MUSCAT GROUP (195A) Q1 FY2027 Earnings Analysis: Significant Revenue Growth, Progress in Business Structural Transformation, and the Growth Story Toward Full-Year Profitability

MUSCAT GROUP (Securities Code: 195A) reported its financial results for the first quarter of the fiscal year ending March 2027, characterized by significant revenue growth and the tangible success of post-merger integration (PMI) and business portfolio restructuring. The company pursues a "Niche Top Strategy," developing its brand produce business through both the launch of in-house brands and strategic acquisitions.

This report categorizes and extracts key topics from the earnings presentation materials into 10 distinct areas, providing a detailed analysis of current performance, segment trends, KPI transitions for major brands, and the logical narrative supporting the achievement of full-year earnings forecasts.

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Analysis of 10 Key Topics

1. Consolidated Revenue +69.3% YoY (1,317 million JPY) : Rapid expansion in revenue scale driven by the new consolidation of "Kanalabo" and clinic-related entities.
2. Rapid Growth in In-House Brand Segment (+264.6% YoY) : The proportion of in-house brands within the segment mix reached 63.4% , shifting toward becoming the core pillar of revenue.
3. Improving Trend in Operating Profit and Adjusted EBITDA : Operating loss improved from -161 million JPY in the same period last year to -141 million JPY (+20 million JPY improvement), while adjusted EBITDA improved from -113 million JPY to -63 million JPY (+50 million JPY improvement).
4. Strong Performance of Flagship Brand "Fujiko" : Recorded Q1 revenue of 517 million JPY while maintaining an astonishing loyalty rate with an e-commerce repeat rate of 87.6% .
5. "Kanalabo" and "Matsumura Shoten" Outperforming Plans : Acquired brands and OEM/ODM contract areas recorded higher gross margins than initially anticipated (Matsumura Shoten: Q1 gross margin of 47.3% ).
6. "MiiS" Q1 Struggles and Recovery Measures : Despite a revenue decline to 108 million JPY (-33.3% YoY) due to the timing of large deals and deteriorating e-commerce promotion profitability, the company is pricing in a recovery from Q2 onwards, supported by the pre-sale of the new product "MiiS LIFT BRUSH" (total support purchases of approx. 14.5 million JPY ).
7. LTV Improvement Measures for Subscription Brand "bialne" : Following the launch of a loyalty program, the number of new member contracts surged approx. 2.4x , and the number of reactivated dormant members increased approx. 2.6x .
8. Maintenance of Full-Year Forecast (Revenue 6,602 million JPY, Operating Profit 50 million JPY) : While the Q1 progress rate is 19.9% , this aligns with the company's characteristic second-half-weighted business model.
9. Business Portfolio Optimization : Resources have been consolidated into high-profit areas, absorbing the impact of the divestiture and restructuring of the Rice Curry LS business.
10. Financial Health Control and M&A Discipline : While the equity ratio has declined, the company has clarified its investment policy to focus on strictly selected deals that promise an increase in post-acquisition EPS (Earnings Per Share).

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Chapter 1: Q1 FY2027 Consolidated Earnings Highlights and Profit Structure

In the first quarter of the fiscal year ending March 2027 (April–June 2026), consolidated revenue reached 1,317 million JPY , a significant increase of +539 million JPY (+69.3%) from 778 million JPY in the same period last year. Gross profit also increased from 413 million JPY to 666 million JPY , a growth of +254 million JPY (+61.5%) .

Regarding profit and loss, although goodwill amortization related to M&A increased from 14 million JPY to 38 million JPY , the operating loss improved by 20 million JPY —from -161 million JPY to -141 million JPY —due to the optimization of sales promotion expenses and the profit contribution from newly integrated companies. Adjusted EBITDA, which indicates actual cash-generating ability, also showed an improvement of 50 million JPY , moving from -113 million JPY to -63 million JPY .

The following slide provides the most critical data, illustrating the overall picture of the Q1 consolidated P&L and the factors behind the changes.

