BOOKOFF GROUP HOLDINGS LIMITED Q3 FY2026 earnings call

• Company Background and Turnaround • After facing severe performance declines in the early 2010s driven by digital shift, e-commerce growth, and failed top-down transformation efforts, the company achieved a V-shaped recovery after the current CEO took office in 2017 by shifting to decentralized individual store management, empowering local store teams to leverage their unique strengths, and integrating digital and offline operations through the "One Bookoff" initiative. • Consolidated revenue for FY2024 ending May was 111.6 billion yen, with 836 total stores across Japan.

• Core Domestic Business Strategy • Expands store formats from small-format book/soft media stores to large 1,000-1,500 tsubo Bookoff Super Bazaar stores that offer one-stop reuse shopping for a full range of products including apparel, sporting goods, branded bags, and jewelry. • Grows non-book categories: operates official trading card tournament spaces, hosts in-store hobby and fashion events, and caters to inbound demand for luxury branded bags. Digital integration has grown app membership to nearly 8.5 million users, with in-store pickup of online orders growing at over 20% annually.

• Premium Service Business Updates • Targets affluent customers uncomfortable with traditional reuse stores, operating hugall in major department stores, jewelry specialist aidect, and urban accessible buyout counters that were recently rebranded from BOOKOFF General Buyout Counter to Rehello by BOOKOFF. Targets 100 total stores, concentrated in high-income areas of the Tokyo and Kanagawa region. • Differentiates from competitors via partner referrals from department store foreign sales departments and real estate firms, and offers an open, low-pressure store format that lets customers sell high-value items alongside books, eliminating the stigma of pawn shops.

• Overseas Business Strategy • Operates in 4 countries: BOOKOFF branded stores in the US and France focused on Japanese content, and Jalan Jalan Japan stores in Malaysia and Kazakhstan that sell unsold Japanese used goods. Malaysia is the most profitable market, while the US shows the strongest long-term growth potential due to booming demand for Japanese pop culture goods (manga, figures, trading cards). • Long-term target is 100 BOOKOFF stores in the US and 100 Jalan Jalan Japan stores across Southeast Asia and Central Asia, with an interim target of 80 total combined stores by FY2028 ending May.

• Sustainability and Shareholder Returns • Reuse business is inherently aligned with sustainability goals; the company has endorsed TCFD, works to reduce CO2 emissions, and hosts community events to promote reuse. • Targets a payout ratio of 20%-30% for stable dividends, prioritizes reinvestment for growth to increase long-term enterprise value, and offers shareholder benefits including store discount coupons and 20% increased book buyback offers.

1. Domestic Bookoff Business: 90% of total consolidated revenue and ~80% of total profit for the fiscal year ending May 2024. Domestic Bookoff directly-operated stores reached ~90 billion yen in revenue in FY2024 May, up from ~69 billion yen in March 2020. Books and soft media maintain stable solid sales, with non-core categories (trading cards, hobby goods, apparel, branded goods, sports equipment) driving incremental revenue growth. 2. Premium Service Business: Currently a small contributor to overall group revenue and profit, focused on serving high-income/affluent customer segments that the core Bookoff business has not fully captured. 3. Overseas Business: Malaysia contributes more than half of the overseas segment's total profit, with 15 profitable stores that have been operating for 7-8 years. Kazakhstan has 7 stores (4 directly operated, 3 franchised) and is still in early-stage operating deficit. France has 3 license-based franchise stores with no material profit contribution reported.

• Maintains the 5-year mid-term management plan target (FY2024 May to FY2028 May) of 130 billion yen in consolidated revenue and 4.5 billion yen in ordinary profit by FY2028 May, representing a 1.5x increase in ordinary profit over the 5-year period, with management targeting to exceed this target.
• Confirms the 100-store expansion target for both the Premium Service Business in Japan, and for the US BOOKOFF and Jalan Jalan Japan overseas business lines, with no downward revisions to expansion plans despite near-term cost pressures.
• Maintains an 80-store interim expansion target for overseas business by FY2028 May, on track to hit the full 200-store long-term target after that milestone.

• US expansion faces upward pressure on opening costs from general US price inflation, the full impact of which has not yet been fully estimated, though management expects overall sales growth will offset higher costs.
• While US tariffs on imported goods exist, their impact is limited because most US BOOKOFF inventory is sourced locally from in-country buyouts, with only a small volume of Japanese animation goods imported.
• Kazakhstan's overseas business is in the early stage of expansion and is currently running initial operating deficits, with future profitability still uncertain.
• The CtoC online reuse market faces growth headwinds from poor consumer experiences with undelivered goods and low-quality products, while the overall BtoC reuse market continues to grow, though competition from established players like Geo Holdings and Komehyo Holdings remains a constant market pressure.

Q: With cost of living rising and reuse demand growing, what is Bookoff's unique strength compared to peer reuse companies? / A: Bookoff's core differentiator is that it accepts all items customers bring for buyback, even items that cannot be resold. Unlike peers that turn away unsellable items and force customers to take them back, Bookoff accepts all items, letting customers leave empty-handed and clear out unused household items. This is possible because of Bookoff's overseas sales network that can find new markets for items unsold in Japan, plus recycling programs for unsold books and plastics that create value from unresellable goods. Cost efficiencies in logistics and strong local demand for even imperfect items mean this model generates consistent profit.

Q: What is the current performance outlook for non-book product categories, specifically trading cards? / A: Trading cards and hobby goods are the fastest growing categories in domestic Bookoff business right now. The overall new trading card market has grown rapidly to over 27 billion yen since 2021, and Bookoff has captured significant growth in the secondary market for this category, supported by in-store tournament spaces that build a regular community of players.

Q: Are you considering expanding into the business of helping consumers dispose of large unwanted household items, similar to Jimoty's growth strategy? / A: Bookoff is already building relationships with local governments to do this work. The company already sends unwanted used goods that cannot be sold in Japan to Jalan Jalan Japan overseas stores for sale to consumers abroad, rather than sending them to landfill. The company will continue strengthening this initiative to secure inventory for overseas expansion while supporting domestic waste reduction goals.

Q: What is the relationship between Bookoff and Hardoff? / A: Hardoff Corporation is a completely separate independent company. Hardoff has operated Bookoff franchise stores since Bookoff's founding, and currently runs 50 Bookoff locations in Japan.