STORAGE-OH Co.,Ltd. Q4 FY2026 earnings call

• Overall Financial Performance for FY2026 January
  • Total consolidated revenue was 3.999 billion yen, 400 million yen lower than the initial plan due to the delayed property sales. Operating income was 191 million yen, exceeding the initial plan of 185 million yen, driven by strong existing store sales growth and solid performance from the operations management business. Ordinary income was 172 million yen, which was nearly in line with plan. Net income attributable to the parent was 117 million yen, up 155.3% year-over-year.
  • Balance sheet: Total assets at period end were 4.707 billion yen, an increase of 1.07 billion yen from the prior period end. Net assets were 1.239 billion yen, up 119 million yen year-over-year, but the equity ratio declined from 30.8% to 26.3% due to the growth in total assets. Cash and deposits were 915 million yen, up 383 million yen from the prior period end, while real estate for sale increased 570 million yen to 2.553 billion yen. Total borrowings increased across short-term and long-term categories to fund asset growth.
  • Cash flow: Operating cash flow was negative 387 million yen, impacted by active new store openings and a 569 million yen increase in inventory assets, even though pre-tax income reached 175 million yen. Investing cash flow was negative 142 million yen, driven primarily by a 98 million yen increase in deposits and guarantees for new store openings. Financing cash flow was 906 million yen, covering the negative cash flow from operating and investing activities, with the increase in short-term borrowings accounting for 519 million yen of this amount.
• ESG and Sustainability Initiatives
  • Completed container reuse: Refurbished 16 used containers from the Yazaike Trunk Room in Adachi Ward, Tokyo and repositioned them to the Fukuroi Minato Trunk Room in Fukuroi City, Shizuoka. This effort avoided new container manufacturing and international transportation, delivering an estimated 64 tons of CO2 emissions reduction.
  • Launched a proof-of-concept (POC) for a waste circular service in partnership with Book Off Corporation and BPLab, using the R-LOOP platform. The initiative installs collection boxes for unwanted items at trunk room facilities, which is the first such trial for a retail trunk room operator in Japan. The company will evaluate the POC results to decide on expansion to additional stores.
• New Store Expansion
  • Opened a total of 34 new stores in FY2026 January: 30 container-type trunk rooms, 3 new indoor trunk rooms, and 1 indoor trunk room in an existing building, spanning from Akita Prefecture to Kagoshima Prefecture. Total new rooms across all stores were 1,608, with 1,132 rooms from container-type stores (average 37.7 rooms per store) and 432 rooms from new indoor stores (average 144 rooms per store, around 4 times the size of the average container-type store).
  • As of period end, the company operates 224 total stores nationwide, with 51 stores in Tokyo (the largest number) and 45 stores in Okayama Prefecture (second largest, stemming from an M&A acquisition of a local department store's trunk room business in 2013). Total company-wide rooms exceeded 13,000, up from 7,710 in FY2022 January, with occupied units reaching 8,280, up from 5,845 in FY2022 January. The overall occupancy rate declined to 74.9% from 84.0% in FY2022 January, due to the trend of opening larger indoor stores with more rooms, which take longer to reach target occupancy.
  • Advanced expansion into urban city center locations: Opened a 33-room small trunk room on the 2nd floor of the Shinjuku Front Tower office building developed by Mitsubishi Estate and other partners in October 2024, which reached 100% occupancy within six months of opening. Following this successful result, the company opened the 195-room Nishi-Shinjuku Trunk Room, a purpose-built full-building indoor trunk room, in September 2025. The company is targeting the new demand segment of office-adjacent storage for office workers, in addition to the traditional residential-adjacent segment.

1. Operations Management Business: Revenue reached 1.096 billion yen, marking the first time the segment exceeded 1 billion yen in revenue, with a 23.3% year-over-year increase (approximately 200 million yen growth). Operating income was 19 million yen, improving 72 million yen from a negative 53 million yen operating loss in the prior year. This segment contributed 21.3% of total gross profit in FY2026 January. 2. Development and Sales Business: Revenue was 2.531 billion yen, a 782 million yen year-over-year decrease, driven by the delayed sale of two properties (Kawasaki Oda Trunk Room and Motosumiyoshi Trunk Room) to FY2027 January. Operating income was 437 million yen, a 10 million yen year-over-year decrease, landing close to the prior year's level. This segment accounts for approximately 80% of the company's total current revenue (flow revenue). 3. Other Business: Revenue increased significantly year-over-year to 371 million yen, with operating income of 24 million yen. The growth came from the sale of a hotel located in Kasai City, Hyogo Prefecture.

