CURVES HOLDINGS Co.,Ltd. Q4 FY2026 earnings call

Core Curves Growth Strategy (Focused on Existing Store Expansion)

• Over 83% of recent membership growth comes from existing stores; average membership per existing store now exceeds 440, up from pre-pandemic levels, with a target of exceeding 500 members per store in the near term. There is significant untapped growth potential for franchise stores, which lag direct-operated stores by 130 members per store and 460,000 yen in monthly product sales.
• Five key additional growth initiatives:
  1. Online fitness: Now has over 70,000 members, with lower churn than in-store only memberships; positioned as a long-term growth lever for employed younger target demographics.
  2. Relocation to high-traffic locations: 50 relocations planned this fiscal year, with tested relocations delivering 100-150 new members within 2 months and 23%+ membership growth.
  3. Existing store renewal: Brand refresh and store interior/facade updates to appeal to younger baby boomer generations, with progressive upgrades to higher-effectiveness, safer fitness equipment.
  4. Extended hours trial: Testing 2-hour extended evening hours (to 21:00 from 19:00) with unmanned operation during extended time. Initial direct store trials showed strong reductions in churn and increases in new membership; trials will expand to ~30 franchise stores starting June 2026 ahead of potential full chain rollout.
  5. Human capital investment and labor productivity improvement: 21% increase in new hire starting wages and 5.5% annual average wage growth for instructors over 3 years, paired with labor hour reductions. The "Most Rewarding White Workplace No.1" strategy aims to attract and retain high-quality staff to address industry-wide labor shortages.

New Business Expansion

• Men's Curves: Store opening acceleration continues, with strong performance from new and existing locations; opening pace will increase further in the second half and next fiscal year.
• Pinto Up: Expansion will move from limited rollout to top 30 existing franchisees to open enrollment for all 360 Curves franchisees, entering a full-scale expansion phase.

Recent Operational Initiatives

• Second quarter: Expanded partnerships with local governments (e.g., partnership agreement with Joyo City, Kyoto) and continued the community-focused Curves Food Drive social contribution activity, which previously won the Japanese Environment Minister's Award for food loss reduction.
• Marketing: Successfully executed a co-branding campaign with Hello Kitty in fall 2025, which resonated strongly with the core 50-60 year old female target demographic.

1. Core business: Women-only 30-minute health fitness Curves: Total chain sales for the first half was 44.92 billion yen, consisting of 32.75 billion yen in membership and initiation fees (72.9% of total chain sales) and 12.16 billion yen in member product sales (27.1% of total chain sales). Total membership reached 879,000, a net increase of 50,000 year-over-year, with over 83% of net membership growth coming from existing stores. Average monthly churn rate hit 2.16%, continuing a downward trend. Product sales growth is driven by rising subscription contract counts (1.8x growth for the new Healthy Beauty product in 1.5 years), improved subscription continuation rates (4.4 percentage point improvement for protein, 0.8 percentage point for Healthy Beauty vs 2011 baseline), and reduced monthly skip rates (16.4 percentage point improvement for protein, 25.5 percentage point for Healthy Beauty), which directly lifted recurring sales. 2. New business 1: Men's Curves (30-minute no-appointment supported gym for men): 35 total stores as of half-year end, 10 new stores opened in the first half, with 15 net new stores added in the past 12 months. 27% of new members come from referrals by women Curves members, and 35% come from targeted digital marketing. 3. New business 2: Pinto Up movement recovery centers: 45 total stores as of half-year end, 8 new stores opened in the first half, with 20 net new stores added in the past 12 months, all opened by top-performing existing Curves franchisees. 4. Overseas business: 122 total stores across 8 European countries, with same-store membership and sales hitting all-time highs, and expansion is accelerating. 5. Consolidated first half results: Consolidated revenue hit 19.96 billion yen (102.1% of forecast, 109.8% year-over-year), operating profit hit 3.835 billion yen (112.3% of forecast, 113.5% year-over-year), with operating margin exceeding 19%. Total group store count reached 2,081, a net increase of 23 stores from the end of the prior term.

• Full-year FY2026 August term guidance was upward revised across all metrics:
  • Consolidated revenue revised up 1.0 billion yen to 42.3 billion yen
  • Operating profit revised up 0.4 billion yen to 7.7 billion yen
  • Ordinary profit revised up 0.32 billion yen to 7.57 billion yen
  • Net income revised up 0.15 billion yen to 4.85 billion yen
  • Total membership target revised up from 900,000-910,000 to 910,000-920,000, driven by stronger-than-expected membership growth.
• Dividend guidance increased: Full-year dividend per share raised from 25 yen to 30 yen, with the 20th anniversary special dividend increased from 5 yen to 10 yen, resulting in a 10 yen interim dividend and 20 yen year-end dividend. Expected consolidated payout ratio (including special dividend) is 57%.
• Shareholder benefits expanded: The previous flat 500 yen QUO card benefit was restructured to a tiered system based on holding period and share count, with values ranging from 1,000 yen (less than 1 year holding, 100+ shares) to 4,000 yen (3+ years holding, 500+ shares). Benefits can now be used as discounts for product subscription orders and are available as electronic money in addition to QUO cards. A one-time 1,000 yen additional special benefit for all shareholders is being offered for this year to mark the 20th anniversary of the Curves chain.
• Second half planned initiatives: Two new membership recruitment campaigns (March-April and June-July) with concentrated TV CM and integrated marketing; enhanced dietary consultation programs in May and July focused on protein intake and nutritional balance to drive product sales. As of late March, membership reached 888,000 with 9,000 net new members in the month, a 44.8% increase year-over-year, indicating strong ongoing momentum.
• Long-term mid-term vision maintained: Targets for FY2030 August term are 2,600 total stores, 1.2 million total members, 56.0 billion yen consolidated revenue, and 10.3 billion yen operating profit. Targets for FY2035 August term are 3,500 total stores, 1.5 million total members, 85.0 billion yen consolidated revenue, and 20.0 billion yen operating profit. Management sees a high probability of achieving these targets, supported by favorable demographic trends for the company's core target market.

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