In May 2024, we announced our first-ever three-year Medium-Term Management Plan since our founding (hereafter the "Management Plan"), covering FY2024 to FY2026. Fortunately, this has received favorable feedback from shareholders and investors, who call it "clear and easy to understand."With a sense of relief, we are renewing our determination to achieve the Management Plan so that we do not fall short of such expectations.

 

In formulating the Management Plan, we listened to the voices of young and mid-career employees and reflected their strong aspiration to inherit the AOKI Group's DNA of taking on new challenges and to create a new growth story that goes beyond a mere extension of the past. To ensure thorough adoption among the employees who will lead these initiatives, we are taking steps such as holding company-wide afternoon assemblies where the plan is explained to all AOKI Holdings employees. While maintaining and enhancing the motivation of our most important management resource, namely our "human resources," we are pushing forward toward achieving our targets.

With a desired 10-year corporate state of “Continue sustainable growth through the creation and transformation of businesses that encompass consumers’ entire life stage,” this Management Plan is positioned as the stage for restructuring our business portfolio, so we are aiming for profit growth of around 10% per year over three years. Meanwhile, as a financial indicator, we aim to achieve a PBR (Price Book-value Ratio) of 1.0 by the fiscal year ending 2026, the last year of the Management Plan, and AOKI Holdings is taking the lead in measures to improve capital efficiency and investment efficiency.

 

During its first year, all business segments steadily executed planned store openings and closures of unprofitable stores, with both net sales and operating profit exceeding initial plans. Capital efficiency indicators such as ROIC (Return On Invested Capital) and ROE (Return On Equity), as well as market evaluations such as PBR, are continuing on an upward trend.

 

I believe there are two key points for achieving the Management Plan going forward.

 

The first is our “pricing strategy.” Given how significantly political and economic developments such as recent changes in U.S. tariff policies can impact the market, these will inevitably affect consumer sentiment and the resulting behavior.

 

At present, consumers appear to be carefully assessing the situation, with signs of somewhat stagnant consumption. On the other hand, the AOKI Group’s products and services are reasonably priced, which means that if the economic environment worsens, demand may actually increase. We will continue to closely monitor consumer trends, capturing demand through optimal pricing while balancing rising procurement costs.

 

The second point is “the steady execution of store expansion plans.” Under the Management Plan, we expect sales and profit growth over the next three years, with a focus on ORIHICA and KAIKATSU CLUB, based on the assumption of opening 20 to 30 new stores annually for each brand. Progress so far has been smooth;however rising construction costs mean we are making detailed adjustments such as reviewing store floor area to reliably achieve the opening plans of each business.

 

The operating profit forecast for the fiscal year ending March 2026 is ¥17 billion, just short of the final-year target of ¥18 billion. Naturally, the Management Plan is subject to rolling revisions, but if profits exceed these projections, we intend to prepare for the next three-year period with investments and other measures. While no new or growth investments have yet materialized, multiple themes are under consideration with each being carefully evaluated. We remain focused on sowing the seeds toward achieving an operating profit of ¥30 billion by FY2033.

 

The Management Plan prioritizes profit growth through business model reform, rather than sales growth. We will continue to improve underperforming existing stores and steadily execute profit-building measures across all business formats.

In this Management Plan, we clearly state the need to strengthen and utilize the management base necessary to support Group growth including human resources, store networks, IT infrastructure, and customer data. To this end, we will pursue and realize synergies by utilizing shared know-how and assets, further strengthening governance.

 

As part of enhancing governance, the composition of the Board of Directors has been revised, with a majority of them now being external directors. We will continue with separating management and execution functions and strengthening AOKI Holdings’ supervisory function. In addition, we are working to enhance the effectiveness of the Board of Directors by having independent third-party conduct evaluations, addressing identified issues, and implementing improvements through the PDCA cycle. With respect to strengthening the effectiveness and authority of the Nomination and Compensation Committee, we will review the skills matrix to reinforce the functions of the Board of Directors and further enhance corporate value.

 

With respect to human resources, we have implemented measures to flexibly allocate employees across Group companies during peak periods as part of our human resource exchange between businesses. Moreover, new recruits hired by AOKI Holdings are also assigned to subsidiaries, creating an environment where they can contribute on the front lines. First, in terms of human resources, we position their development and utilization as the AOKI Group’s top priority and will work on the stable recruitment and development of talented individuals, along with creating an environment in which they can thrive.

 

For our store network, we are expanding flexible utilization methods that transcend the boundaries of individual operating companies, such as converting AOKI stores into other business formats within the AOKI Group. Furthermore, in order to maximize the effectiveness of these measures, the Group continues to invest in IT infrastructure, introducing a unified internal system across the Group and enabling all employees to share information, thereby improving operational efficiency.

 

In customer data utilization, we are working to make effective use of data from all 45 million Group members. However, in January 2025, KAIKATSU CLUB experienced an unauthorized access incident. At present, while no leaks of personal information or secondary damage related to the incident have been confirmed, we deeply regret the significant concern caused to our stakeholders. Cyber-attacks are becoming increasingly sophisticated, requiring us to constantly keep apprised of the most up-to-date information and enhance our security levels. We have established group-wide compliance, risk management, and information security committees, and are working to manage risks across the Group. First, we will align efforts across each company and work to raise the overall level of the AOKI Group.

The AOKI Group operates three business segments, but many consumers are unaware that KAIKATSU CLUB and ANNIVERSAIRE are also operated by the AOKI Group. I would like the corporate image that everyone thinks of with regard to the AOKI Group to be a positive one—something like “The AOKI Group has various businesses, and anything managed or developed by the AOKI Group can be trusted and used with confidence.” This will also foster a sense of pride, enabling each employee to hold their head high as a member of the AOKI Group.

 

To all of our stakeholders, including employees, shareholders, investors, customers, and business partners, we will continue striving to achieve “RISING 2026” with the hope that you will continue to experience the AOKI Group as a company enriching people’s lives in a variety of occasions.