AEON Fantasy Co.,LTD. Q4 FY2025 earnings call

Overall Consolidated Performance

• Consolidated revenue hit an all-time high of 87.24 billion yen, with operating profit of 4.344 billion yen (759 million yen YoY increase). Net loss attributable to parent company shareholders was 1.816 billion yen, driven by China business restructuring costs.
• Total store count reached 1,228 globally as of end-February 2025, with 195 new stores opened in the period.

Domestic Business Operational Highlights

• Existing store deepening:
  • Prize Division: Kids-focused prizes now account for 42.9% of division revenue (up 13.4pp since 2019), driven by stable, IP-agnostic popular products and kid-friendly easy-win booth expansion.
  • Medal Division: Added 105 new Powerful Pro Baseball units and 133 additional Momotaro Dentetsu units; ran successful promotions including the "10 thousand yen for 10 thousand medals" event and launched the high-value "Medal Gappori" corner across 175 stores, driving membership and sales growth.
  • Experience Division: Expanded rollout of the updated "My Yokubari Pass", which added point redemption for rewards to the original all-you-can-play pass; sales at converted stores increased 20%.
  • Digital Membership: Retired old analog and legacy digital membership programs, launched a new LINE-integrated program and the kid-focused parenting support app Tot-tot; nearly all members migrated by H1, with total membership reaching ~1.607 million by end-February 2025.
• Format and geographic expansion:
  • Opened 85 new domestic stores: 6 Chikyu no Niwa playgrounds, 1 Skids Garden drop-off specialty store, 2 Molly Fantasy large amusement stores, 1 Feedy Diner & Arcade, 50 TOYS SPOT PALO capsule toy stores, 4 Capsule Yokocho urban formats, 17 PRIZE SPOT PALO prize stores, and 2 Crane Yokocho urban formats.
  • Chikyu no Niwa: 6 new stores opened (total 8), with new store sales hitting 129.1% of plan, and all store sales hitting 132.2% of plan.
  • Feedy Diner & Arcade: New Gen Z-focused format combining amusement, dining, and a collab sticker booth; launched in Osaka and received positive feedback from both Gen Z and family customers.
  • Urban alley formats: 4 Capsule Yokocho and 2 Crane Yokocho opened in high-foot-traffic locations like Shibuya and Dotonbori, with strong sales performance.

ASEAN Business Operational Highlights

• Indonesia (growth priority): 122.9% YoY revenue growth, opened 16 new stores (total 50); three new formats all outperformed sales plans: Kidzooona Safari (190% of plan), KID'S BOX JUMBO (110% of plan), kidzooona with Little Planet (101% of plan).
• Vietnam (growth priority): 128% YoY revenue growth (fastest in ASEAN), opened 10 new stores (total 40); reduced SG&A ratio by 6.7pp YoY; underperforming amusement business recovered in H2 after product updates.
• Philippines (share priority): Number one market share in domestic playground industry, opened 11 new stores (total 66); all new stores outperformed plan, operating margin hit 13.5% (highest across the group).
• Malaysia (share priority): Number one market share in domestic amusement industry, opened 24 new stores (total 132); maintained 11.7% operating margin, expanded into new regions.
• Thailand (productivity priority): 120.3% YoY revenue growth; existing store focused initiatives (including visiting 2,142 nearby kindergartens) drove 111.6% YoY visitor growth, improved profitability via higher gross profit and lower SG&A.

China Business Operational Highlights

• Accelerated unprofitable store closure and conversion to playground format: closed 67 unprofitable stores (exceeding annual plan), completed activation/expansion for 20 converted playground stores.
• Amusement format share dropped from 74% in 2022 to 48.2%, targeting under 40% in 2026 as playground expands; 340 million yen in reserves for 2026 planned closures already booked at end-2025.

Sustainability

• Working on 5 core material sustainability issues, with details available for follow-up review.

