HUMAN MADE FY2027 Q2 Earnings Deep Dive: A Global Growth Story Driven by Upward Revisions and Major Flagship Expansion

1. Earnings Overview: Record-Breaking Performance Leads to Upward Revision of Full-Year Guidance

HUMAN MADE Inc. (Securities Code: 456A) delivered exceptionally strong results for the second quarter (interim period) of the fiscal year ending January 2027, with both revenue and profit at every level significantly exceeding initial projections.

For the first half (H1), the company reported revenue of 8,758 million JPY (+46.3% YoY) , operating profit of 2,456 million JPY (+36.1% YoY) , ordinary profit of 2,429 million JPY (+37.7% YoY) , and net income of 1,719 million JPY (+50.4% YoY) , marking a substantial increase in both top and bottom lines. In Q2 alone, revenue reached 4,458 million JPY (+35.4% YoY), setting a new record for a single quarter.

Given this strong momentum, the company has announced an upward revision to its full-year consolidated earnings forecast. The revised outlook projects revenue of 19,200 million JPY (+34.5% YoY, +700 million JPY vs. previous forecast) , operating profit of 5,300 million JPY (+17.0% YoY, +500 million JPY vs. previous forecast) , and net income of 3,700 million JPY (+25.8% YoY, +400 million JPY vs. previous forecast) .

■ Background and Drivers of the Upward Revision

The upward revision is driven by resilient demand for core essential products and the explosive success of strategic IP collaborations. Furthermore, the contribution of major flagship stores scheduled for the second half of the year has been factored into the outlook.

While the operating profit margin appears to have dipped from the previous year's 31.7% to 27.6%, this is due to upfront investments for future growth (totaling 660 million JPY in one-time costs, including pre-paid rent for new domestic stores and preparation expenses for US and Chinese subsidiaries). Excluding these investments, the "underlying operating profit margin" stands at 31.0% (underlying operating profit of 5,960 million JPY) , maintaining a high-profit structure exceeding 30%.

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2. Analysis of Earnings Trends and Profit Structure

A review of quarterly revenue and operating profit trends highlights the company's stable growth trajectory.

■ Growth Momentum in Quarterly Trends

As shown in the slide above, revenue expanded from the previous quarter (Q1: 4,299 million JPY) to reach 4,458 million JPY in Q2 . Although the operating profit margin was 27.4% due to one-time expenses, the quarterly operating profit reached 1,222 million JPY .

Key strengths in the profit structure include:

• High Gross Profit Margin (64.0%) : Despite royalty payments and sample costs associated with certain collaborations, the company has successfully mitigated rising costs to maintain high margins.
• High DTC Ratio (82%) : The Direct-to-Consumer (DTC) ratio, including company-owned stores and e-commerce, has reached 82% , while the proprietary brand ratio (including overseas partners) stands at 92% , establishing a high-profit model that eliminates intermediate margins.
• Maintenance of 100% Full-Price Sell-Through : Since its inception, the company has maintained a "100% full-price sell-through" policy, avoiding all discount sales. Inventory turnover is tightly controlled at 2.6 months .

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3. Key Topics and Progress of Growth Drivers

Major business highlights for Q2 FY2027 include the following initiatives:

① Success of Global IP Collaborations

The second collaboration with the globally popular "Pokémon" franchise was launched, featuring apparel and goods centered on "Pikachu," "Farfetch'd," and the newly introduced "Magikarp," significantly contributing to customer acquisition and brand awareness. Additionally, collaborative items with creative partner VERDY sold out instantly both domestically and internationally, further driving brand value.

② Expansion of Store Network and Sales Channels

• Shinsaibashi PARCO Store Renewal : The store was significantly expanded to 115㎡ , approximately five times its original size, and reopened in July 2026, contributing to increased foot traffic and higher average transaction values.
• Opening of 3rd Seoul Store (JAMSIL) : A 264㎡ large-scale partner store opened in June 2026 on the first floor of the popular "Lotte World Mall." Its high affinity with K-pop culture is creating a ripple effect across the entire Asian region.

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4. Mid-to-Long-Term Growth Strategy: Establishing a Domestic Base and Overseas Direct Operations

The company has positioned the fiscal year ending January 2027 as a "preparation period for aggressive investment to drive non-linear growth from FY2028 onwards."

■ First Flagship Store "HUMAN MADE TOKYO" and Domestic Pipeline

The most significant topic for domestic operations is the opening of the first flagship store, "HUMAN MADE TOKYO," in Harajuku, Tokyo, on September 26, 2026 . Boasting a total floor area of 595㎡ , the store is expected to generate 2 to 3 billion JPY in annual sales , serving as a major hub to drive performance from Q3 onwards (Q3 revenue is projected at 5.0 to 5.4 billion JPY).

Furthermore, a store in Nagoya (approx. 200㎡, projected sales of 600-800 million JPY) is confirmed for January 2027, with additional openings planned for Aoyama Miyuki-dori in Spring 2027 and Umeda, Osaka, in Summer 2027, steadily advancing a dominant strategy in major domestic cities.

■ Full-Scale Direct Operations in the US and China

In overseas expansion, the company is shifting from a wholesale/partner model to a direct subsidiary model:

• USA (New York) : A lease has been signed for a standard-sized property in the SOHO area.
• China (Shanghai) : A lease has been signed for a flagship-sized property in the heart of the Jing'an District, home to many luxury brand street-level stores.

Local subsidiaries have been established in both countries, with infrastructure and opening preparations underway for full-scale operations starting February 2027 (FY2028).

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5. Financial Foundation and Shareholder Return Policy

■ Robust Financial Position and High-Efficiency Management

The company's balance sheet is exceptionally healthy, with an equity ratio of 80.0% and cash and deposits reaching 10.4 billion JPY . With interest-bearing debt at only 180 million JPY, the company remains effectively debt-free, maintaining a structure capable of funding aggressive capital investment through ample operating cash flow and internal funds.

■ Mid-Term Financial Policy (Balancing Growth, Profitability, and Efficiency)

The company has set a target of "around 30%" for the following three mid-term financial indicators:

1. Growth : Revenue and Operating Profit CAGR of around 30%
2. Profitability : Operating Profit Margin of around 30% (controlled at a floor of 25% even during investment phases)
3. Efficiency : ROE of around 30%

■ Introduction of Shareholder Benefit Program

To expand the individual investor base and encourage long-term holding, the company announced the introduction of a shareholder benefit program . Starting with shareholders of record as of the end of January 2027, those holding 100 shares or more will receive "limited original goods" based on their holding period. The company plans to consider appropriate timing for dividends and other shareholder returns while balancing capital efficiency and growth investment.

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6. Summary and Future Outlook

HUMAN MADE's Q2 FY2027 results were highly positive, proving the high profitability and brand loyalty of existing operations while achieving an upward revision of full-year guidance.

Key points to watch include: (1) The post-opening performance of the "HUMAN MADE TOKYO" flagship store , (2) The pace of profit generation in Q3 and Q4 after absorbing one-time expenses , and (3) Progress in preparations for the NY and Shanghai direct stores for full-scale operations starting in FY2028 . The roadmap toward establishing the brand's status as a global IP powerhouse is being executed steadily.