Revenue growth and profit decline coexist, with proving a return to full-year profitability the focus

Q1 revenue was ¥3,191 million, up 32.0% year on year. While the increase in members resulting from new Pilates K openings supported revenue growth, higher new-store opening costs and advertising investment resulted in an operating loss of ¥225 million, an ordinary loss of ¥264 million and a net loss for the quarter of ¥93 million. The operating loss was approximately 7.1% of revenue, making the fact that higher revenue has not translated directly into profit the most important signal from this quarter.

The company maintained its full-year forecasts of revenue of ¥14,570 million, operating profit of ¥270 million, ordinary profit of ¥150 million and net profit of ¥40 million. Q1 revenue progress was only 21.9% of the full-year forecast, below the 25% implied by simple quarterly allocation. However, the company bases its forecasts on a business plan that incorporates variations in store opening timing and the timing of expenses, so the progress rate alone cannot be used to conclude that the forecast will be missed. Full-year operating profit of ¥270 million corresponds to an operating margin of approximately 1.9% on full-year revenue.

However, if the Q1 operating loss of ¥225 million is simply reflected in the full-year forecast, cumulative operating profit of ¥495 million will be required over the remaining 3 quarters. In FY2026, revenue was ¥11,421 million, operating profit was ¥722 million and the operating margin was 6.3%. In FY2027, the company plans to further expand store openings and advertising investment, and forecasts operating profit to decline 62.6% despite revenue growth of 27.6%. At the next results announcement, the key points to check will be how far operating results have improved on a cumulative basis through Q2, whether the amounts of new-store opening costs and advertising investment are disclosed separately, and whether the second-half cost assumptions supporting the full-year forecasts are explained.