Significance and Background of Slide 19

This slide is crucial because it clearly visualizes the "rapid expansion of revenue" and the "mechanism of profit improvement." Specifically, it shows that the primary drivers of revenue growth were the consolidation of "Kanalabo," which joined the group in FY2026, contributing +645 million JPY , and clinic-related entities contributing +178 million JPY . Meanwhile, existing WinC businesses (MiiS, MOVE, etc.) saw a revenue decline of -107 million JPY due to the reaction from large-scale advertising investments in the previous year. However, by promoting the optimization of advertising expenses (+54 million JPY improvement on a WinC business profit basis), the company successfully improved the group's overall operating profit. Although the gross margin slightly declined from 53.0% to 50.6% , this is due to changes in the composition of low-margin businesses and the impact of new consolidations, indicating that the strengthening of the business foundation is progressing steadily.

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Chapter 2: Segment Trends and KPI Analysis of Major Brands

Since FY2026, the company has reorganized its business areas into three segments: "In-House Brand Area," "Planning & Manufacturing Contract Area," and "Other New Business Areas." The performance of each segment in Q1 was contrasting, clearly highlighting where the company's growth engines lie.

• In-House Brand Area : Revenue of 1,024 million JPY ( +264.6% YoY ). Contributed by the addition of "Kanalabo" through M&A and the growth of existing brands, it has established itself as the core area, accounting for 63.4% of the total.
• Planning & Manufacturing Contract Area (Matsumura Shoten) : Revenue of 117 million JPY (-30.6% YoY). While affected by a temporary decrease in opportunities in major sales channels, the gross margin remained strong at 47.3% , exceeding the planned 41.8%.
• Other New Business Areas : Revenue of 176 million JPY (-46.3% YoY). Revenue decline due to the impact of business restructuring following the sale of the Rice Curry LS business.

Overwhelming Performance of Flagship Brand "Fujiko"

The growth of the in-house brand area is driven by the cosmetics brand "Fujiko." The following slide shows Fujiko's performance and quantitative KPIs.

Significance and Background of Slide 29

This slide serves as the most important quantitative evidence proving the company's M&A and PMI (post-acquisition re-growth) capabilities. Fujiko, the flagship brand of "Kanalabo" which joined the group at the end of October 2025, generated 517 million JPY in revenue in Q1 alone. The KPI data on the right is noteworthy. The purchase unit price on the company's own e-commerce site was 2,994 JPY (5,742 purchasers), while the unit price on third-party e-commerce sites was 1,970 JPY (37,725 purchasers). Repeat sales for focus products reached 75 million JPY , with an extremely high repeat rate of 87.6% . Hit products are being released in succession, such as the "Keana Odamari! Cream" launched in March, which sold approx. 30,000 units in just two weeks. With numerous selections for "Best Cosmetics" awards in beauty magazines and by YouTubers, the strong customer base and brand power are backed by data, proving this is not just a temporary boom.

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Chapter 3: Key Topics by Business and Strengthening Customer Engagement

During Q1, important measures leading to future revenue and profit growth were implemented across various brands.

1. "MiiS" Recovery Strategy and New Product Traction

The oral care brand "MiiS" struggled in Q1 with a -33.3% YoY decline due to the timing of wholesale transactions and deteriorating profitability in e-commerce mall promotions. However, the new product "MiiS LIFT BRUSH" (39,800 JPY including tax), which began pre-sales on the crowdfunding platform "Makuake" on May 11, reached its target within 30 minutes and ultimately secured approx. 14.5 million JPY in support purchases. Based on this strong validation of actual demand, the company is steadily advancing channel expansion for a V-shaped recovery from Q2 onwards, including general sales starting August 10, the Qoo10 "Mega Wari" starting August 1, and nationwide Loft expansion starting August 24.

2. Maximizing LTV for Subscription Brand "bialne"

The hair care brand "bialne" launched a "Loyalty Program" for regular members on May 25. By providing increased redemption rates and benefits based on purchase history, the company aimed to upgrade customers and prevent churn. As a result, comparing the 30 days before and after the implementation, new member contracts jumped approx. 2.4x , and the number of reactivated dormant members increased approx. 2.6x .

