YAMANO HOLDINGS CORPORATION Q4 FY2025 earnings call

Overall 2025 Fiscal Year Results

• The group delivered net sales of 13.964 billion yen, an increase of 0.127 billion yen year-over-year; EBITDA of 0.368 billion yen; operating profit of 0.256 billion yen (up 153.9% YoY); net income of 0.041 billion yen. All profit lines grew, and the target of returning to net positive profit in the first year of the mid-term plan was achieved even after accounting for investment security valuation losses from past investments.
• Dividends were resumed for the first time in two periods after achieving the profit target.
• Profit improvement was driven by growth from new businesses, a shift of existing businesses to a more profitable structure, cost optimization, and reduction of unprofitable stores that cut fixed costs. Interest-bearing debt decreased 16%, equity ratio improved 2.6pp to 16.7%, and operating and free cash flow remained positive.

Mid-Term Plan (Tsunageru2027) Progress

• The first year of the mid-term plan delivered solid results, with stabilized profits for existing businesses and growth in the education segment. The key new challenge identified is building sustained growth expectations among investors, as market reaction to the company's progress has been muted outside of temporary reactions to M&A announcements.

Strategic Initiatives for 2026 March Fiscal Year (Second Year of Mid-Term Plan)

• Segment Reorganization: The 5 legacy segments were reorganized into 2 new segments to clarify strategic roles:
  • New Value Segment: Growth-driving area including post-2020 launched education, reuse, and photo businesses; will receive active investment for expansion, with a target to increase its revenue share to 50% by 2030 March fiscal year.
  • Core Value Segment: Stable profit-generating existing businesses centered on wafuku/jewelry and beauty; will focus on efficiency, profit stabilization, and maximizing cash flow in mature markets.
• Business Portfolio Optimization: Three key actions:
  1. Completed two succession-focused M&As: (1) Yakushi Studio, a photo studio business with strong brand and SNS marketing capabilities; will leverage synergies with beauty and wafuku businesses to develop integrated services, expand into the pet photo market, and build an inbound-focused business model. (2) New York Joe Exchange, a fashion reuse business with strong branding and youth customer appeal; will drive synergies with existing OLD FLIP reuse business, including cross-selling of unmatched inventory and knowledge sharing on branding.
  2. Absorbing beauty subsidiary Yamano Plus into the parent company in October 2025 to unify Core Value Segment operations, enable better synergy between beauty and wafuku businesses, streamline management processes, and improve sales capabilities via talent sharing.
• Human Capital Management: Prioritize addressing labor shortages, improve HR personnel capabilities, expand training for recruitment, develop succession plans for next-generation leadership, improve workplace engagement, and optimize the talent portfolio aligned with business strategy.
• Capital and Share Price Conscious Management: EBITDA margin rose 1pp to 2.6%, ROE turned positive after returning to net profit; will expand IR activities, improve investor communication, and increase information disclosure to build growth expectations.

For the 2025 March fiscal year (pre-segment-reorganization):

1. Beauty and DSM: Revenue decreased due to closure of unprofitable stores and site consolidation, but operating profit improved. This segment falls under the new Core Value Segment, which accounted for 88% of total consolidated revenue and 52% of total EBITDA at fiscal year-end.
2. Wafuku/Jewelry: The segment experienced lower gross margin due to promotional campaigns, but per-store profitability and operating margin improved. It is also part of the new Core Value Segment.
3. Reuse: Classified under the new New Value Segment, which includes education, reuse, and photo businesses launched after 2020. This segment held 12% of total consolidated revenue and 48% of total EBITDA at fiscal year-end.
4. Education: Revenue grew strongly, driving overall group top-line growth, and is part of the New Value Segment.

All five original segments achieved operating profit growth, with all improving profitability after restructuring measures.

• For the 2026 March fiscal year, management guides: net sales of 14.4 billion yen, EBITDA of 0.64 billion yen, operating profit of 0.5 billion yen, ordinary profit of 0.45 billion yen, and net income of 0.32 billion yen, representing an upward trajectory of continued revenue and profit growth.
• The annual dividend is planned at 1.5 yen per share, representing an increase from the resumed dividend in the prior year.
• The wafuku division of the Core Value Segment will launch a new sales management system in the 2026 fiscal year, which will enable faster product delivery. This is expected to bring a one-time sales and profit uplift in the first quarter, which is already incorporated into the full-year guidance.
• Management expects the New Value Segment (led by reuse and photo businesses) to increasingly contribute to group EBITDA growth starting from the 2027 March fiscal year, after accounting for 2026 fiscal year M&A-related costs.

• Sustained low investor growth expectations remain a key strategic risk, as the market has not fully priced in the company's progress on restructuring and future growth from new business segments.
• M&A integration carries execution risk, including unanticipated costs and delayed realization of projected synergies between acquired businesses and existing group operations.
• Aging internal accounting, HR, and logistics systems require costly replacement, and management underinvestment in administrative functions has created a need for increased spending on talent and system upgrades to support the expanded group footprint from M&A.
• After the one-time first quarter uplift from the new sales system, future revenue and profit growth will depend on successful organic growth and additional M&A, which carry inherent uncertainty of outcome.

Q: How large is the one-time impact of the new sales system on 2026 fiscal year guidance, and what drives the remaining projected growth? / A: Management expects the new system will add approximately 0.3 billion yen in one-time sales and ~0.2 billion yen in one-time operating profit to the first quarter, which is included in the full-year guidance. The remaining projected growth comes from organic expansion after accounting for M&A-related transaction and goodwill amortization costs that will offset some organic gains in 2026. Future years will see fuller profit growth once one-time M&A costs are absorbed.

Q: What synergies are expected from the absorption of Yamano Plus and from the acquisition of Yakushi Studio? / A: Absorbing Yamano Plus unifies beauty and wafuku operations under the Core Value Segment to make cross-business synergy easier, after three years of restructuring that brought the beauty business to profitability. With Yakushi Studio, management expects to combine it with existing beauty and wafuku businesses to open new combined stores that serve life events like coming-of-age ceremonies, and to develop a new inbound-focused business model leveraging the combined group's customer base and capabilities.

Q: What synergies are expected between the acquired New York Joe Exchange and existing OLD FLIP in the reuse segment, and what is the 2026 profit outlook for reuse? / A: The main synergies come from cross-utilizing inventory that cannot be sold through one brand's channel (OLD FLIP serves mostly middle-aged/older customers, while New York Joe Exchange serves younger customers), allowing both to capture higher margins on inventory that would otherwise be sold in bulk to third parties. OLD FLIP will also learn branding and store design expertise from the established New York Joe Exchange brand. For 2026, goodwill and M&A costs will lead to a ~15 million yen negative impact from New York Joe Exchange, and OLD FLIP will target breaking even. Full profit contributions from the combined reuse business will appear starting in 2027.

Q: Will management methods change with the new segment split, especially for cross-segment synergies between New Value photo business and Core Value beauty/wafuku? / A: The new management framework is still being trialed in 2026. The top priority is strengthening the corporate center's administrative function by upgrading outdated systems and hiring more management talent to support the larger group from M&A. Cross-segment synergies will be coordinated at the executive and business unit level via dedicated cross-business working meetings, rather than through changes to the formal segment management structure.