Choushimaru Co.,Ltd. Q4 FY2025 earnings call

Leadership and Governance

• A leadership transition is planned after the 48th annual general meeting of shareholders in May 2025: current President Mitsuru Ishida will become Special Advisor to the Board, and current Vice President Ken Ishii will become the new Representative Director and President.

New Business and Customer Expansion Initiatives

• Outbound mobile rotating sushi catering service grew steadily, with 233 events held in the 2025 February term. Inquiries from large corporate clients and for events/fairs are increasing, expanding the company's customer base.
• A joint venture was established in March 2024 with Royal Holdings Co., Ltd. and Sojitz Corporation to develop the US sushi restaurant market. The first location is planned to open in California in calendar 2025, laying groundwork for future multi-store expansion, leveraging the fast growth of Japanese food restaurants in the US, especially California.

Shareholder Return Policy Update

• The company maintains a stable dividend policy, and will adopt return on equity (DOE) as a new guiding metric for shareholder returns, targeting an initial 2% DOE. The target will be reviewed alongside future business performance and ROE improvements. For the irregular 2025 February term, the per-share dividend is maintained at 12 yen, for a 28.0% payout ratio.
• The company repurchased 18.92 billion yen of treasury stock in January 2025; the equity ratio remains at a strong 72.6%.

2026 February Term Core Strategic Priorities

1. Refine core Sushi Choushimaru brand: Strengthen core differentiators including artisan hand-pressed sushi, bluefin tuna, seasonal fresh fish, expert buying, and hospitality. Balance high quality, safety, and low cost, build flexible sourcing for small-batch premium products that large chains cannot offer, and develop a sustainable stable sourcing base leveraging the company's direct purchasing rights at Toyosu Market.
2. New store opening and new format development: Prioritize new openings for the core brand in underpenetrated areas starting with Kanagawa. Expand Standing 鮨 Bar Yasuke in non-cannibalizing station locations in Tokyo to grow casual sushi customer base. Renovate large/mid-sized existing stores to improve efficiency, capacity, and labor savings; exit unprofitable stores and relocate to better locations to strengthen profit structure. Pursue M&A alongside organic store development to acquire operating know-how and talent simultaneously.
3. DX advancement: Use sales data from full touchscreen ordering to identify priority initiatives, improve product strategy and service, implement consistent operations, reduce food waste, and maximize revenue and profit. Roll out table checkout to improve customer convenience, clearly separate automated and human-led roles, and use the company's "En App" for direct marketing to registered customers to improve customer retention.
4. Talent acquisition and retention: Focus on three priorities: hiring new staff, training skilled technicians, and retaining long-term employees. Implement new career development programs and a new evaluation system for long-term skill development, improve support for women employees including increasing hiring of full-time women and promoting women to store manager and management roles, and build training centers to share the company's mission and create a corporate culture that enables diverse talent to thrive.

The 2025 February term is a 9 months and 13 days irregular period due to a fiscal year change from May to February ending on the month end, compared to the prior 15th of month closing. Aggregate total company revenue was 349 million yen below budget at 98.0% of the original forecast. Operating profit was 5 million yen below budget at 99.6% of forecast. Net income was 62 million yen above budget at 112.0% of forecast, driven by a tax expense forecast variance. When comparing the same May 16 to February end period year over year, total revenue was 105.0% of the prior year comparable period. Pure comparable existing stores (excluding new/closed/renovated locations) saw a +3.7% revenue increase year over year, with +0.8% customer traffic growth and +2.8% average check growth. By region, all areas saw year-over-year comparable revenue growth when adjusted for the same period. Gross cost ratio came in at 38.6%, 0.4 percentage points below budget, as stable bluefin tuna prices offset higher rice and seaweed costs. Selling, general and administrative expenses came in at 98.6% of budget, 136 million yen under budget, driven by lower than planned personnel, utility, and repair costs; as a percentage of sales, SG&A was up 2.1 percentage points year over year, 1.6 points of which came from higher personnel costs including statutory benefits. 3 new-format stores were opened: premium fully reserved Edomae sushi Sushi Gen, station standing sushi Standing 鮨 Bar Yasuke (Akabane), and food court format Choushimaru Miyabi (Ario Hashimoto). No store closures, ending the period with 91 total stores, 6 existing store renovations completed. No detailed financials are disclosed for the new format segments; all 3 new stores underperformed initial plans at opening but are improving after iterative trial-and-error adjustments. Tokyo has the highest revenue contribution share among all regional segments.

• For the 2026 February full term, management forecasts total revenue of 24.263 billion yen, targeting 109.5% comparable existing store revenue growth year over year.
• The forecast assumes a 38.2% cost ratio and 26.3% personnel cost ratio, with projected operating profit of 1.445 billion yen (6.0% operating margin), and projected net income of 0.911 billion yen (3.8% net margin).

• Sustained inflation is driving increases in raw material (rice, seafood), personnel, utility, and logistics costs, creating ongoing margin pressure that requires continuous strategic adaptation.
• Japan's long-term population decline is reducing the total working-age population and domestic customer base, with the working-age customer population projected to halve over 50 years, creating long-term headwinds for domestic growth.
• The 12-day company-wide simultaneous closure for work style reform in the 2025 February term could not be fully offset by higher sales on other operating days due to factors including bad weather, leading to revenue missing budget.
• The three new-format stores opened in 2025 February term underperformed initial plans at opening, requiring ongoing iterative adjustments to reach target performance.

The full detailed answers to the listed questions on forecast logic, gross margin improvement, and new store count were not included in the provided transcript. Only the question topics are listed in the available content.