CHARLE CO., LTD.

Business Details

Products manufactured at domestic and overseas partner factories are delivered to Mates (consumer members) and general consumers through business members via home-party-style fitting sessions in direct sales format. As a complementary channel, mail-order sales via an e-commerce site are also operated. Clothing (women's inner and outer wear, etc.), cosmetics (skincare, hair care, etc.), and health foods are the core categories, forming the core business of the Charle Group.

Recent Overview

Both sales and profit fell short of plan, with a large impairment loss and a product voluntary recall occurring

Net sales of the women's innerwear business for FY2026 (ending March 2026) were ¥10,656 million (down 3.8% year on year). The main causes were weak sales of women's outerwear and slowing demand following the June price revision. The voluntary recall of the hair care iron resulted in both lower sales and higher cost of sales. On the profit side, an increase in inventory valuation losses was also a factor, expanding the segment loss to ¥1,177 million (versus a loss of ¥869 million in the prior period). In addition, in response to the deteriorating performance of the women's innerwear business, an impairment loss on fixed assets of ¥2,348 million was recorded (treated outside the segment). Consolidation of logistics warehouses into a single location (scheduled for around the end of 2026) was also decided.

Key Products

Growth Drivers

• Strengthened measures to promote the development of new franchise-affiliated outlets (the number of newly developed personnel in FY2026 (ending March 2026) trended above the previous year)
• Expanded product lineup through new product launches in the health food category (such as "Lumiora")
• Promotion of a shift toward a hybrid sales model combining direct sales and mail-order sales (a B-to-C business model)
• Expansion of the sales composition ratio of high-gross-margin products and discontinuation of low-profit products through review of the product portfolio
• Reduction of procurement costs (review of product sourcing methods through the search for new suppliers and production countries)
• Phased advancement of business structure reform based on the long-term vision "Charle Group Vision 2035"
• Fixed cost reduction effect from consolidating logistics warehouses into a single location (scheduled for completion around the end of 2026)

Risks

• Slowdown in sales activity and decline in the number of active salespeople (business members) due to their aging
• Shrinking sales base due to a decline in new participants joining the business as the next generation
• Rising cost of sales and declining gross margin due to soaring raw material prices and energy costs
• Consumer purchase hesitancy and delayed demand recovery following price revisions
• Increased inventory valuation losses due to sluggish sales
• Product voluntary recall risk (the hair care iron recall adversely affected both sales and cost of sales)
• Deteriorating consumer sentiment and growing thrift orientation due to prolonged price inflation
• Existence of material events relating to going concern assumptions due to continued operating losses