1. Domestic Business: Revenue of 69.468 billion yen, 7.7% YoY growth, operating profit of 6.21 billion yen, 1.639 billion yen YoY increase, reaching all-time high revenue and profit, contributing 79.6% of total consolidated revenue. Within domestic business: small-format stores reached 7.7 billion yen in revenue (230 million yen YoY increase, 8.5x growth since 2020), large/standard stores reached 61.7 billion yen in revenue (all-time high). 2. ASEAN Business: Revenue of 13.181 billion yen, 19.8% YoY growth (third consecutive year of record revenue), operating profit of 1.19 billion yen, contributing 15.1% of total consolidated revenue. Gross margin held at 22.9%, down slightly YoY due to new store expansion but remains at a high level. 3. China Business: Revenue of 4.829 billion yen, operating loss of 3.052 billion yen, contributing 5.5% of total consolidated revenue.

For the 2026 February fiscal year:

• Consolidated guidance: Revenue of 92.2 billion yen (5.7% YoY growth), operating profit of 7.3 billion yen (2.955 billion yen YoY increase), ordinary profit of 5.7 billion yen (2.259 billion yen YoY increase), net profit attributable to parent shareholders of 2.5 billion yen (a 4.316 billion yen improvement from the prior year loss), and a planned dividend of 15 yen per share. This full-year guidance is 12 billion yen higher in revenue and 7 billion yen higher in operating profit than the original medium-term management plan targets.
• Segment guidance:
  • Domestic: Revenue 73 billion yen (5.1% YoY growth), operating profit 6.5 billion yen; plans 27 new playground stores (including expanded Chikyu no Niwa and new Nobikko brand) and 58 new amusement stores (including one additional Feedy Diner & Arcade). Plans to roll out My Yokubari Pass to 100 additional stores, continue machine investment for the medal division, expand kids prizes, and grow capsule toy specialty stores.
  • ASEAN: Revenue 15.2 billion yen (15.3% YoY growth), operating profit 1.4 billion yen; Indonesia and Vietnam will accelerate new store opening, Malaysia and the Philippines will maintain high stable profit, Thailand will improve profitability via existing store optimization and cost reduction.
  • China: Revenue 4.3 billion yen (11% YoY decline), operating loss of 600 million yen; targets a 2.452 billion yen improvement in operating profit, with improvement coming from 1.215 billion yen from prior year closures, 511 million yen from cost cuts, 470 million yen from playground activation, and 256 million yen from 2025 closures; targets gross profit break-even for the segment.

• China business has continued to generate operating losses that destroy corporate value, with a projected 600 million yen operating loss planned for 2026, even after multiple rounds of unprofitable store closures.
• Profitability improvement for China's playground transformation remains unproven at scale, and sustained sales growth after activation is dependent on consistent staff quality management.
• Actual full-year 2026 results may differ materially from guidance due to multiple external and internal uncertain factors, per management disclaimer.

Q: China business delivered a record low profit this period, and is projected to remain at a 600 million yen loss next term. Management previously said it would assess playground profitability before committing to further investment, but now includes activation growth in forecasts. How does this align with prior statements, and what is the path to profit exceeding cost of capital? / A: Last year, pilot playground activations in difficult conditions delivered 1.5x to 1.6x sales growth compared to pre-activation levels. This year, the company will implement activation at 13 playground-only locations, planning for 1.5x sales growth based on prior results, with higher confidence in projections. While a 600 million yen loss is projected, unprofitable store closures are nearly complete, and the company will finish clearing remaining small loss-making stores and complete playground conversion this year, targeting operating black ink starting next term.

Q: Is the 1.5x sales growth after playground activation sustainable, and does it deliver consistent profit? / A: Unlike amusement facilities that rely on game machines, playground competitiveness depends primarily on staff quality, which is a core strength AEON Fantasy has built. Activated locations have delivered sustained sales growth and consistent profit, with established competitive advantage over peers, so management sees high long-term growth potential for the format, and will continue expansion.