Deterioration in the Performance of Existing Fitness Clubs Due to the Opening of Nearby Competing Facilities

「In the Fitness business, we are working to improve advertising and promotional methods for schools for children and expand our capacity to accommodate students. Although membership fee revenue remained solid, revenue declined because of the impact of store closures carried out in the previous consolidated fiscal year.」

「In the Fitness business, membership is gradually recovering, but competition is diversifying with the emergence of competing services, and the business environment remains challenging.」

「In the Fitness business, we expect membership to recover following the reclassification of COVID-19 under the Infectious Diseases Act to Category 5. However, competition is diversifying with the emergence of competing services, and the business environment remains challenging.」

「However, the effects of the COVID-19 pandemic continue to linger, while competition is also diversifying, including the emergence of competing services with new concepts, particularly in the Tokyo metropolitan area, and the business environment remains challenging.」

「Operating profit declined 14.8% year on year to ¥2,858 million, as the Health Industry business was affected by sluggish performance at existing comprehensive fitness club locations due to intensifying competition and higher new-store opening costs, as well as the spread of COVID-19.」

「Compact gyms such as A-1 EXPRESS are steadily improving their performance. However, sluggish performance at existing comprehensive fitness club locations due to intensifying competition and higher new-store opening costs resulted in a segment loss of ¥54 million, compared with a segment loss of ¥2 million in the same period of the previous year, when ¥63 million in expenses related to the acquisition of shares in 株式会社エヌエーシーシステム were incurred.」

「株式会社エヌエーシーシステム, which became a consolidated subsidiary at the end of the previous consolidated fiscal year, contributed to sales, which increased 44.9% year on year to ¥1,722 million. However, the recording of ¥50 million in amortization of goodwill related to its acquisition, new-store opening costs, and deterioration in the performance of existing comprehensive fitness clubs due to nearby competing locations resulted in a segment loss of ¥31 million, compared with segment profit of ¥55 million in the same period of the previous year.」

「株式会社エヌエーシーシステム, which became a consolidated subsidiary at the end of the previous consolidated fiscal year, contributed to sales, which increased 45.5% year on year to ¥860 million. However, the company recorded ¥25 million in amortization of goodwill related to its acquisition, and existing comprehensive fitness clubs were affected by the opening of competing locations nearby, resulting in a segment loss of ¥10 million, compared with segment profit of ¥24 million in the same period of the previous year.」

「In addition to higher new-store opening costs and expenses related to the acquisition of shares in 株式会社エヌエーシーシステム, sales increased 2.3% year on year to ¥2,361 million, as existing comprehensive fitness clubs were affected by the opening of competing locations nearby. However, segment profit was ¥16 million, down 84.1% year on year, or ¥80 million, down 24.0% year on year, before deducting the acquisition-related expenses.」