KOMEHYO HOLDINGS Q1 FY2027 Earnings Analysis: The Structure of Substantial Profit Growth Driven by Record-High Individual Purchases and a 'Retail-First' Strategy

Introduction

The Q1 FY2027 earnings results announced by KOMEHYO HOLDINGS Co., Ltd. represent a remarkably strong performance, with both revenue and profit at every level significantly exceeding the same period last year and marking a record high for a first quarter.

This report provides a detailed analysis of how the company's strategic focus on "strengthening individual purchases" and a "retail-first" approach has translated into business expansion, examining the results from the perspectives of procurement, sales, cost structure, and future growth initiatives.

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1. Overview of Earnings: Record-High Revenue and Nearly Fourfold Increase in Operating Profit

Consolidated results for the first quarter of the fiscal year ending March 2027 were as follows: Revenue of 65,820 million yen (142.7% YoY) , Operating Profit of 3,533 million yen (399.8% YoY) , Ordinary Profit of 3,334 million yen (511.2% YoY) , and Quarterly Net Profit Attributable to Owners of the Parent of 2,081 million yen (589.0% YoY) . This represents a massive jump from the operating profit of 883 million yen recorded in the same period last year, demonstrating a high level of progress against the full-year plan.

[Commentary and Significance of Slide 7 (Consolidated Statement of Income)] This slide presents critical data regarding the current quarter's income statement and progress against the full-year plan. Of particular note is the high progress rate: 26.1% for revenue , 32.7% for operating profit , and 35.6% for quarterly net profit .

Having achieved over 30% of the full-year target in the first quarter alone, the fact that operating profit has increased nearly fourfold (+399.8%) year-on-year indicates that the accumulation of gross profit has fully absorbed the increase in SG&A expenses associated with new store openings and enhanced recruitment.

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2. Core Engine of Growth: Record-High Individual Purchase Value

In the reuse business, the source of revenue and profit is the procurement (purchase) of high-quality inventory. The consolidated individual purchase value for this quarter reached 30,438 million yen (136.5% YoY) , marking a record high on a quarterly basis.

[Commentary and Significance of Slide 8 (Trends in Individual Purchase Value)] This slide visualizes the quarterly trend of individual purchase values over the past several years. It shows a continuous upward trend from 11,052 million yen in Q1 FY2023, finally breaking through the 30 billion yen mark .

Behind this growth, in addition to the aggressive opening of specialized purchasing stores, is the improvement of purchasing power at existing stores . According to the materials, approximately 80% of the total increase in individual purchase value was contributed by existing stores. Enhanced digital marketing (SEO and web advertising) and purchasing campaigns have successfully boosted the customer acquisition and purchasing capabilities of existing locations.

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3. Mechanism of Profitability Recovery: Higher Gross Margin and SG&A Control

The gross profit margin for this quarter was 21.9% , an improvement of +0.6pt from 21.3% in the same period last year. The primary driver of this margin recovery is the thorough implementation of a "retail-first" strategy , which prioritizes the supply of high-margin, individually purchased items to the company's own retail channels.

While the absolute amount of SG&A expenses increased to 10,849 million yen (121.1% YoY) due to the expansion of the store network and rising personnel costs, the revenue growth significantly outpaced these costs, substantially strengthening the profit structure.

[Commentary and Significance of Slide 11 (Trends in SG&A Expenses)] This slide shows the breakdown of SG&A expenses and the trend in the SG&A-to-revenue ratio. Despite continued upfront investments in rent and depreciation from new store openings, base salary increases, recruitment, and promotional expenses, the SG&A-to-revenue ratio improved by 2.9pt year-on-year to 16.5% .

This is the result of powerful economies of scale being realized alongside rapid business expansion, confirming that a highly efficient profit structure has been built where revenue growth directly translates into explosive increases in operating profit.

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4. Trends in Key Merchandise and Agile Sales Strategy

In the market environment, while high gold prices and price revisions by major brands served as tailwinds, some segments of the jewelry and watch markets showed signs of softness. The company has responded to these changes with agility:

• Gold, Brand Jewelry, and Bags : Remained very strong, supported by robust domestic and international demand and the popularity of vintage items.
• Watches and Diamonds : To counter market softness, the company avoided excessive inventory accumulation and actively utilized corporate sales (BtoB auctions, etc.) to maintain inventory freshness and mitigate downside risk.
• Optimization of "Retail" and "Corporate Sales" Balance : While prioritizing supply to high-margin retail, inventory exceeding retail demand was liquidated through corporate sales, achieving both profit realization and improved inventory turnover (which improved to 4.0 turns this quarter).

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5. Segment Performance and Digital/Global Initiatives

(1) Brand Fashion (BF) Business

This is the core business, accounting for 97.6% of group revenue.

• Revenue : 64,269 million yen (143.6% YoY)
• Operating Profit : 3,379 million yen (433.6% YoY)

Within the BF business, Auction GMV (Gross Merchandise Value) , which demonstrates presence in the BtoB market, expanded to 30,444 million yen (128.2% YoY) . Furthermore, EC-related revenue grew rapidly to 6,170 million yen (190.2% YoY) . This was significantly driven by the optimization of domestic EC mall promotions, the growth of cross-border EC, and the establishment of a pattern where inbound tourists check items online before making tax-free purchases in-store.

(2) Tire & Wheel (TW) Business

• Revenue : 1,540 million yen (113.4% YoY)
• Operating Profit : 27 million yen (70.4% YoY)

In line with market changes, the company focused on shifting to high-margin products and expanding sales of its proprietary "BRADLEY" wheel series. By improving operational efficiency at the new warehouse, the company secured profits exceeding its plan.

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6. Future Initiatives: Strengthening the Growth Foundation through Global Expansion and M&A

To drive future growth, the company is promoting the active expansion of its store network, strengthening global distribution, and pursuing M&A in the digital domain.

• Deepening Domestic Presence : In addition to joint store openings in the Shibuya area (BRAND OFF SHIBUYA / Rodeo Drive SHIBUYA) and a new flagship store in Okachimachi, the company renovated and renewed the 1st floor of the KOMEHYO Nagoya Main Store .
• Overseas/Global Distribution : Accelerating store openings and the establishment of corporate entities in Malaysia, Shanghai, Hong Kong, Macau, and Indonesia. Furthermore, the "JBA Shanghai Auction" was launched in August 2026 to strengthen the BtoB distribution network in China.
• Acquisition of Garage Bank as a Wholly Owned Subsidiary : Acquired Garage Bank, Inc., which operates the asset management and utilization app "cashari." The company aims to acquire new purchasing and reuse customers, particularly among the younger generation, and expand its digital platform.

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Summary

The Q1 FY2027 earnings for KOMEHYO HOLDINGS demonstrate the successful execution of a hybrid strategy: securing high-quality inventory through the "maximization of individual purchases" and monetizing it with high efficiency through a "retail-first" approach and "agile corporate sales."

The synergy between lower SG&A ratios due to economies of scale and improved inventory turnover has resulted in an overwhelming profit growth rate. Moving forward, the company's acceleration of global expansion and the further extension of its customer base through M&A are key developments to watch.