QB Net Holdings Co.,Ltd. Q4 FY2025 earnings call

• 2025 June Full-Year Core Performance

  • The full year was positioned as the first year of the mid-term management plan, a pre-investment period to build a foundation for re-growth, with focus on strengthening store operations, talent development systems, and entry into new overseas markets.
  • Consolidated results: Revenue of 25.543 billion yen (+3.2% YoY), operating profit of 1.685 billion yen (-20.3% YoY), net profit of 1.022 billion yen (-21.4% YoY). Revenue hit 99.4% of plan, while operating profit hit 88.7% of plan due to higher-than-planned pre-investment in talent expansion and new store openings globally.
  • Dividend maintained at 35 yen per share as originally planned, and a new shareholder benefit program was launched.

• Domestic Operations Highlights

  • A price adjustment implemented in February 2025, paired with the 'Tsukiichi Discount Campaign' to prevent customer churn, resulted in customer footfall decline limited to below the planned 2% drop, with existing store sales and footfall recovering steadily from April onward.
  • Full-year hiring results: 135 experienced hires (5 above plan) and 140 trainee talent hires (36 above plan), with Q4 63 total assignments (47 experienced hires, 16 above plan). Strong trainee hiring was driven by new outreach tactics (recruitment videos, more frequent training experience events) that resonated with diverse age groups, especially mid-career job seekers seeking new skills.
  • Store location strategy was expanded to include high-flexibility street locations and community-focused standalone shopping centers in addition to traditional high-traffic locations, enabling flexible scheduling that improves work-life balance for senior and child-rearing stylists.
  • A pilot QB PREMIUM small-format high-price store was opened in Ginza subway, with potential for conversion of existing QB HOUSE locations to the premium brand if successful.
  • Training center expansion was accelerated: a new Sapporo location was added, completing coverage of all major domestic regions, and the Osaka Logi Cut School was relocated and expanded to accommodate 160% YoY higher trainee volume.

• Overseas Operations Highlights

  • Hong Kong: Price adjustment from HKD 70 to HKD 80 resulted in only a 6% footfall decline (vs planned 20%), supported by pre-price-adjustment service improvements, new app rollout, and full cashless conversion. New store openings will be limited to 4 next period, with focus on renovating 10 existing stores to improve brand image and increase visit frequency via app promotions.
  • Singapore: Completed turnaround via store consolidation, conversion to the premium QB PREMIUM brand, and stylist staffing adjustments, returning to profitability this period after a prior-year loss. Next period will focus on further profitability improvement and cross-border operational integration with Malaysia.
  • Taiwan: Expanded to 38 stores (second largest overseas market after Hong Kong), opened a new training center in Taichung to support expansion into central/southern cities (Taichung, Tainan, Kaohsiung). Plans a January 2026 price adjustment, with incremental profits to be used for salary improvements to boost hiring competitiveness.
  • US: Opened 6th store, implemented price adjustment from $30 to $35, with customer churn within expectations and revenue up 6% YoY. Plans 2 new stores next period, expanding to Brooklyn in addition to Manhattan, with future expansion to other East Coast cities like Boston under consideration.
  • New entry markets (Canada, Vietnam, Malaysia): All have opened first/second stores, with Canada on track to reach break-even 1 year ahead of plan. Next period plans 3 new stores per country to build the foundation for long-term growth.

• Mid-Term Management Strategy

  • The company operates in a labor-intensive industry requiring licensed stylists, so core strategy is a virtuous growth cycle: invest in stylist training and compensation to improve hiring competitiveness, deploy talent to new store growth and service improvement, increase productivity via operational and DX improvements, drive profit growth, and reinvest profits back into talent. All key KPIs are on track as planned in the first year, with talent development progressing 1 year faster than planned.
  • Target annual net store growth of 35 domestic stores, with 2 already opened and 28 under negotiation as of the call, supported by increased availability of closed salon locations from struggling competitors. The mid-term target of 1,000 total overseas staff by the final year of the plan is on track, with overseas turnover steadily declining targeting a 10% long-term rate.

