Q1 FY2026 Financial Results Explanation Materials

Performance Overview

In Q1 FY2026, net sales reached 232 billion yen (actual YoY △3%). Although deterioration in Japan-China relations was within expected bounds, certain brands experienced timing shifts and inventory adjustments leading to a decline in sales. Meanwhile, core operating profit was 13 billion yen (up ¥4.8 billion YoY), securing a substantial profit increase supported by structural reforms and company-wide cost management. Operating income reached 12.3 billion yen (YoY +71%), quarterly profit was 8.4 billion yen (YoY +127%), EBITDA was 25.5 billion yen (YoY +22%), and free cash flow improved to -7.1 billion yen, representing a YoY improvement.

Regional, Brand-specific Trends and Future Outlook

In Japan, sales declined due to reduced inbound demand, but local brands and new products remained strong, maintaining profitability. In China and Travel Retail, demand trends are accurately captured with plans for full-year positive growth. The Americas are steadily progressing toward full-year profitability, led by major brands 'NARS' and 'SHISEIDO.' Europe experienced a decline due to initial shipment effects of new products but plans to recover in the second half. The company is accelerating structural reforms company-wide, aiming for over 25 billion yen in benefits for FY2026. While adapting to changing market conditions, flexible additional measures will be implemented to achieve the full-year plan.