.7% year on year), while Korea Wholesale declined to ¥274 million (down 23.5% year on year), and Domestic EC, Overseas EC, Overseas Wholesale, and Domestic Wholesale all recorded lower sales. The cost of sales ratio improved to 38.0% (40.1% in the same period of the prior year), raising the gross profit margin to 62.0%; however, SG&A expenses swelled to ¥733 million (up 7.8% year on year) due to increased outsourcing expenses, salaries and allowances, rent, and depreciation associated with stronger hiring and new store openings, resulting in an operating loss of ¥43 million (compared with operating profit of ¥0 million in the same period of the prior year). In addition, non-operating expenses included ¥8 million in restricted stock-related expenses, leading to an ordinary loss of ¥47 million. The full-year earnings forecast (net sales of ¥4,965 million, operating profit of ¥115 million) remains unchanged, maintaining a plan premised on a recovery in the second half of the fiscal year.

Key Products

Growth Drivers

• Sales expansion driven by continued new store openings in Domestic Retail (such as Fukaya Hanazono Premium Outlet): Q1 Domestic Retail sales rose 16.7% year on year, performing strongly
• Improvement in gross profit margin through thorough reduction of the cost of sales ratio: Q1 cost of sales ratio was 38.0% (40.1% in the same period of the prior year), and gross profit margin was 62.0% (59.9% in the same period of the prior year)
• Full-scale operation of the China Wholesale channel: ¥55 million was recorded in Q1, and it is becoming established as a new revenue source
• Improvement in the D2C ratio: The Q1 D2C ratio improved to 61.4% (56.3% in the same period of the prior year), advancing the strengthening of the direct sales revenue structure
• Maintenance of the full-year earnings forecast for FY2026 (ending December 2026): net sales of ¥4,965 million (up 2.1% year on year) and operating profit of ¥115 million (up 93.8% year on year)

Risks

• Risk of persistently high SG&A expenses: Fixed costs continue to rise due to stronger hiring and new store openings, with Q1 SG&A expenses up 7.8% year on year to ¥733 million. An operating loss of ¥43 million was already recorded in Q1, and a significant sales expansion in the second half is needed to achieve the full-year plan
• Risk of dependence on Korea Wholesale: Q1 Korea Wholesale sales continued to decline, falling to ¥274 million (down 23.5% year on year). The sales composition ratio remains high at 24.7%, meaning that fluctuations in transactions with JC FAMILY CO., LTD. directly affect performance
• Decline in overseas sales ratio: The Q1 overseas sales ratio fell to 34.6% (39.0% in the same period of the prior year). Sales declines in Korea Wholesale and Overseas Wholesale continue, and the contribution from China Wholesale (4.9%) has not been enough to offset them
• Decline in EC penetration rate: The Q1 EC penetration rate fell to 16.9% (19.0% in the same period of the prior year). Both Domestic EC and Overseas EC recorded lower sales year on year, and growth in digital channels is slowing
• Risk of losses at the China joint venture: Equity-method investment losses may continue, and startup costs for the China business risk weighing on profits for the time being
• Rising costs for raw materials, logistics, and electricity: The apparel industry as a whole continues to face a difficult cost environment, with the risk that a weak yen and persistently high energy prices will squeeze procurement costs