Ikka Holdings Co.,Ltd. Q4 FY2025 earnings call

Consolidated Overall Performance

• Total group consolidated revenue hit 10.089 billion yen, a new all-time high and a 9.3% increase year-over-year. However, the group reported a net loss of 172 million yen, with operating loss of 74 million yen, missing the revised full-year guidance due to lower-than-expected revenue and higher costs. A total impairment loss of 140.939 million yen was recorded as extraordinary loss for underperforming closing stores and low-profitability locations.
• Cash flow from operating activities remained positive, and ending cash and cash equivalents stood at 1.339 billion yen, with a healthy cash position maintained after continued borrowing.

Core Business Operational Updates

• Food Service: Record extreme heat from July to mid-November suppressed customer traffic at the summer-sensitive Yatai-ya Hakata Gekijo brand, and cost controls failed to fully offset sustained raw material price hikes, pressuring profits. Management has implemented price adjustments, menu restructuring, and weekly cost ratio management, which has stabilized food costs early in the current fiscal year, and expanded external marketing to recover lost customer traffic. The company initiated franchise development for the high-performing Taishu Jingisukan Sakaba Ram-chan brand, with a plan of direct operation in the Tokyo 1-city 3-prefecture area and franchise expansion to other regions, and targets opening the first franchise location in FY2026. Existing portfolio rationalization will reformat underperforming Korean Yatai Handsome locations (1 closure, 2 reformatting to established high-performing brands) to reduce costs.
• Bridal: After facility renovation, restaurant and banquet operations are strong, but the overall industry faces structural headwinds of declining wedding volumes from population aging, delayed marriage, and rising numbers of couples opting out of formal weddings. The company has strengthened Instagram advertising, expanded in-house customer events, and adjusted offerings to meet growing demand for small, family-focused weddings, and new visitor numbers have started to improve gradually.
• New Leisure Business: The new subsidiary Ikka Leisure Service opened its first location, THE RIVERSIDE BBQ NISHIKASAI, which saw strong demand during the recent Golden Week. It has taken over operation of the two existing seasonal rooftop BBQ/beer garden locations, which will now be reported under the leisure segment. The company is leading a special purpose vehicle to renovate and operate Ibaraki Prefectural Botanical Garden and Ibaraki Prefectural Forest, set to open as the THE BOTANICAL RESORT 'Rinne' experience resort in November 2025, which will include accommodation, attractions, a hot spring facility, and restaurants, and management views this as a foundational project for future expansion of leisure facility management.

Human Resources and Employee Engagement

• The company successfully hired 62 new graduates in a tight labor market for the service industry, and prioritizes internal development of hospitality-focused talent through the in-house Ikka Universal College training program, which has seen growing attendance from employees. The company also prioritizes converting part-time employees to full-time staff (with 15+ conversions targeted annually) and focuses on employee engagement through company-sponsored sports clubs and events to improve retention and service quality.

1. Food Service Segment: Revenue reached 8.138 billion yen, a 6.6% increase year-over-year. This segment accounted for 80.7% of total group consolidated revenue. The segment added 12 new stores in the period, ending with 92 total stores, and same-store sales were flat at 100.1% of the prior year. Rising raw material costs, higher selling, general and administrative expenses (SG&A) from new store expansion, and underperformance from weak summer demand led to a year-over-year decline in operating profit for the segment.
2. Bridal Segment: Revenue hit 1.946 billion yen, a 21.9% increase year-over-year, as the prior year period included a full facility closure for major renovation, while the full year of normal operations was achieved this period. This segment accounted for 19.3% of total group consolidated revenue. Despite growth in average group size and revenue per wedding, and strong performance from banquets and restaurant operations, the segment still posted an operating loss of 131 million yen, with the loss margin slightly narrowed from the prior year due to higher SG&A and staff costs from post-renovation expansion.
3. Leisure Segment: The new segment was launched with the establishment of the Ikka Leisure Service subsidiary in April 2024, and only incurred upfront pre-opening investments for the Ibaraki project and new locations in FY2025, contributing no positive profit this period.

• For FY2026 (March 2026 term), management guides for a new all-time high revenue of 11.629 billion yen, an operating profit of 320 million yen, and an ordinary profit of 286 million yen, representing a full return to profitability from the prior year's net loss, with both top-line and bottom-line growth year-over-year.
• Food Service new store openings will be reduced to 6 controlled openings (down from 12 in FY2025), with openings limited only to high-quality, high-confidence locations, focused on the three core brands: Yatai-ya Hakata Gekijo, Ram-chan, and Ninoya. Management expects the gradual price increases implemented from December 2024 will fully flow through to results in FY2026, improving gross margin even with modest customer traffic declines.
• The new Ibaraki botanical resort will open in November 2025 (mid-FY2026), and management expects it will start contributing incremental operating profit from the following fiscal year, with gradual growth expected after launch.
• Management expects the adjusted marketing and product strategy for the bridal segment will put business on a stable growth trajectory starting in FY2026.

• Food Service: Sustained raw material and labor cost inflation, unexpected demand shocks from extreme weather (such as the 2024 heat that suppressed summer sales), and weak consumer spending that could reduce customer traffic despite price adjustments.
• Bridal: Long-term structural industry decline from falling birth rates, delayed marriage, and shifting consumer preferences away from large formal weddings, which continues to pressure new visitor volumes despite improved conversion rates.
• New Leisure Business: The large Ibaraki resort project is unproven for the company, with high upfront investment costs, and underperformance at the opening would impact group profitability for the coming period.
• Operational: Overly aggressive new store expansion into lower-quality locations (as seen in FY2025) can pressure overall segment profitability, requiring disciplined portfolio management.

Q: What is the expected average customer spending per guest for the new Ibaraki leisure resort? / A: The full transcript provided does not include management's published answer to this question, but management has confirmed the resort targets family and experience-focused travelers looking for comfortable, nature-focused getaways. The project is positioned as a medium-priced experience destination, with pricing designed to drive repeat regional visits.

Q: What synergies exist between the new leisure business and the company's existing food and bridal operations? / A: The full transcript provided does not include management's published answer to this question. The company has existing experience operating large-scale BBQ and food & beverage venues, and will leverage existing in-house food service talent and supply chain capabilities to support the new resort's restaurant and F&B operations. The company's existing customer base in the Kanto region can also be leveraged for cross-promotion.