YELLOW HAT LTD.

Business Details

The core segment of the Group. It operates 936 stores nationwide (as of end-March 2026) under four brands: Yellow Hat (car accessories), 2rinkan and Bike Kan (motorcycles), and Y's Road (sport cycles). The segment consists of two pillars: wholesale to sales subsidiaries and affiliated companies, and retail through stores and websites. In addition to sales of consumables such as tires, oil, and batteries, installation and maintenance services (labor revenue) form a key pillar of earnings. Y's Road (sport cycles), consolidated as a subsidiary in January 2025, made a full-scale contribution to consolidated earnings for the first time this period.

Recent Overview

Revenue rose 11.6% to ¥165,486 million, but profit fell 2.7% to ¥13,680 million due to higher costs.

Revenue increased by ¥17,199 million year on year, driven by the start of Y's Road's consolidated contribution, strong sales of tires and consumables, and increased labor revenue. On the other hand, SG&A expenses rose substantially due to higher depreciation from increased subsidiary store count, the launch of the new Tohoku logistics center, and existing store equipment renewals; higher personnel costs and logistics costs; increased goodwill amortization; and one-time costs from logistics facility relocation, renovation, and system development, resulting in a ¥376 million decline in segment profit. As a subsequent event, a possible personal information leak due to unauthorized access at consolidated subsidiary 2rinkan Yellow Hat was disclosed, and the impact on next-period earnings is still under review.

Key Products

Growth Drivers

• Solid tire sales driven by demand ahead of price revisions by tire manufacturers (steady demand continued throughout the period)
• Increased in-store sales of consumables such as oil and batteries, supported by travel and homecoming demand
• Expansion of labor revenue (installation and maintenance work): growth in high-margin labor revenue boosted gross profit
• Full-scale contribution of Y's Road (sport cycles) to consolidated earnings (consolidation began this period)
• Strengthened digital customer acquisition through expanded web service bookings (addition of same-day oil-change booking feature): up 157% year on year
• Capturing vehicle inspection (shaken) demand by leveraging the April 2025 extension of the eligible booking window (from one month prior to two months prior)
• Rollout of new services, including the start of direct-type auto insurance offerings in partnership with NTT DOCOMO
• Expansion of the store network as regional infrastructure through a small-trade-area, low-cost store opening strategy (net increase of 14 stores this period)

Risks

• Risk of a sharp slowdown in sales of winter goods (e.g., studless tires) due to weather factors (mild winter, elevated temperatures) — winter goods sales were sluggish this period due to warm temperatures in December
• Continued increase in SG&A expenses and pressure on profit from rising personnel, store operating, and logistics costs
• Shrinking domestic car accessories market (declining birthrate, reduced car ownership among young people)
• Deterioration in consumer sentiment due to the impact of US trade policy and continued price increases
• Integration costs and goodwill amortization burden associated with M&A subsidiaries such as Y's Road (goodwill balance of ¥1,435 million at end of FY2026, ending March 2026)
• Constraints on expanding labor revenue due to difficulty securing mechanics and inspectors
• Possible personal information leak due to unauthorized access at consolidated subsidiary 2rinkan Yellow Hat (impact on next-period earnings still under review)
• Continued risk of one-time costs from the launch of the new Tohoku logistics center, relocation and renovation of logistics facilities, and system development