Can the first-quarter return to profitability be sustained through FY2027-H1?

FY2027-Q1 revenue was ¥1,051 million, up 9.7% from ¥958 million in the same period of the previous year. Operating profit turned from a ¥10 million loss in the same period of the previous year to a ¥46 million profit, while ordinary profit was ¥51 million and net profit attributable to owners of the parent was ¥61 million. Not only revenue but also operating profit, ordinary profit and bottom-line profit were all positive, an improvement from the first half of the previous fiscal year, when the company posted an operating loss of ¥21 million and an ordinary loss of ¥15 million.

At the same time, FY2027-Q1 operating profit of ¥46 million represents approximately 92% of the full-year operating profit forecast of ¥50 million. On a simple calculation, the company could still meet its full-year forecast even if operating losses from the second quarter onward totaled ¥4 million, making first-half results appear significantly ahead of plan. This is a mechanical comparison that does not account for seasonality or new-product launch costs in the second half, however, and the company has left unchanged its forecasts of ¥4,052 million in revenue, ¥50 million in operating profit, ¥52 million in ordinary profit and ¥24 million in net profit.

The factors behind revenue growth included the first salon invitation event in six years, expanded sales of priority products, new-product launches and the rebranding of existing products. Domestic revenue rose 11.4% year on year to ¥1,009 million, while overseas revenue fell 19.0% to ¥42 million, indicating that the recovery currently depends heavily on domestic sales activities. In FY2027-H1, it will be necessary to confirm whether standalone second-quarter revenue exceeds ¥804 million, taking first-half revenue above the ¥1,855 million reported in the same period of the previous year, and whether domestic revenue growth continues.

On the earnings side, the increase in gross profit from higher sales, together with reductions in selling, general and administrative expenses such as advertising and personnel costs, contributed to the return to profitability. Accordingly, the next results should be assessed not only on whether operating profit reaches at least ¥25 million, but also on which components, including revenue growth, gross profit and SG&A expenses, were reproduced in the second quarter. Whether the full-year forecast is revised, particularly whether the ¥50 million operating profit forecast is maintained or raised in light of the strong first-quarter progress, will be an important disclosure point.