3. Hit Creation by "Matsumura Shoten" and "Kanalabo (b idol)"

Matsumura Shoten, which handles planning and manufacturing contracts for kids' and teen goods, saw its collaboration product with the popular Gen Z IP "Itazuraguma no Gloomy" viewed over 300,000 times on SNS (X) and ranked #1 in the daily ranking of Rakuten Ichiba's kids' fashion category. Additionally, for Kanalabo's cosmetics brand "b idol," the "Magic Eyebrow Powder" saw revenue grow by approx. 230% after winning a Best Cosmetics award, demonstrating that marketing linked to SNS and media exposure is a powerful revenue driver.

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Chapter 4: Full-Year Earnings Forecast and Logical Story for Achievement

The company maintains its full-year earnings forecast for the fiscal year ending March 2027: Revenue of 6,602 million JPY (+59.9% YoY), Operating Profit of 50 million JPY (vs. -1,003 million JPY in the previous year), Adjusted EBITDA of 324 million JPY , and Adjusted Net Income of 128 million JPY .

With a Q1 progress rate of 19.9% for revenue and an operating loss (-141 million JPY), the hurdle for achievement may appear high at first glance. However, there is a clear basis for the company maintaining its full-year forecast. The following slide explains this logic.

Significance and Background of Slide 24

This slide is a critical document that provides a structural and quantitative basis for the question, "Why can the company maintain a full-year profit forecast despite a loss in Q1?"

The points are summarized as follows:

1. Second-Half-Weighted Seasonality : Looking at past Q1 revenue progress rates, they were 21.5% in FY2025 and 18.8% in FY2026. The current 19.9% is in line with the company's usual annual trend (cruising speed). The structure is such that large e-commerce mall sales and winter demand are concentrated in the second half.
2. Outperformance of "Kanalabo" and "Matsumura Shoten" : In Q1, Kanalabo performed better than planned in both e-commerce and wholesale, and Matsumura Shoten achieved a gross margin of 47.3% , significantly exceeding the plan (41.8%).
3. Profit Accumulation Factors from Q2 Onwards : Against the Q1 operating loss of -141 million JPY, the company plans to accumulate +191 million JPY in profit from Q2 onwards. Of this accumulation, +395 million JPY is expected to be covered by the strong performance of existing businesses from the three companies—Kanalabo, Matsumura Shoten, and HaD—which already outperformed plans in Q1. Furthermore, new revenue sources such as the rebranding of "whomee" starting in August (70 PLAZA stores nationwide and Harajuku POP UP) and the new "Oripa Shop" service launched on July 31 are planned to contribute toward the second half.

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Chapter 5: Financial Health, Capital Efficiency, and Future Growth Strategy

With an aggressive expansion strategy centered on M&A, certain changes have occurred in the company's financial structure. As of Q1 FY2027, net assets are 883 million JPY , total assets are 5,337 million JPY , and the equity ratio is on a continuous downward trend (approx. 16.5%).

This is due to the recording of goodwill associated with M&A and net losses in past quarters. The company is aware of this financial situation and has stated that its future M&A policy will be to "strictly select deals that promise an increase in EPS (Earnings Per Share) post-acquisition." By doing so, the company aims to avoid reckless scale expansion and achieve a balance between capital efficiency and financial health, while aiming for a recovery in the equity ratio.

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Summary: The Overall Growth Story of MUSCAT GROUP

MUSCAT GROUP's Q1 FY2027 earnings are a turning point that demonstrates not just revenue expansion, but a "shift to a high-profit structure centered on in-house brands" and the "steady growth and successful PMI of acquired brands (such as Kanalabo)."

Although there is an operating loss in Q1 due to upfront investments and seasonality, the story toward achieving the full-year forecast is logically constructed when considering the establishment of powerful IP and brand groups led by Fujiko, the V-shaped recovery measures for MiiS, the fruition of LTV improvement measures, and the second-half-weighted profit model. As a brand produce company based on a "Niche Top Strategy," the company's growth curve from Q2 onwards and its transition to the profit-harvesting phase will be closely watched.