RENAISSANCE,INCORPORATED Q2 FY2026 earnings call

• Overall Interim Financial Performance

  • Consolidated net sales reached 31.702 billion yen, up 1.1% year-over-year
  • Consolidated operating profit was 59 million yen, turning profitable in the 2nd quarter after a weak Q1; consolidated ordinary loss was 348 million yen, and net income attributable to parent company shareholders was 24 million yen
  • Q1 underperformance driven by lower-than-expected sports club new memberships, but business recovered and returned to growth in Q2, entering a clear recovery trend

• Post-Merger Integration (PMI) Progress

  • Completed absorption merger of Sports Oasis on April 1, completed brand rebranding of all former Oasis locations to Renaissance, and refreshed company-wide staff uniforms
  • To accelerate PMI and decision-making after Q1 underperformance, implemented organizational restructuring and personnel changes on September 1, consolidating two headquarters into the unified Sports Club Business Division to speed up strategy execution
  • Plans to gradually integrate core systems, optimize back-office operations, and adjust management structures to unlock cross-company synergies faster

• Capital and Operational Initiatives

  • Opened 2 new full-service sports clubs in Sapporo and Kobe by renovating vacated locations from exiting competitors, keeping opening costs low
  • Invested in existing store renovations, added new studio programs like Essential Pilates to improve member experience
  • As of end-September, the group operates 296 total facilities: 294 domestic facilities including BEACH TOWN, plus 2 facilities in Vietnam

1. Sports Club Business: Increased revenue year-over-year. Excluding 2 new opened stores, existing club member count increased 1.2% YoY and existing club revenue increased 1.3% YoY as of the end of September. Post-merger of Sports Oasis, new corporate monthly memberships to former Oasis stores performed strongly, with all key member categories (fitness, swimming school, tennis school) growing in active membership. 2. BtoG (Regional Health Promotion) Business: Increased revenue year-over-year. Started management and operation of 9 new public facilities across multiple Japanese cities during the interim period. 3. BtoB (Corporate/Health Insurance Union Health Promotion) Business: Increased revenue year-over-year, expanded outreach of its online corporate health services including スマートAction and RENAISSANCE Online Livestream. 4. Medical/Nursing Care Related Business: Increased revenue year-over-year. Opened 5 new 元氣ジム rehabilitation-focused day service facilities (3 directly operated, 2 franchise) during the interim period, and expanded BtoB sales of its synapsology brain activation online gymnastics program to nursing care facilities. 5. Home Fitness Business: Decreased revenue year-over-year. The brand transition to Renaissance caused Amazon reviews for core product ステッパー to not be carried over, hurting sales, but the new product スタイリーフェイス launched in September had a strong start across TV shopping and e-commerce channels.

• Management revised full-year FY2026 March Term consolidated guidance, updating full-year targets to: 66.0 billion yen in net sales, 1.7 billion yen in operating profit, 0.9 billion yen in ordinary profit, and 0.5 billion yen in net income attributable to parent company shareholders, based on the Q2 recovery trend and expected full achievement of initial plans in H2
• Full-year dividend guidance is maintained at 13 yen per share, unchanged from the prior forecast
• H2 Sports Club Business priorities: Increase attractiveness of full-service clubs by leveraging existing strengths including hot bath/sauna facilities, adding multi-use spaces like lounges and co-working areas, run promotions to grow membership, adjust membership pricing to reflect recent cost inflation, and improve store operation productivity
• H2 adjacent business priorities: Continue expanding BtoG collaboration with local governments, launch new limited-corporate sports club use tickets to support corporate health management in BtoB, accelerate 元氣ジム expansion and is actively considering M&A to speed up growth of medical/nursing care related business
• H2 Home Fitness priorities: Drive sales growth for ステッパー, scale スタイリーフェイ sales through upcoming TV shopping placements, and conduct test marketing for additional new products
• H2 PMI priorities: Complete system integration, back-office efficiency improvements, and management restructuring to deliver synergy benefits faster

• Q1 membership underperformance highlighted execution risk post-merger, and elevated cost pressures from rising wages, utility costs, and facility expenses that compress margins
• New lease accounting standard implementation is still under review, with full quantification of financial impact not yet complete, creating uncertainty for financial reporting
• Increasing competition in the fitness industry, with more consumer options for exercise, creating pressure to retain members and maintain utilization rates
• Rising investment requirements for IT and cybersecurity, which increases capital expenditure needs for the business
• The home fitness business faced unexpected headwinds from the brand transition that disrupted e-commerce sales, creating near-term revenue risk

Q: What explains why net income is positive even when ordinary operating income is negative in the first half? / A: After the April 1 absorption of Sports Oasis, management re-evaluated taxable income from the acquired business and adjusted deferred tax asset accounting. This led to a 442 million yen positive adjustment to corporate tax in Q2, which pushed net income into positive territory even with an ordinary loss.

Q: What is the outlook for sports club membership growth by the end of the full fiscal year? / A: Existing store membership grew 1.2% YoY as of September, recovering after weak Q1 recruitment that was offset by strong results from June through October. Management expects full-year membership growth of approximately 4% YoY by the end of March 2026.

Q: What are the main cost pressures for gym operation, and what countermeasures are you implementing? / A: The two largest cost pressures are facility/utility costs and labor costs. For utility costs, Renaissance is progressively replacing older equipment with energy-efficient models across 140 facilities to cut ongoing running costs while making necessary capital investments. For labor costs, the company is automating administrative work via digital transformation to reduce required labor hours and offset rising wage levels.

Q: What is your expansion plan for medical and nursing care related business, including M&A? / A: The company opened 5 facilities in H1 and 1 additional facility in early H2, for 6 total openings this fiscal year. Going forward, Renaissance plans to open 5-6 new facilities annually, and is actively evaluating M&A opportunities to accelerate the expansion pace of this segment.

Q: How does Renaissance plan to drive long-term profit growth amid rising fixed and labor costs? / A: The core strategy is combining human service with digital tools: digital is used both to add member value (supporting higher pricing and retention) and to improve back-office and operations efficiency. Management continues to evaluate key KPIs like revenue per employee to guide ongoing efficiency improvement efforts.