KOHNAN SHOJI CO.LTD.

Business Details

A group centered on KOHNAN SHOJI, including Building Materials Wholesale (Ken Depo), Home Improvement Hirose, Home Center Mitsuwa, and overseas stores in Vietnam, handling a wide range of DIY products, household goods, pet products, food, and more. As of the end of the first quarter of FY2027 (ending February 2027), the group operated a total of 674 stores (658 domestic, 16 overseas). Under the 4th Medium-Term Management Plan (FY2026 (ending March 2026)–FY2028 (ending March 2028)), the company is pursuing expansion of sales scale and establishment of a highly profitable business structure.

Recent Overview

Q1 operating profit up 42.8%, significant profit growth; Allenza HD becomes equity-method affiliate; capital and business alliance with Valor Holdings

In the first quarter of FY2027 (ending February 2027) (March–May 2026), operating revenue was ¥146,219 million (up 11.8% year-on-year), operating profit was ¥10,151 million (up 42.8% year-on-year), and ordinary profit was ¥9,770 million (up 51.5% year-on-year), representing substantial profit growth. The Housekeeping segment led growth at 119.7% year-on-year. The company acquired 38.79% of voting rights in Allenza Holdings Co., Ltd., making it an equity-method affiliate (recording ¥381 million in equity-method investment gains). As a subsequent event, on June 30, 2026, the company entered into a capital and business alliance agreement with Valor Holdings and resolved to dispose of 719,400 treasury shares (at ¥4,170 per share, totaling approximately ¥2,999 million) through third-party allotment. The full-year earnings forecast (operating revenue of ¥543,500 million, operating profit of ¥23,000 million) remains unchanged.

Key Products

Growth Drivers

• Aggressive store openings based on the 4th Medium-Term Management Plan (final year targets: net sales of ¥560.0 billion, operating profit of ¥29.0 billion) (8 new stores opened in Q1, bringing the total to 674 stores at period end)
• Strengthened business collaboration and recognition of equity-method investment gains through making Allenza Holdings Co., Ltd. an equity-method affiliate
• Deepening market penetration in the Kansai and Kanto regions and mutual supply of private-brand products through the capital and business alliance with Valor Holdings
• Improved gross profit margin driven by high growth in the Housekeeping segment (up 119.7% year-on-year)
• Operating leverage effect from restraining growth in selling, general and administrative expenses relative to revenue growth (11.8% growth in operating revenue versus 6.7% growth in SG&A expenses)

Risks

• Impact on existing store sales from deteriorating consumer sentiment amid rising prices
• Supply constraints and rising personnel costs due to increased logistics costs and labor shortages (a factor pushing up the SG&A expense ratio)
• Slowdown in overseas economies and rising procurement costs due to U.S. diplomatic and trade policy and geopolitical risks
• Intensifying competition with other home center operators and low-price retailers in other industries
• Continued amortization burden from goodwill balance of ¥15,455 million and intangible fixed assets (customer-related assets, trademark rights, etc.)
• Potential future impact from the finalization of accounting treatment related to the provisional accounting for the acquisition of Allenza Holdings shares (purchase price allocation not yet completed)
• Interest rate rise risk and financial burden associated with the increase in long-term borrowings balance (long-term borrowings of ¥128,632 million under fixed liabilities)