Sales growth continues, but existing-store performance and margins are showing signs of slowing

Revenue for the cumulative 3Q of FY2026 was ¥59,354 million, up 15.6% year on year, while operating profit was ¥7,571 million, down 9.8%, and ordinary profit was ¥7,755 million, also down 9.8%. The operating margin was approximately 12.8%, down by roughly 3.6 percentage points from approximately 16.4% in the prior-year period. Margins have fallen sharply despite higher revenue, bringing the company to a point where it must demonstrate improvements in per-store profitability and cost absorption rather than relying solely on store-count growth.

By segment, karaoke revenue was ¥57,635 million and segment profit was ¥8,520 million. Revenue rose 16.0% year on year, while profit declined 6.7%. Real estate management generated revenue of ¥1,026 million and profit of ¥143 million, while Other recorded a loss of ¥55.985 million on revenue of ¥693 million. Because karaoke accounts for most of consolidated profit, the decline in the core business directly reduced company-wide operating profit.

The breakdown of existing-store performance in the supplementary materials showed revenue at only 100.5% of the prior-year period, with customer traffic declining to 96.9% while average spend per customer rose to 103.7%. Existing-store revenue excluding collaboration-related sales was 101.0%, but it is important that the revenue was maintained through higher spending per customer rather than increased traffic. In the next results release, it will be necessary to determine whether price revisions have pushed customer traffic down further and whether E-bo and new content have improved visit frequency or length of stay.

Cumulative 3Q revenue represented approximately 72.3% of the full-year forecast of ¥82,046 million, close to the simple nine-month benchmark of 75%, while operating profit reached only approximately 64.0% of its forecast. Achieving the forecast requires revenue of ¥22,692 million and operating profit of ¥4,260 million in 4Q alone. Unlike the company’s traditional seasonality, in which the second quarter including year-end and New Year demand is the peak season, FY2026 4Q will need to build profit through summer demand and contributions from newly transferred stores. The next results should therefore provide specific confirmation of existing-store customer traffic and average spend year on year, as well as standalone 4Q operating profit.