7455.T

Previous Medium-Term Management Plan Review

• The previous 3-year plan "PARIS MIKI NOUVEAU" missed original targets (planned 51 billion yen revenue / 2.1 billion yen operating profit, actual 50.7 billion yen / 1.38 billion yen), but successfully exited unprofitable operations and established a stable profit structure.
• Key achievements over the 3-year period:
  • Redesigned store portfolio: Completed over 150 new openings/renovations, developed new store formats (lodge-type, entertainment-type, concept specialty stores) that improved customer experience, though profitability varies across locations/format.
  • Refined product strategy: Grew high-value product lines including Sabae-made private brand frames, hearing aids, and progressive lenses, resulting in improved average transaction value, but needs more flexible product line design to match shifting consumer behavior.
  • Up-skilled workforce: Trained 1,102 certified eyeglass makers (just missed the 1,200 target, still the industry's largest cohort), and advanced DX to improve operational efficiency, freeing up staff time for customer consulting.
  • Advanced medical collaboration and overseas expansion: Built out the integrated eyeglass/medical business model with ophthalmology clinics in Vietnam and the Philippines, and explored medical-focused formats domestically.

New 3-Year Plan: Future Framework 2027

• Positioned 2025-2027 as a period focused on intrinsic value creation, to build a resilient business foundation and sustainable growth, with a corporate purpose of delivering "excitement and peace of mind" to customers.
• Three core strategic pillars:
  • Strengthen core domestic business: Shift from price competition to value competition, focusing on three differentiators: specialized expertise, personalization, and customer trust. Customer satisfaction (measured by NPS) rose to +6.2 points after 2 years of initiatives.
  • Restructure overseas business: Accelerate unprofitable store closures in China to improve portfolio health, focus on differentiated medical-eyecare integrated models in Southeast Asia, and pursue high-value expansion with Sabae-made frames in South Korea targeting regional growth.
  • Create new business and maximize group synergy: Add newly acquired asset management business aligned with the corporate mission of solving customer life challenges (eyecare solves health issues, asset management solves financial concerns). Plans to test synergies such as hosting investment seminars for existing customers.

Key Operational Initiatives

• Store strategy: Move beyond uniform expansion, develop format tailored to region and customer demographics: concept luxury specialty stores and entertainment formats for urban areas, lodge/maison-type community stores for suburban areas, premium brand-focused salons for department stores. New concept store "LINDBERG by PARIS MIKI" in Ginza has delivered strong early results.
• DX for improved customer experience (CX): Completed digitalization of customer records across all stores, launched a new system that lets staff post product content online to drive EC sales, especially leveraging idle time at low-traffic suburban stores to reach customers nationwide. Will continue rolling out reservation systems to improve customer convenience.
• Supply chain and product innovation: Reconstruct supply chain to address long lead times for frames and supply chain disruptions caused by exchange rate volatility and overflow demand for Sabae manufacturing. Will expand luxury brand offerings, grow private brand lines, and strengthen promotion of high-functional lenses aligned with the company's eye protection mission.
• Eyecare business expansion: Newly established the Eye Care Promotion Division to focus on myopia management, leveraging existing overseas expertise ahead of the launch of myopia management products in Japan's domestic market this term. The company aims to evolve from an eyeglass retailer to a total eye health partner.

• For FY2026 March term: Management guides total revenue of 51.451 billion yen (101.3% year-over-year), operating profit of 1.548 billion yen (111.9% year-over-year), ordinary profit of 1.748 billion yen (102.8% year-over-year), and net profit attributable to parent shareholders of 1.005 billion yen (113.3% year-over-year). Growth is expected to come from same-store profit growth across frames, lenses, sunglasses, and hearing aids.
• Dividend guidance: Maintains a stable annual dividend of 8 yen per share (4 yen interim, 4 yen year-end) unchanged from the prior term, with the 8 yen per year set as a floor. Management will consider additional shareholder returns if performance exceeds expectations, prioritizing shareholder value maximization.
• The 3-year Future Framework 2027 sets realistic, achievable targets focused on delivering value rather than chasing aggressive growth, with a focus on improving corporate quality over the plan period.

1. Domestic Segment:
   • Total revenue: 44.82 billion yen, 102.3% year-over-year, contributing 88.3% of total company revenue. It recorded an operating profit of 1.85 billion yen, 87.9% year-over-year.
   • Paris Miki (subsidiary): Revenue 101.5% year-over-year, operating profit 1.395 billion yen (76.1% year-over-year).
   • Kinpodo (subsidiary): Revenue 104.4% year-over-year, operating profit 0.334 billion yen (109.3% year-over-year).
   • Net store change: +5 stores, ending total 635 domestic stores.
2. Overseas Segment:
   • Total revenue: 6.133 billion yen, 97.5% year-over-year, contributing 12.1% of total company revenue. It recorded an operating loss of 0.464 billion yen.
   • Net store change: -17 stores, ending total 74 overseas stores. Total company revenue for the full fiscal year: 50.782 billion yen (101.7% year-over-year), with operating profit of 1.383 billion yen (71.7% year-over-year), ordinary profit of 1.7 billion yen (65.6% year-over-year), and net profit attributable to parent shareholders of 0.887 billion yen (52.5% year-over-year).

• Rising construction and operating costs from high inflation have increased overhead, and prevented the company from hitting its planned new store opening target in the prior fiscal year.
• Persistent challenges in hiring enough qualified staff in a tight labor market, adding operational pressure.
• Long-standing aggregate net losses across the entire overseas business, despite profitable operations in Singapore and Thailand, requiring urgent restructuring of unprofitable assets.
• Supply chain disruptions: Long lead times for frame products, and supply bottlenecks caused by exchange rate-driven excess demand for Sabae-manufactured frames, which has forced many retailers including the company to hold excess inventory.
• Increased low-price competition in the sunglasses market from fast fashion and convenience store retailers, leading to lower-than-expected sales growth in the prior term.
• Current share price weakness with PBR below 1x, reflecting investor concerns that require multi-faceted improvements to asset efficiency and capital policy.
• Shifting consumer behavior and growing price sensitivity have created more diverse demand that the company's existing product lineup has not fully adapted to.

The provided earning call transcript does not include a transcribed question and answer section, so no key exchanges can be summarized.