Vega corporation Co.,Ltd. Q1 FY2026 earnings call

Overall Financial Performance

• Overall gross profit was 2.248 billion yen (119.6% YoY), with a gross margin of 51.7%. Selling, general and administrative expenses (SG&A) were 1.984 billion yen (118.3% YoY). Operating profit was 264 million yen (130.5% YoY), ordinary profit was 267 million yen (131.5% YoY), and quarterly net profit was 178 million yen (136.9% YoY). The half-year performance is tracking in line with plan.

LOWYA Business Updates

• Opened 2 new physical stores in the quarter, expanding total physical store count to 10. Two additional new stores are confirmed to open in November and December 2025, with no expected cannibalization between the two planned Fukuoka locations due to geographic separation.
• Flagship store membership exceeded 2 million, reaching 2,058,000. Over 90% of members are aged 20-40, with a stable gender split of 36% male / 64% female.
• Launched new in-house private label products focused on design and trend alignment, including home furniture, small appliances, and outdoor goods. The company retains full in-house product planning with outsourced manufacturing, maintaining cost competitiveness and affordable pricing.
• The new interior simulation app おくROOM, launched November 2024, surpassed 410,000 downloads without paid advertising. It is already driving incremental conversions to LOWYA's EC platform, with high expected future impact.
• Gross margin for LOWYA decreased 0.3 percentage points YoY to 50.7%, while SG&A ratio decreased 0.8 percentage points YoY to 44.5%. SG&A (including labor and fixed costs) is rising with physical store expansion, so the company will continue to focus on controlling SG&A ratio.

DOKODEMO Business Updates

• Implemented generative AI to improve translation accuracy, which has driven gradual improvement in operational metrics and put GMV and revenue on a recovery trajectory. System development for OMS integration is ongoing.
• Membership and app downloads continue to grow steadily. Taiwan remains the largest market by GMV, and the US has now exceeded 10% of total GMV, marking a new milestone. Marketing activities are ongoing in Southeast Asia, Oceania, and North America.
• The company maintains the goal of keeping the segment's profit near break-even, with all incremental profits reinvested into advertising, product development, and marketing to grow GMV. The quarterly small profit is viewed as a positive operational milestone.

Capital Allocation & Sustainability

• Capital expenditure has increased as the company expands physical stores, after historically low capex from its pure EC origins. The company now publishes capex and cash flow trends to address frequent investor inquiries.
• Dividend policy targets a 12 yen per share full-year dividend, with a 2.0% DOE target; remaining capital is allocated to growth investment. The full-year plan targets 10.6% ROE and a 3.8% net profit margin.
• Sustainability initiatives include CO2 emission reduction, donation of product photography samples, and sales of CO2 reduction-focused products such as removable heat-blocking window film.

Overall company revenue: 4.351 billion yen, 120.9% of the prior year period. 1. LOWYA segment: Revenue of 4.262 billion yen, 121.5% of the prior year period, accounting for 98% of total company revenue. The segment recorded solid growth, with customer volume reaching 207,000 (118.5% YoY) and average order value of 21,688 yen (103.5% YoY). Within LOWYA, the OMO channel (own flagship EC + physical stores) grew 146.4% YoY and accounted for 55.8% of LOWYA total revenue, serving as the core growth driver. Third-party EC mall channels remained flat YoY. 2. DOKODEMO segment: Revenue of 89 million yen, 98.2% of the prior year period, accounting for 2% of total company revenue. GMV reached 557 million yen (97.8% YoY). The segment achieved a rare quarterly net profit of 2 million yen.

• Management maintains the full-year 2026 March fiscal year guidance originally disclosed on May 15, with no upward or downward revision.
• Full-year targets: 17.5 billion yen total revenue, 1.1 billion yen operating profit, 1.1 billion yen ordinary profit, and 660 million yen net profit.

• Expanding physical store count increases the share of small-format general merchandise in the product mix, which could put downward pressure on average order value. Management identifies total sales growth as the key monitoring metric for this period rather than average order value.
• Physical store expansion drives increases in fixed costs and labor costs, which creates pressure to maintain SG&A efficiency.

No substantive question-and-answer content is included in the provided transcript.