2198.T

• Financial Summary

  • Consolidated revenue: 22.455 billion yen, 1.9% below plan.
  • Operating profit: 1.82 billion yen, roughly in line with plan, as higher gross margin from price increases offset the revenue shortfall.
  • Net profit attributable to parent shareholders: 1.963 billion yen, 76.9% above plan, driven by an increase in deferred tax assets from a change in corporate classification for recoverability.
  • Ending backlog of orders: 4,544 units; total new orders grew 1.4% year-on-year due to increased strategic advertising investment.
  • Financial position remains stable: equity ratio of 58.4%, interest-bearing debt dependence of 11.5%.

• Core Business Operations (Wedding Business)

  • Overall market visitor volume declined 6% year-on-year, especially from portal sites (down 20% year-on-year), but the company offset this with a 40% year-on-year increase in traffic from its own website, driven by strengthened digital marketing and social media activity.
  • Improved pre-visit customer engagement (enhanced phone support and pre-consultation) reduced cancellation rates and lifted conversion by 1.2 percentage points year-on-year, leading to total new orders of 101.5% of the prior year level.

• New Strategic Initiatives

  • Selected as designated manager for the historically designated "Former Matsazaki Ryoya Aburaya" cultural property in Ogori, Fukuoka, to develop new hospitality offerings leveraging the company's expertise.
  • Established IKK United Link Co., Ltd. in October 2025 to launch an overseas human resources business, providing end-to-end support for recruitment, training and entry to address Japan's growing labor shortage.
  • Opened a third photo studio location in Shinjuku, Tokyo in November 2025, with full facilities including a chapel, 30 photo booths, and strong access to popular Tokyo outdoor shooting locations.

• 2026 October period consolidated revenue is projected to grow 1.8% year-on-year to 22.85 billion yen. The growth is driven by a projected 55,000 yen increase in average wedding execution price to 4.165 million yen, new product development and sales expansion in the food business, and the opening of the new Shinjuku photo studio.
• Operating profit is projected to decline 34.1% year-on-year to 1.2 billion yen (5.3% operating margin), with the decline driven by pre-opening costs for 3 planned new wedding locations and the new photo studio.
• Net profit attributable to parent shareholders is projected to decline 63.3% year-on-year to 720 million yen. The 2026 period is positioned as a "seeding period" for mid-term growth.
• Capital expenditure is planned at 581 million yen, allocated to existing store renovations and wedding apparel purchases, with continued cost control on non-essential spending alongside strategic investment.
• No full new wedding store openings are planned, but the 3 upcoming locations will begin accepting orders in the 2026 period, with full operations starting in the 2027/2028 period.
• A full-year dividend of 24.0 yen per share is planned, with a high 95.9% payout ratio that is described as temporary, driven by this period's increased investment activity. The company maintains a policy of retaining sufficient capital for long-term planning and strengthening, while paying dividends aligned with performance.
• The company is currently evaluating multiple opportunities for new entry into the hotel business, with information gathering and land acquisition ongoing, targeting opening in several years.

1. Domestic Wedding Business: Revenue decreased 5.2% year-on-year. It achieved an all-time high average execution price of 4.11 million yen, up 3.1% year-on-year, but total execution volume fell 8.0% year-on-year to 4,930 units, resulting in a year-on-year revenue decline. It contributed the majority of total consolidated revenue.
2. Photo Business: Revenue reached 904 million yen, up 34.5% year-on-year (an increase of 231 million yen), with both execution volume and average price exceeding plan significantly. It contributed approximately 4.0% of total consolidated revenue.
3. Other segments including new ventures (Overseas Human Resources Business, Hotel Business, Food Business) recorded year-on-year revenue growth in the 2025 October period.

• The domestic wedding industry overall is facing weak market demand, with both total market visitor volume and order volume showing year-on-year declines, driven by broader demographic and industry changes.
  • Portal site-driven traffic has declined sharply, creating pressure on the company's customer acquisition strategy that has required a shift to owned digital channels.
• Sustained high costs for utilities, food and raw materials continue to pressure margins, requiring ongoing cost management efforts.
• All new growth initiatives (overseas human resources business, hotel business) are in early stages of development, with uncertain outcomes and required upfront investment that near-term profitability.

Q: What is the reason for appointing Nakajima as President at this time, and what are the outlook for this change? / A: Management cited two core reasons. First, Nakajima has a strong track record of results at his prior role, has demonstrated consistent effort and growth, and is ready to grow into the president role at his current age of 41. Early experience in the role will allow him to close any remaining experience gaps. Second, the outgoing chair is 73 years old, and splitting responsibilities will allow the company to take a step forward while supporting Nakajima's growth as he leads the business forward.

Q: What are the company's medium- to long-term growth strategies and what key targets does management focus on? / A: Management laid out three core growth pillars. First, build out the company's wedding brand in major Tokyo, Osaka, and Kobe markets. Second, expand and brand the Meitoku-an food business. Third, gradually launch and grow the new hotel business. The company also views the overseas human resources business as a key long-term pillar to address demographic shifts. For financial targets, management prioritizes maintaining a high equity ratio, and continues to focus on improving ROA and ROE, which supported the company through the COVID-19 pandemic.

Q: Why was the Iwaki branch in Fukushima transferred, and what is the financial impact of this store closure? / A: The branch was transferred to a local Fukushima company with strong expertise operating local event, wedding, and banquet businesses. Management believes the local operator will achieve better results from the location than the company could. The transfer reduced total store count from 20 to 19, but only has a minimal impact on total revenue, with no negative impact on overall profit, so there is no material concern from the change.