MrMax Holdings Ltd. Q4 FY2025 earnings call

Overall Full-Year 2025 February Term Financial Performance

• Total operating revenue reached 136.5 billion yen, up 5.4% year-over-year, marking 3 consecutive years of revenue growth and a new all-time company high, exceeding pre-pandemic 2021 February term levels.
• Gross margin improved 0.3pp year-over-year to 21.9%, and operating income hit 3.8 billion yen, up 26.6% year-over-year, delivering profit growth for the first time in 2 periods.

Gross Margin Improvement Initiatives

• Company prioritized gross margin improvement in the 2025 term, with visible results emerging from Q3 2025 onward. Pricing previously set uniformly nationwide was adjusted to region-specific appropriate prices, focused on HBC (health and beauty care) and food categories.
• Management narrowed the selection of price-focused products by SKU, maintaining customer traffic while delivering margin gains; Q3 and Q4 2025 both saw 0.5pp year-over-year gross margin improvements.

New Store Operations

• In November 2024, MrMax opened its first new store in 3 years: the MrMax Sunrib Koga store, a 900-tsubo small-format non-food focused tenant within a Sunrib-operated commercial facility. The store opened as planned with large appliances driving sales and a strong start, though work remains to improve assortment and layout to boost purchase count and visit frequency.

100th Anniversary Initiatives (2026 February Term)

• 2026 marks MrMax's 100th founding anniversary. Key initiatives include: 1) Rebuilding the company's philosophy system and updating branding to align with the next 100 years of operation; 2) Year-long 100th anniversary promotional activities including commemorative products, in-store events, and special sales to reach existing, lapsed, and new customers; 3) Full rebranding of the company's private brand line, with updated concept and design to deliver more customer value.

Existing Store Remodeling

• 8 existing stores are scheduled for remodeling in the 2026 term, focused on boosting sales, improving margins, increasing operational efficiency, and enhancing customer convenience.
• The remodel will reconfigure store layout: main aisles will shift to feature kitchenware and household goods, while food and detergent consumables will be streamlined and located within permanent sales areas to improve customer circulation through the full store, replacing the prior layout that concentrated discount consumables on main aisles and ended most shopping trips before customers reached deeper sections of the store.

Mid-Term Management Plan (2025-2029 February Terms) First Year Progress

• The 5-year mid-term plan targets 200 billion yen in total revenue and a 5% operating margin by the 2029 February term, with the first year (2025) off to a strong start with record revenue.
• Omnichannel (integrated online store, physical store, and app) launched in 2023 now has over 300,000 members, with ~half of online customers using in-store pickup, and member spending double that of non-members. The mid-term target is to grow EC to 10% of total revenue; EC sales are growing steadily with a clear path to hitting the target, even though current volumes remain small.
• M&A activity: Management is exploring multiple opportunities, including acquiring complementary discount store businesses and new growth pillars, but no deals are ready for announcement as of yet. Stronger core profitability will increase the company's ability to pursue partnerships and acquisitions moving forward.

1. Grocery and Daily Consumables Segment: Processed foods, detergents, and paper products delivered strong performance driven by aggressive price positioning, and active inventory restocking for rice (which faced prolonged supply shortages) further boosted results. No absolute segment revenue or percentage contribution was explicitly provided in the transcript. 2. Home Appliances Segment: Large home appliances including drum washing machines and air conditioners, sold as "revival models" (repurposed older hardware customized for MrMax), performed very well. As a result, the segment hit an all-time record for total sales. 3. Private Brand Segment: Private brand products now account for over 20% of total company revenue, with the share growing steadily, contributing directly to overall gross margin improvement.

• For the 2026 February term, management guides total revenue of 137.5 billion yen (up 4.7% year-over-year), operating income of 4.1 billion yen (up 7.2% year-over-year), and assumes 3.0% year-over-year same-store sales growth.
• New store opening guidance was revised downward: management previously guided 2 new stores for the 2026 term, but development delays will reduce this to 1 new store (opening in Beppu, Oita Prefecture in summer 2025), with the second location pushed to a future fiscal year. The planned summer 2025 store will be a full supercenter format that also sells fresh produce, expected to drive higher visit frequency and revenue than standard discount formats.
• Management acknowledged investor concerns over slow new store opening pace, and has strengthened the company's real estate development division to enable multiple new store openings per year starting from the 2027 February term onward. The company will actively consider vacant and secondhand properties to accelerate opening pace.
• A 25 yen per share closing dividend is guided for the 2025 February term.
• The mid-term plan target of 25 new stores over 5 years remains in place, despite early progress falling behind schedule, and management confirms a clear path to achieving the full plan's targets with improving core profitability enabling faster growth.

• New store openings are falling well behind the mid-term plan's 5-year 25-store target, with only 1 new store opened in 2025 and 1 planned for 2026. Development delays have slowed initial progress, and the company must accelerate site acquisition and opening to meet long-term targets.
• Labor costs are rising due to wage increases, though the company has limited overall expense growth via broad work efficiency improvements.
• Cashless payment processing fees are rising as usage grows; while management is negotiating lower rates to limit cost increases, upward pressure on expenses remains.
• Current return on equity (ROE) of 6.9% remains below the average for Prime Market listed companies, and the stock price has stagnated around 700 yen in recent years, reflecting low market expectations for the company's profit growth.
• M&A progress has been slow, with no actionable deals to announce after exploring multiple opportunities.

Q: How will rising labor costs and workforce reductions impact future new store opening plans? / A: The call notes this question was frequently raised in investor meetings, but the full answer is not included in the available transcript. The partial transcript confirms management is aware of concerns and has implemented efficiency improvements to offset rising labor costs.

Q: What is the outlook for hitting the mid-term new store opening target? / A: Management acknowledges the current opening pace is far behind the 25-store 5-year target. The company has strengthened its development division, and the pipeline of under-development and candidate sites grows annually. Management expects to deliver multiple openings per year starting next term, and improving profitability will help the company win bids for higher-rent sites to accelerate expansion.

Q: What impact could the Trump administration's tariff policy have on MrMax's business? / A: The question is listed in the available table of contents, but the full question and answer content is not included in the provided transcript snippet.