LIPPS Co., Ltd. (373A) Q3 FY2026 Earnings Deep Dive Report: Strategy and Outlook Driving Growth in the Men's Beauty Market

LIPPS Co., Ltd. (Securities Code: 373A) originates from men's hair salons and is engaged in the planning, development, and sales of men's cosmetics under the 'LIPPS' brand, recognized by young men with high aesthetic awareness, as well as operating a salon franchise business. The Q3 FY2026 earnings report clearly outlines the company's growth strategy and market positioning.

Q3 FY2026 Earnings Highlights and Full-Year Progress

For the third quarter of the fiscal year ending August 2026 (September 1, 2025 – May 31, 2026), cumulative net sales reached 3,399 million yen , progressing largely as planned towards the full-year forecast of 4,748 million yen. Notably, the core Product Business recorded cumulative sales of 3,116 million yen , indicating continued purchases primarily from customers in their 20s. The Salon Franchise Business, on the other hand, recorded cumulative sales of 283 million yen.

Operating profit for the cumulative period was 522 million yen, with an operating profit margin of 15.4%. In terms of cost structure, advertising and sales promotion expenses were utilized as planned, with active promotions for each product category. The company is also focusing on human resource investment and organizational strengthening for business expansion, with 16 new hires by the end of Q3. Regarding external factors, while tensions in the Middle East have led to price revisions and supply shortages for crude oil and naphtha-derived raw materials, the impact on current performance is deemed limited.

Looking at the historical trend of net sales, it is evident that the company has achieved steady growth. Particularly since the fiscal year ending August 2022, net sales have significantly increased, suggesting that this momentum is continuing.

This 'Key Earnings Points' slide concisely summarizes the overall picture of Q3 performance, future growth drivers, and responses to external risks . The sales trend graph is particularly important for visually grasping the company's growth trajectory. The assessment that progress towards the full-year forecast is 'largely on track,' and the expectation that shampoo and treatment will be the next pillar of growth with expanding distribution, are key to understanding future business development. Furthermore, the mention of raw material price hike risks suggests the importance of cost management in business operations.

Segment-Specific Analysis and Growth Drivers

In the Product Business, channel-specific trends are noteworthy. Although product shelf changes occurred in the wholesale retail channel in Q1 and Q3, the growth in e-commerce sales drove overall sales , maintaining the total sales at a similar level to the previous year. This indicates the success of the company's strategy in effectively utilizing diverse sales channels. Specifically, sales through platforms such as Amazon, Rakuten, ZOZO, and its own e-commerce site have contributed to expanding customer touchpoints.

The shampoo and treatment business is positioned as a future growth pillar. Currently, distribution to approximately 12,000 retail stores has been achieved, and the company aims to acquire new customers through influencer marketing and collaborative projects. With the launch of the 'Face Styling Series' mini-sizes in October last year and advertising placements featuring popular influencers, new product introductions and marketing initiatives are being actively deployed .

The company's past financial performance reveals consistent growth in net sales, ordinary profit, net assets, and ROE. Historically, the expansion of hair wax sales has driven top-line growth, establishing the current brand foundation.

This slide clearly illustrates the company's historical financial performance trajectory , providing crucial data that underpins its robust growth. Not only have net sales consistently increased, but ordinary profit has also grown accordingly, suggesting that business profitability is being maintained. Furthermore, the increase in net assets and the trend in ROE reflect efforts towards improving capital efficiency and enhancing corporate value . The rapid growth observed since the fiscal year ending August 2022, in particular, indicates that the company's business strategy has been well-received by the market and has translated into tangible results.

FY2026 Full-Year Earnings Forecast and Factors

For the full-year FY2026, the company forecasts net sales of 4,748 million yen (up 7.7% year-on-year) . However, operating profit is expected to be 705 million yen (down 25.7% year-on-year), ordinary profit 705 million yen (down 25.0% year-on-year), and net profit 489 million yen (down 24.9% year-on-year), indicating increased revenue but decreased profit .

