3187.T

• Strategic Foundation Building for Long-Term Value Growth

  • Completed corporate name change in October 2024, and implemented large-scale awareness expansion initiatives including TV commercials to boost new brand recognition and value.
  • Optimized the business portfolio: acquired the synergistic SUVACO and リノベりす platform businesses in December 2024 to strengthen growth areas, and sold an underperforming subsidiary at year-end to improve financial efficiency and focus resources on core businesses.

• Core Business & Product Development

  • Achieved record-high consolidated revenue of 16.746 billion yen (3.9% YoY growth), but missed initial full-year guidance. Recorded an operating loss of 282 million yen, ordinary loss of 291 million yen, and net loss attributable to parent shareholders of 447 million yen, driven by concentrated awareness advertising spending and one-off special losses from the subsidiary sale.
  • The washbasin category, the core product line, performed strongly: the Smith minimalist mirror box and Pitta Mirror (custom-size 1mm adjustment mirror) drove growth, and the category's share of total sales increased. Launched Toale, the company's first original home appliance (lighting product), expanding into the home appliance category to strengthen full-space design proposals.
  • Doors/exterior products faced competition from increasing market imitation products, but the company is responding with new product variations.

• Key Operational Initiatives

  • Achieved 194,000 Instagram followers, a top-tier number in the Japanese housing equipment industry. EC site traffic declined YoY due to domain change impacts from the corporate name change, and the company is working to recover domain authority and traffic.
  • As of one year post-name change, corporate name recognition recovered to pre-change levels, and latest surveys show recognition exceeds pre-change levels, with branded search volume up 16.3% YoY. The company will continue targeted awareness initiatives moving forward.
  • Expanded into the non-residential sector: products have been adopted for multiple commercial facilities including arenas and hotels, and the company will continue strategic expansion to offset declining new housing starts.
  • Won multiple domestic and international design awards, including 11 consecutive years of iF Design Awards and 15 consecutive years of Good Design Awards, reinforcing the company's design-focused brand position.
  • Expanded international business: signed a distribution agreement with Dexterton in the Philippines, opened the first post-name-change overseas showroom in Taoyuan, Taiwan, and Dexterton will open the first Philippines showroom in Manila in November 2025.
  • Expanded services for the ASOLIE voluntary chain network with partner construction firms: added full-service support from land search to after-sales, and launched the 1-day fast design planning service, improving partner proposal capabilities.
  • Achieved expected synergies from the SUVACO acquisition: integrated with the existing Cozi Concierge service to improve customer support, and leveraged the expert network to gather feedback for product development.
  • Implemented sustainability initiatives: carbon offset via the J-Credit scheme, acquired Kurumin certification for employee work-life balance, and sponsored public and sports initiatives.

• For the 2026 September fiscal year, the company will report standalone (non-consolidated) results following the subsidiary sale. The company guides 17.035 billion yen in total net sales, representing 12% year-over-year growth compared to 2025 standalone results, and an increase even versus 2025 consolidated revenue.
• Operating profit is guided at 352 million yen, representing a 575 million yen improvement from the 2025 standalone operating loss of 223 million yen, driven by gross profit growth from sales expansion and reduced advertising spending after the review of awareness initiatives.
• Key targets for 2026 are: 170 billion yen in revenue, 2.1% operating margin, and 4.1% ROIC.
• Key growth drivers included in guidance: sales contributions from new categories/products, new sales channel expansion to house builders (standard/optional product adoption), increased building material sales from completed ASOLIE homes, recovering site traffic post-domain change, price increase effects, and growing traction from overseas showrooms.
• The company will continue growth-focused investments including AI/system development, trade show participation, and product development, while implementing strict cost control to target record-high profit by the end of the current growth phase.

1. 住設・建材EC事業 (Core Housing Equipment & Building Materials E-commerce Segment): Net sales of 15.121 billion yen, representing a 4.1% year-over-year increase. This segment accounts for approximately 90.3% of total consolidated revenue. Segment profit was 606 million yen, a 59.8% year-over-year decrease driven by concentrated advertising spending for the company name change. 2. 住宅事業 (Housing Segment): Net sales of 1.627 billion yen, accounting for approximately 9.7% of total consolidated revenue. The segment recorded a segment loss of 116 million yen, due to challenging market conditions including soaring construction costs and rising mortgage rates that hurt completed home sales.

• The domain change associated with the corporate name change had a larger and longer-lasting negative impact on EC site traffic and new customer acquisition than initially expected, resulting in full-year revenue and profit guidance misses.
  • The underperforming sold subsidiary missed business plan targets significantly, generated sustained negative cash flow, and became insolvent, requiring a large one-off special loss from partial debt forgiveness in 2025.
  • The housing market faces sustained headwinds including soaring construction costs and rising mortgage rates, which hurt performance in the housing segment.
  • Large-scale mass media awareness initiatives were a first-time effort for the company, with higher inherent uncertainty, and the time lag between brand exposure and customer purchase was longer than initially projected.
  • Fixed costs are projected to increase in 2026 due to prior personnel investments, office relocation/new setup expenses, and continued growth investments, putting pressure on near-term profit margins.

Q: Why did you sell the subsidiary and record a 650 million yen debt forgiveness loss, and what is the impact going forward? / A: The subsidiary underperformed drastically against plan amid external changes, with sustained negative cash flow and insolvency, requiring future capital injections. Debt forgiveness was required to close the sale and reduce the buyer's risk. While the sale creates a large one-off special loss, it will improve long-term asset efficiency, focus management resources on core business, and reduce financial risk. The 2026 standalone plan projects growth in both sales and profit compared to 2025 consolidated results.

Q: Why did you miss full-year guidance, and why did profit drop sharply year-over-year? / A: While we expected a temporary sales slowdown from the corporate name change, the time lag between gaining customer awareness and actual purchase was longer than projected, leading to the revenue miss. In addition to lower gross profit from missed sales, we spent ~1.15 billion yen on advertising for awareness expansion plus increased sales promotion for trade shows, which drove the large year-over-year profit decline.

Q: Why was the conversion time lag longer than you expected for the awareness initiatives? / A: We previously focused advertising on active, in-market customers. For the name change, we ran our first large-scale mass media campaign targeting a broader audience including potential customers. This was a new type of initiative for us, so it was hard to set clear prior expectations, and it naturally took longer than projected to impact customer behavior.

Q: Why do you forecast a lower gross margin for 2026? / A: Accounting rules require us to deduct the same amount from both revenue and cost for direct-to-customer manufacturer shipments, which does not change gross profit amount but increases the reported gross margin ratio. In 2026, we will shift some products from direct shipping to inventory to improve supply stability, reducing the size of this deduction and lowering the reported gross margin ratio. Additionally, growing overseas sales (which currently have lower margins than domestic sales) will also contribute to a lower overall gross margin.