Domestic segment: Operating profit of 1.529 billion yen, which was 261 million yen below plan, accounting for approximately 90.7% of total consolidated operating profit. Revenue was near plan at 99.3% of target. The segment achieved a net increase of 22 stores (30 new openings, 8 closures) as planned. Overseas segment: Operating profit of 156 million yen, which was 46 million yen above plan, accounting for approximately 9.3% of total consolidated operating profit. Within the overseas segment: the 4 existing markets (Hong Kong, Singapore, Taiwan, US) delivered operating profit 70 million yen above plan, offsetting 24 million yen of higher-than-planned startup losses from 3 new entry markets (Canada, Vietnam, Malaysia). Hong Kong delivered revenue up ~5% YoY after price adjustment, Singapore returned to profitability after restructuring, Taiwan grew to 38 stores (over 10% YoY growth post-COVID), and the US opened its 6th store with revenue up 6% YoY after price adjustment.

• For 2026 June full year, management guides consolidated revenue of 27.35 billion yen (+7.1% YoY) and consolidated operating profit of 2.2 billion yen (+30.5% YoY), targeting an all-time high consolidated operating profit.
  • Profit growth is expected to come from 630 million yen of incremental profit from the domestic segment (driven by new store expansion and full-year impact of 2025 price adjustment) and 83 million yen of incremental profit from the overseas segment, partially offset by a 200 million yen increase in domestic personnel expenses from higher 2025 trainee hiring.
  • Domestic plans 34 new stores (4 higher than 2025), with openings balanced across all four quarters to double the in-period visitor contribution from new stores to ~307,000 visitors (from ~157,000 in 2025).
  • New entry markets Canada, Vietnam, and Malaysia are each planned to open 3 new stores in 2026, building their growth foundation.
  • Canada is expected to achieve break-even 1 year ahead of original plan.
  • Management maintains the mid-term dividend policy of targeting 40% payout ratio for stable dividends, with dividend amounts planned to increase alongside profit growth.

• Experienced hiring is sensitive to labor market competition, which can delay new store openings and lead to missed sales targets as seen in the first half of 2025.
  • Lower than expected hiring can lead to lower seat utilization and opportunity loss from unstaffed positions.
  • Hong Kong faces sustained macroeconomic weakness from post-COVID outbound consumption to mainland China, which may pressure customer demand even after price adjustment.
  • Singapore still faces intense price competition from competitors post-COVID, requiring further restructuring to improve profitability.
  • Unpredicted construction delays for public location new stores can lead to minor staggered opening delays.
  • Higher than expected turnover among new hires increases hiring costs and limits capacity for new store expansion.

Q: What is the most critical factor to achieve the 2026 full-year sales plan, after 2025 sales came in slightly below plan? / A: The plan is premised on sustained positive impact from recent price adjustments. The key core is hiring: successfully scaling experienced hiring to plan is the make-or-break factor. For trainee talent, already having strong hiring results in 2025, improving training accuracy to get new stylists assigned on the original 6-7 month timeline is also very important. (212 words)

Q: With experienced hiring growth slowing slightly, what is the risk that new store openings do not meet plan, and what is the overall risk level? / A: Management notes that overall risk has decreased significantly compared to prior periods. While construction delays for public location stores can create minor delays, openings are spread across all four quarters of the year, so any delays have very limited overall impact on full-year results. (112 words)

Q: What is the current improvement status of employee turnover? / A: Domestic turnover decreased steadily from 7.3% in 2024 June year to 6.5% in 2025, on track to hit the mid-term target of below 5%. Overseas turnover at major hubs is also falling steadily. Improvement comes from targeted changes: added post-training follow-up for new trainees to reduce anxiety about women's cutting, which is a top cause of early turnover, and mandatory onboarding training for experienced new hires to help them integrate. These initiatives are now working as intended, driving steady turnover reduction. (148 words)

Q: What is the development status of the new customer app, when will it launch, and what are the targets? / A: The domestic app is currently in internal testing with a virtual store to debug errors and improve stylist-facing usability. It is on track to launch in the Tokyo metropolitan area in Q3 2026. The first version will be simple and user-friendly rather than full-featured, to drive higher adoption. The company targets ~20% of customers to download the app, based on the result of 15% adoption in Hong Kong to date. (114 words)