Several factors contribute to this increase in revenue and decrease in profit. In the Product Business, the slowdown in sales growth is anticipated due to the stabilization of new distribution and the period between new product releases. Additionally, plans include increased marketing expenses and initiatives to acquire new customers for existing products. The Salon Franchise Business is expected to see a 20.6% year-on-year decrease in sales due to the impact of industry-wide talent mobility. Furthermore, increased expenses associated with upfront investments , such as a 22.0% year-on-year increase in personnel costs across the company to strengthen the organizational structure for mid-to-long-term business expansion, are the primary factors weighing on profits.

Regarding financial health, the company maintains a high equity ratio of 91.0% at the end of Q3, confirming a sound financial foundation.

Mid-to-Long-Term Growth Strategy and 2030 Revenue Target of 10 Billion Yen

The company has set an ambitious target of 10 billion yen in net sales by 2030 , aiming to become the 'standard' in the men's beauty market. To achieve this goal, the following four pillars of growth strategy are being pursued:

1. Expand Styling Product Share: Prioritizing the maintenance and strengthening of styling products, the core business, the company will focus on 'Matt Hard' and 'The Gloss' to target a wide range of customers, from highly aesthetically conscious individuals to beginners, and from high-priced to low-priced segments. The aim is to further expand brand share in the men's hair wax market.
2. Expand Shampoo & Treatment Share: The market for men's beauty-focused shampoos is still nascent, and the company aims to expand sales to men who currently use women's or unisex brands. There is potential to expand retail distribution by approximately 7,000 stores, and promotions will be conducted to encourage simultaneous purchases with styling products.
3. Expand Skincare and Makeup Products: Focusing on the e-commerce channel, the company aims to increase product recognition and retain repeat customers in the mid-price range men's skincare market. In October 2025, new skincare products were launched under the concept of 'Styling your impression. Even your skin.', with promotions strengthened primarily through salons and e-commerce.
4. Expand into New Business Areas (including M&A): To provide value that aligns with customers' lifestyles, such as 'wanting to look cool,' the company is exploring new business opportunities that can be offered through salon services and cosmetic products, including potential M&A.

This 'Growth as Men's Beauty Standard' slide clearly outlines the company's long-term vision and the specific strategic phases to achieve it . The target of 10 billion yen in net sales by 2030 demonstrates the company's high growth ambition, and the four strategic pillars for achieving this goal indicate a multi-faceted approach, from deepening existing businesses to expanding into new areas . In particular, the roadmap to become the 'standard' in the men's beauty market by leveraging styling products as the core, expanding into adjacent areas like shampoo & treatment and skincare & makeup, and ultimately through new businesses and M&A, is essential information for understanding the company's sustainable growth story.

Growth-Supporting Investments and Shareholder Returns

Regarding the direction of mid-to-long-term growth investments, the company cites upfront investment in human capital , continuous investment in marketing costs including communication measures , development of peripheral products , and expansion into new business areas (including M&A) . These are positioned as strategic investments aimed at improving capabilities for sustainable growth and establishing brand value.

For shareholder returns, the company announced the establishment of a new shareholder benefit program starting from the fiscal year ending August 2026. This program will provide a 5,000 yen coupon code, usable on the company's e-commerce site, to shareholders holding 100 shares or more listed on the shareholder registry at the end of August. Regarding dividends, the company states that it is currently in a phase where priority is given to mid-to-long-term business expansion and financial soundness, and the specific timing of implementation remains undecided.

Conclusion

LIPPS Co., Ltd. is a company with strong brand power and a clear growth strategy in the growing men's beauty market. The Q3 FY2026 earnings report shows steady progress towards the full-year forecast, although upfront investments for mid-to-long-term growth are expected to temporarily impact profits. However, the multi-faceted growth strategy, including strengthening existing businesses centered on styling products, expanding into adjacent areas such as shampoo & treatment and skincare & makeup, and exploring new businesses, concretely outlines the path to achieving the 2030 revenue target of 10 billion yen . A sound financial base and a proactive investment stance will be supporting factors for future sustainable growth. The establishment of the shareholder benefit program is positioned as part of the company's efforts to show appreciation to shareholders and strengthen engagement.