Nitori Holdings Co., Ltd.

Business Details

The segment centers on the development, manufacturing, and sale of furniture and interior goods, and also operates real estate leasing, advertising services, and logistics services. Domestically, it operates multiple formats including Nitori, Deco Home, and N+, and has expanded overseas into 11 Asian countries/regions. Through an integrated "manufacturing-logistics-IT-retail" model spanning manufacturing through logistics to sales, it provides high-quality, low-priced products. As of the end of FY2026 (ending March 2026), the segment operated 808 domestic stores and 209 overseas stores, for a total of 1,017 stores.

Recent Overview

Revenue declined slightly but margins were maintained, and the logistics expense ratio is expected to peak as all proprietary DCs become operational

In the Nitori Business for FY2026 (ending March 2026), domestic existing-store customer traffic was sluggish at 92.8% of the prior period and sales were 95.8% of the prior period, leading to a decline in revenue to ¥816,196 million (down 0.6% year on year). Segment profit also declined slightly to ¥118,381 million (down 0.5% year on year), remaining roughly flat. On the other hand, all six proprietary distribution centers became fully operational, and the logistics expense ratio is expected to peak out. Domestically, 40 Nitori stores and 22 Deco Home stores were opened, while 30 stores were opened overseas. In mainland China, profitability improved significantly through withdrawal from unprofitable stores (reducing the store count from 100 to 78). The company also restructured its merchandising organization to improve the quality, volume, and speed of product development. Capital expenditures fell sharply to ¥43,490 million from ¥122,565 million in the prior period, indicating the completion of the DC investment phase.

Key Products

Growth Drivers

• Accelerated new product development (strengthened quality, volume, and speed of development through reorganization of the merchandising division, generating hit products such as pocket coil mattresses and ultra-lightweight frying pans)
• Expansion of the home appliance category (products such as the "410L 4-door fan-type refrigerator-freezer," "Mini LED LCD TV," and "12kg heat-pump drum-type washer-dryer" exceeded prior-period results and won home appliance awards)
• Peak-out of the logistics expense ratio following completion of logistics infrastructure development (full operation of six proprietary DCs, labor savings and cost reduction through introduction of devanning robots)
• Renewed growth in overseas business (significant profitability improvement in mainland China, deployment of new store-opening models in Vietnam, South Korea, etc., and cost reductions from reviewing overseas shipping routes)
• Strengthened price competitiveness (cost reduction through specification changes, raw material review, development of new suppliers, in-house manufacturing arrangements, and smaller product packaging)
• Enhanced brand awareness through regular new product exhibitions leveraging media and influencers

Risks

• Continued decline in customer traffic (domestic existing-store customer count at 92.8% of prior period, reflecting delayed recovery in the consumer sentiment index and weaker purchasing appetite for durable goods)
• Insufficient product development capability (risk that new products with superior design, functionality, and price competitiveness are not developed adequately, hindering timely product proposals)
• Rising labor and SG&A costs (SG&A expenses increased year on year due to human capital investments such as active hiring and company-wide wage revisions)
• Uncertainty in the mainland China business (ongoing withdrawal from unprofitable stores and revision of store-opening criteria, with store count shrinking from 100 to 78)
• Intensifying sales competition that crosses industry and business-format boundaries (a challenging competitive environment across the furniture and interior industry as a whole)
• Rising import costs due to yen depreciation and higher raw material prices (impact on cost of sales)
• U.S. trade policy and geopolitical risks (impact on supply chains and costs from global uncertainties such as tensions in the Middle East and Iran)

Business Details

Centered on Shimachu Co., Ltd., this segment sells furniture, interior goods, and home center merchandise. It operates primarily through physical stores based mainly in the Greater Kanto region, handling a wide range of everyday goods including daily consumables, pet food, bicycles, and apparel. The segment leverages the Nitori Group's private-brand development capabilities and logistics infrastructure to pursue low-cost operations and improved gross margins. As of the end of the fiscal year under review, the number of stores stood at 52 (down one store from 53 in the prior period).

Recent Overview

Despite declining revenue, the segment returned to profitability through significant cost reductions and PB expansion, with impairment losses falling sharply

Revenue (segment total) for the fiscal year under review declined 7.8% year on year to ¥110,273 million, but segment profit turned positive, reaching ¥7,212 million compared to a loss of ¥1,288 million in the prior period. This improvement was driven by higher gross margins from an increased sales mix of PB products such as the "Neasy series," optimization of advertising expenses through reduced TV commercials and revised flyers, and lower logistics costs from transferring delivery operations to Home Logistics. A sharp reduction in impairment losses, from ¥8,571 million in the prior period to ¥175 million, also contributed to the profit improvement.

Key Products

Growth Drivers

• Improved gross margins from an increased sales mix of PB products (strong performance from the "Neasy series" apparel, etc.)
• Optimization of advertising expenses (reduced frequency of TV commercials, revised flyer size and distribution frequency)
• Reduced intra-group logistics costs through transfer of delivery operations to Home Logistics
• Improved customer traffic and profitability through Nitori store openings and outside tenant attraction at some stores
• Improved profitability through adjustment of sales floor area based on profit/loss by product category
• Integrated promotion of facility-level profitability redesign, shared-space utilization, and SG&A review

Risks

• Ongoing decline in revenue (down 7.8% year on year), shrinking the revenue base
• Pressure on SG&A expenses from wage revisions and rising labor costs
• Deteriorating consumer sentiment and reduced purchasing appetite for durable goods amid continued price increases
• Intensifying sales competition that crosses industry and business-format boundaries (in the home center industry)
• Extremely low capital expenditures of ¥354 million, constraining investment capacity to maintain future store competitiveness