HASEGAWA CO.,LTD. Q2 FY2026 earnings call

Mid-Term Management Plan (FY2026 March - FY2028 March) Core Priorities

• Evolve and Grow Existing Business
  • The acquisition of Gendai Butudan expanded Hasegawa's commercial footprint to all 47 prefectures of Japan, bringing total group store count to 150 locations. The company plans 21 new store openings over 3 years: 5 in FY2026, 8 in FY2027, 8 in FY2028. 3 new stores have opened so far in FY2026, with a fourth planned in Gunma Prefecture in the coming month.
  • For Buddhist altars: The company stopped selling low-price (under 30,000 yen) altars in physical stores, and will discontinue low-price SKUs on EC once existing inventory is cleared, to focus on higher-value products. The strategy has resulted in a 12.7% drop in in-store visitor groups, but an 11.5% increase in average selling price to 330,000 yen. Hasegawa will merge 6 existing brands to develop higher value-added original products.
  • For memorial services: Traditional stone gravestone sales continue to decline, while demand for tree burials and joint memorial graves is growing steadily. Sales of indoor columbarium units dropped sharply below 500 H1 units after the sell-out of a 4,000-unit large facility in Shinano-machi, Tokyo.
• Grow New Business (Peaceful Life Support / PLS)
  • PLS is positioned as Hasegawa's third core business, providing one-stop support for post-funeral procedures, end-of-life planning, inheritance arrangements, and related services, connecting customers with relevant specialists. It leverages Hasegawa's high brand recognition (98% awareness in the Kanto region), 250 nationwide stores, and 700,000-800,000 annual in-store visitors.
  • H1 2026 results: 4,488 consultation cases (vs a 5,200 case target, 196% year-over-year growth), and 118 million yen in revenue (263% year-over-year growth), which is considered on track to meet full year targets. The company targets a 1 million customer database by FY2028, built from 300,000 current app members. The combined end-of-life and inheritance market is estimated at 1 trillion yen, and Hasegawa targets 1 billion yen in PLS revenue within 2.5 years.
• Execute Strategic Investment
  • 30 billion yen in total planned investment over 3 years: 15 billion for growth initiatives (store, R&D, human capital, and system investment), 5 billion for internal reserves, and 10 billion for shareholder returns. The company has an active M&A strategy to expand existing business in the current challenging market environment.
  • The company aims to raise its P/B ratio above 1.0 from the current 0.46, using the growth of the PLS business as a key catalyst. It has introduced a progressive dividend policy that pays the higher of 30% consolidated payout ratio or 15 yen annual dividend per share, and expanded IR activities to include direct meetings with general shareholders starting this year.
• Shift to a Profit-Focused Operating Structure
  • The company is pursuing store model reform and digitalization of operations to improve productivity and build a more resilient profit structure.

1. 仏壇仏具 (Buddhist Altar & Fittings) Business: 7.227 billion yen in revenue, a 4.3% year-over-year decrease. This segment accounts for approximately 65.4% of the firm's total consolidated revenue. 2. 墓石 (Gravestone) Business: 10.1% year-over-year decrease in revenue (absolute amount not provided). 3. 飲食・食品・雑貨 (Food & Beverage, Food Products, General Merchandise) Business: 36.2% year-over-year increase in revenue driven by strong performance of food gift sales. 4. ピースフルライフサポート (Peaceful Life Support, PLS) Business: 166.5% year-over-year increase in revenue, with 118 million yen in H1 2026 FY revenue meeting planned targets; the segment achieved 263% of prior year revenue in H1.

• Full year FY2026 guidance is maintained despite H1 results falling below original plan, with management expecting to generate sufficient profit through existing business sales initiatives, new store openings, and selling, general and administrative expense control.
• The 3-year mid-term plan targets are maintained: grow total revenue from 21.2 billion yen to 27 billion yen, and grow operating profit from 12 billion yen to 25 billion yen by FY2028 March.
• The interim dividend for FY2026 is planned at 7.5 yen per share, in line with the company's progressive dividend policy.
• PLS targets are maintained: 10,000 annual consultations in FY2026, 300 million yen in full year FY2026 PLS revenue, growing to 1.5 billion yen in PLS revenue by FY2028.

• Declining demand for traditional Buddhist altars and gravestones has resulted in consistent year-over-year revenue decreases for the company's core businesses, and the growth of the new PLS business is not yet large enough to offset this core business decline.
• The market for core Buddhist altar and gravestone products is structurally declining, and a growing number of industry peers are considering exiting the market, creating ongoing pricing and volume pressure for Hasegawa's core business.
• H1 2026 consolidated revenue missed the original plan by 755 million yen, and operating profit, ordinary profit, and net profit all came in below previously published targets. No changes to full year guidance were made, but meeting the full year target depends on successful execution of cost control and sales initiatives in the second half.

Q: The company recently stopped selling low-price (under 30,000 yen) Buddhist altars in stores. Can you clarify the company's pricing tier strategy and distribution for low and high-price altar products? / A: Hasegawa has exited low-price under 10,000 yen altars because it believes these products do not meet the quality standards required for a long-used religious item. EC will stop carrying these once current inventory sells out. Demand is growing for mid-range 500,000 to 700,000 yen altars from customers who want a durable, high-quality product, so the company is focused on developing new higher-value original branded products for this segment.

Q: Investors perceive that business expansion is moving slowly. What is management's view on this, and how will the company accelerate growth going forward? / A: For core altar/gravestone business: After acquiring Gendai Butudan, the company will expand into the underpenetrated Tohoku and northern Japan regions, and will opportunistically add new sales locations with proper due diligence and a focus on speed. For PLS: The business is accelerating per the mid-term plan, with 120 million yen in H1 revenue against a 300 million yen full-year target, growing to 1.5 billion yen in two years. The company targets 1 million total customers, and will expand services into new categories like identity guarantee and advance end-of-life planning, with plans to move beyond referral-only models to in-house services over two years, to build long-term customer relationships and improve profitability.

Q: Besides exiting the low-price altar segment, what other legacy practices or operations is the company cutting or revising to sharpen its strategic focus? / A: The company is shifting its long-standing free in-home delivery and installation model: customers who prefer third-party delivery are now accommodated, and customers that still want the full in-house installation service pay a separate fee for the service. The company is also rapidly rolling out RPA and AI to automate traditionally people-dependent work, which is expected to significantly change retail management and work practices. After 90+ years of minimal change to operating methods, the company is currently undergoing a period of rapid, condensed transformation that is larger than any change in its recent history.