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• Business Model and Strategic Framework

  • Yamano HD follows a business succession-focused M&A growth model, targeting small and medium-sized enterprises struggling with lack of successors. The model enables discounted acquisitions, leverages existing customer bases for early stable revenue, and respects existing talent and operations to enable early profit contribution. The company has built repeatable M&A success through accumulated standardized PMI know-how.
  • The company operates a two-segment strategic framework under its medium-term management plan "Tsunageru2027": the New Value segment focuses on high-growth potential businesses built via new M&A to cultivate future profit bases, while the Core Value segment focuses on mature existing businesses (centered on kimono, jewelry and beauty) to maximize stable profit and cash flow generation.

• Portfolio Optimization Progress

  • In the first half of the fiscal year, two M&A deals were completed for the New Value segment, expanding the business portfolio as planned. All three businesses in the Core Value segment delivered ongoing profitability improvements, with the kimono jewelry division (70% of Core Value revenue) driving group-wide profit growth via gross margin improvements, and Life Plus achieving break-even.
  • Long-term target: Increase the New Value segment's revenue share to 50% by 2030, raising group EBITDA margin to a 7%-8% range from the current planned 4.4% for this fiscal year.

• Human Capital Management

  • The company identifies talent shortage as a core structural issue that risks creating opportunity loss for growth. It has rolled out the Talent Development Map (TDM) for hierarchical talent development, which visualizes previously individualized skills and know-how, standardizes evaluation and training processes, improves evaluation fairness, boosts employee retention and motivation, and lifts consistent organizational productivity to build a repeatable profit structure.
  • The company aims to create a positive cycle: visible skills and career paths increase employee motivation and fill leadership roles, enabling more store expansion and profit growth which is then returned to employees to further drive motivation.

• Capital and Shareholder-focused Management

  • The company has strengthened information disclosure and investor engagement, resulting in average daily trading volume tripling and market capitalization doubling year-over-year. It plans to further expand engagement opportunities including individual investor briefings and increased digital information dissemination, and incorporates investor feedback into board-level strategic reviews to improve long-term corporate value.

• Full-year 2026 March fiscal year guidance remains unchanged from the May announcement, with the first half progress hitting 49.7% of the full-year revenue target, slightly above the prior-year pace.
• The company expects higher revenue in the second half due to typical seasonal trends, with ongoing contributions from the kimono division's new system implementation and full half-year revenue contribution from the two newly acquired M&A companies, resulting in larger profit accumulation than in typical years.
• A 1.5 yen per share dividend increase is planned for the full year.

1. New Value Segment: Revenue of 1.004 billion yen, 15.0% year-over-year growth, contributing 14% of total consolidated revenue. Segment profit of 13 million yen, a 68.4% year-over-year decrease. Revenue growth was driven by solid performance from the education business, plus contributions from newly acquired 薬師スタジオ and NYJ. Profit decline stemmed from strategic upfront investments for recruitment in the education business and one-time post-merger integration (PMI) costs, with full profit contribution expected from next fiscal year onward.
2. Core Value Segment: Revenue of 6.156 billion yen, 3.1% year-over-year growth, contributing 86% of total consolidated revenue. Segment profit of 189 million yen, a sharp shift from a prior-year net loss to full black ink. The strong performance came from structural reform gains at the kimono and jewelry business, profitability improvements at the beauty business, and the achievement of break-even at the Life Plus business. Store closures of unprofitable locations improved average per-store sales and gross margins, while new system implementation further drove sales growth for the kimono and jewelry division.

• Talent shortage is a core structural risk: insufficient leadership talent, aging workforce, and difficulty hiring local staff can lead to missed expansion opportunities, and the ability to hire and retain sufficient staff will directly determine the growth performance of newly acquired businesses.
• M&A completion rates are very low (approximately 0.3%), and overly narrow industry targeting would further reduce the number of feasible deals, limiting portfolio expansion.
• Even industries with shrinking overall market size can still have growth opportunities for individual players, but prolonged market shrinkage could pressure long-term performance for segment businesses.
• New graduate hires face high turnover, particularly for female employees exiting for life events, which creates operational continuity risk.

Q: What types of targets does Yamano HD pursue for expansion of the New Value segment, and does it prioritize targets with synergies to its existing female-focused customer base?

A: Yamano does not narrow its focus to specific industries, and considers nearly all retail and service industry businesses for M&A. Given the very low 0.3% M&A completion rate, narrowing the target pool would make M&A too difficult, so it takes a broad approach. All overstored or industry-wide shrinking sectors are allocated to Core Value, while all other sectors with growth potential are classified as New Value. The company confirms that it does prioritize targets with clear synergies to existing businesses, for example 薬師スタジオ already has clear synergies with the existing beauty and kimono businesses, and wedding kimono rental is one example of a priority synergistic area for future M&A.

Q: Toward 2030, will Yamano prioritize new graduate hiring or mid-career specialist hiring?

A: Priorities differ by industry: For beauticians, most hires are mid-career, as new graduates take 2-3 years to become productive. Recent trends show more beauticians are moving to stable employers from independent contracting arrangements, so mid-career hiring is growing. For kimono businesses, new graduate hiring is prioritized due to the large store base, but mid-career hiring of experienced talent from consolidating smaller industry players is also growing, as these candidates are immediately productive and have strong local industry knowledge. Next fiscal year, the company plans to hire 20-30 new graduates company-wide, and is working to improve retention through expanded benefits and career development, particularly for female employees.

Q: What is the expected earnings contribution of newly acquired 薬師スタジオ and NYJ, and how does Yamano integrate these acquired businesses?

A: 薬師スタジオ is a zero-goodwill business succession acquisition, with an annual sales target of 180 million yen and operating profit target of 15 million yen, for an 8-9% profit margin. NYJ has an annual sales target of 480 million yen and operating profit target of 80 million yen; after 40 million yen in annual goodwill amortization, it contributes 40 million yen in consolidated profit, maintaining an over 8% operating margin. Both have started off strong, with NYJ particularly exceeding expectations so far. For integration, Yamano rarely disrupts well-running established operations, and focuses on providing behind-the-scenes support: it takes on owner personal guarantees, handles back-office and cash management functions to let acquired teams focus on sales, and uses a centralized real-time cash management system to allocate capital to business units with demand.