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Overall Performance Highlights

• Both total sales and operating income achieved all-time record highs for the 2026 January term, with sales exceeding 20 billion yen for the first time. DAIWA CYCLE grew sales by 10 billion yen over the 5 years since passing the 10 billion yen threshold in the 2021 January term during the COVID-19 pandemic.
• The company opened 22 new stores during the term, and converted 2 existing franchise stores to directly operated stores, ending the term with 154 total stores: 150 directly operated stores and 4 franchise stores. Full-year new store openings hit the planned target of 20 stores, an improvement from the prior 2025 January term when only 10 of the planned 20 new stores were opened.
• Revenue growth was driven by the increase in total store count and strong sales of electric assisted bicycles. Despite downward pressure on gross margin from the higher electric assisted bicycle sales mix and increased costs associated with aggressive store expansion, the company still delivered year-over-year operating income growth, and all profit metrics came in above the initial forecast.

Business Infrastructure Strengthening (Hako/Hito/Mono Framework)

• Hako (Store Network Infrastructure): Management has built a scalable operational platform that supports consistent opening of ~20 new stores per year, enabling planned and stable expansion of the company's store footprint going forward.
• Hito (Human Resources Infrastructure): The company has established hiring systems capable of onboarding ~200 new employees per year to support the 20-store annual opening plan. Amid growing demand for bicycle repair services, management is prioritizing technical skills training for store staff to strengthen maintenance capabilities and improve customer satisfaction as a specialized bicycle retailer.
• Mono (Product Infrastructure): The company has advanced expansion of its product lineup for private brand electric assisted bicycles, and launched new electric assisted bicycles with trailers for corporate customers to create new usage scenarios for bicycles. Management will continue developing new products that deliver unique value to customers.

Long-Term Growth Strategy

• DAIWA CYCLE now has 154 stores as of the end of the 2026 January term, and is on track to reach 174 stores by the end of the 2027 January term. Achieving the medium-term target of 200 total stores is now within sight, and management has already begun preparing for growth after hitting the 200-store milestone.
• The company will accelerate a two-wheel store opening strategy: continuing expansion of its core suburban roadside store format (which still has significant remaining room for growth) paired with increased opening of small-format stores in the city centers of major metropolitan areas like Tokyo and Osaka, which management views as a large untapped growth opportunity.
• Management will expand the service area for the company's signature on-site bicycle repair service (which it views as its highest-quality, signature service) to further enrich customers' bicycle-centric lifestyles.
• Beyond in-store bicycle sales, DAIWA CYCLE plans to expand into a broader range of services and business areas related to bicycles and bicycle lifestyles to drive long-term growth.

• For the 2027 January term, management forecasts total sales of 24.293 billion yen, a 15.1% increase year-over-year, driven by existing store sales growth and the planned opening of 20 new directly operated stores.
• Operating income is forecast at 1.49 billion yen, a 74 million yen increase year-over-year, while operating margin is expected to decline 0.6 percentage points to 6.1% from the 2026 January term. The margin decline incorporates the expected further increase in the sales mix of lower-margin electric assisted bicycles, additional yen depreciation, and higher labor costs from increased hiring associated with new store openings.
• Management forecasts ordinary income of 1.519 billion yen and net income of 1.006 billion yen for the 2027 January term.
• The company maintains its 20% payout ratio target, with a planned annual dividend per share of 73 yen in line with this policy.
• 20 new store openings are planned for the 2027 January term, with continued focus on the 1 prefecture 3 prefecture area in the Kanto region and continued expansion of the urban DAIWA CYCLE STYLE format.

For the full 2026 January term, overall company sales hit 21.1 billion yen, a 15% increase year-over-year, operating income reached 1.416 billion yen, a 3% increase year-over-year, both marking all-time record highs. Private brand (PB) products accounted for 33.7% of total revenue, a 0.9 percentage point decline year-over-year, driven by stronger sales of national brand electric assisted bicycles. Gross profit margin decreased 0.8 percentage points year-over-year to 43.6%, pulled down by the higher sales mix of lower-margin electric assisted bicycles and aggressive promotional pricing implemented in the fourth quarter to maintain and expand market share. For existing stores (defined as stores open 13+ months as of each month end), cumulative sales came in at 104.6% of the prior year level. In the fourth quarter of 2026 January term, overall sales increased 19.7% year-over-year driven by new store contributions and growing existing store sales, while operating income decreased 10.1% year-over-year due to higher new store opening costs, an outcome that was in-line with management expectations. Existing stores delivered 8.1% year-over-year growth in operating profit before corporate overhead allocation. In the fourth quarter alone, the company opened 6 new stores, bringing full-year new store openings to 20 stores in line with the full-year plan: 13 new stores in the Kanto region, 7 new stores in the Kansai region, 12 stores under the core 'DAIWA CYCLE' brand, and 8 stores under the urban-focused 'DAIWA CYCLE STYLE' brand. The fourth quarter PB highlight was the addition of a new model to the company's original electric assisted bicycle brand ATOSS.

The only market/operational headwind explicitly referenced by management is that the overall bicycle industry remains in a challenging operating environment. No specific operational failures or unanticipated major risks were disclosed during the call.

No question and answer section was included in the provided earning call transcript.