• For FY2027 January, the company expects total revenue of 4.668 billion yen (116.7% year-over-year), operating income of 217 million yen (113.5% year-over-year).
• For the three-year mid-term plan spanning FY2027 January to FY2029 January: Total revenue is projected to be 5.133 billion yen (110.0% year-over-year) in FY2028 January, and 5.202 billion yen (101.3% year-over-year) in FY2029 January. The gradual slowdown in revenue growth reflects the company's strategy of retaining more container-type stores for self-operation (rather than selling them) to build stock revenue. Operating income is projected to grow to 258 million yen (118.9% year-over-year) in FY2028 January, and 314 million yen (121.7% year-over-year) in FY2029 January, as the benefits of increased stock revenue take hold.
• The company's core mid-term strategic target is to increase the gross profit contribution of the Operations Management (stock revenue) segment from 21.3% in FY2026 January to 65% by FY2029 January. By FY2029, the company expects operating profit from the Operations Management segment to reach approximately 600 million yen, which will be sufficient to cover the company's total current selling, general and administrative expenses of around 500 million yen. This will create a more resilient business structure where the company can remain profitable even if new store openings are temporarily paused.
• The company plans to open the same number of new container-type trunk rooms in FY2027 January as it did in FY2026 January (30 new stores), while advancing the initiative to convert existing container-type stores to self-owned and self-operated stock. The company will continue to prioritize new indoor store openings in the Tokyo metropolitan area, with a focus on smaller wooden structures, which have been less affected by construction cost inflation than steel-framed structures, enabling continued expansion near residential areas.

• Flow revenue (from development and sales of new stores), which currently accounts for approximately 80% of total revenue, is highly sensitive to macroeconomic conditions. Recent construction cost inflation has made it increasingly difficult to find suitable locations for new development projects.
• The company expects borrowing to increase temporarily during the structural transition to a stock revenue-focused business model, which creates near-term balance sheet and interest cost pressure.
• Continued increases in land prices, construction costs, crude oil prices, transportation costs and construction fees raise operating and project development costs for the business.
• The low penetration rate of trunk room storage in Japan means the market is still developing, and consumer awareness growth may be slower than expected, which could delay improvements to occupancy rates and revenue growth.

Q: Why is the penetration rate of trunk rooms in Japan much lower than in the United States, even though Japanese homes are smaller on average and should have more need for extra storage?

A: There are several key structural reasons for the difference. First, land price dynamics differ: in Japan, even 30 minutes drive from a major city center does not result in a very large drop in land prices, while in the U.S., 30 to 60 minutes drive from a city center typically reaches suburban areas with drastically lower land costs. Additionally, the U.S. is a car-centric society where consumers do not mind 1-hour drives for storage, creating a cost advantage for trunk room development that does not exist in Japan. Second, there are cultural differences: the U.S. has many all-dormitory universities, and students commonly use trunk rooms to store belongings when moving between dorms each year, which familiarizes younger consumers with trunk room use from an early age. In Japan, most consumers have only recently started using trunk rooms, primarily to store seasonal items like winter clothing or seasonal appliances that no longer fit in shrinking modern Japanese homes, as average apartment sizes have reduced from 75 sqm to 60 sqm for 3LDK units amid rising real estate prices.

Q: Trunk rooms are not yet a common service in Japan. What initiatives is the company undertaking to expand consumer awareness?

A: Currently, the company allocates most of its advertising budget to online advertising where consumers actively search for trunk rooms, but continues to invest in print advertising like flyers and newspaper inserts. This mixed approach is effective because trunk room customers almost always look for storage near their home or office, so focused local outreach is important. The company also participates in industry-wide initiatives: as a board member of the Rental Storage Promotion Council, it works with the Japan Self Storage Association (JSSA), which has designated October 9 as "Trunk Room Day" and runs industry-wide awareness campaigns including usage contests. On the company's own website, it partners with outdoor media like CAMP HACK to create content highlighting creative use cases, such as storing camping gear. The content explains unique benefits like being able to load gear early in the morning without disturbing neighbors, which helps consumers understand the convenience of trunk room use and encourages adoption.