Seria Co., Ltd. (2782) Q4 2026 Earnings Call Transcript

Seria Co.,Ltd. Financial Results Briefing for the Fiscal Year Ended March 2026 May 13, 2026

Event Summary [Company Name]

Seria Co.,Ltd.

[Company ID]

2782-QCODE

[Event Language]

JPN

[Event Type]

Earnings Announcement

[Event Name]

Financial Results Briefing for the Fiscal Year Ended March 2026

[Fiscal Period]

FY2026 Annual

[Date]

May 13, 2026

[Number of Pages]

29

[Time]

10:00 - 10:45 (Total: 45 minutes, Presentation: 20 minutes, Q&A: 25 minutes)

[Venue]

Webcast

[Venue Size] [Participants] [Number of Speakers]

[Analyst Names]*

2 Eiji Kawai Hitomi Yasuda

President Director

Hideki Sumi Kuni Kanamori

Tokai Tokyo Intelligence Laboratory SMBC Nikko Securities

*Analysts that SCRIPTS Asia was able to identify from the audio who spoke during Q&A or whose questions were read by moderator/company representatives.

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Presentation

Kawai: Thank you very much for taking time out of your busy schedule to attend our financial results briefing today. I'd like to start with an overview of our financial results for the fiscal year ended March 2026. First are the key points of the closing results. The sales marked a record high. The cost of sales ratio declined 0.3 percentage points YoY. The SG&A to sales ratio declined 0.8 percentage points YoY. Efficiency improved due to higher same-store sales. As a result, operating profit margin reached 8.2%, which was 1.1 percentage points higher than the previous year. Same-store sales were 105.5% of the previous year's level. The growth rate increased from H2. The number of newly opened shops managed directly by the Company totaled 117, which was 8 fewer than the previous year. The number of closed shops managed directly by the Company was 53, which was 21 fewer than the previous year. Although we have largely completed the restructuring of unprofitable stores, we will continue to take appropriate measures. During H1, the Company conducted a takeover bid of treasury shares.

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Here is a summary of the tender offer for treasury stock. The Company acquired 12,567,900 shares at JPY2,000 per share for JPY25.1358 billion in order to contribute to the improvement of capital efficiency such as EPS and ROE and to help return profits to our shareholders. All the amount was covered by our own fund.

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Next is a summary of our business performance. Net sales were JPY255,695 million, up 8.2%. Operating profit was JPY20,968 million, up 24.5%. Ordinary income was JPY21,287 million, up 25.3%. Net income was JPY14,696 million, up 31%.

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The following chart shows the changes in net sales and operating profit over the past 10 years. From around 2018, the industry began to seem saturated, and after the special demand for stay-at-home time during the COVID pandemic, more competitors started to abandon the pricing of JPY100 as the special demand disappeared and costs rose. Currently, we are seeing signs of emerging survivor’s advantage for companies that continue to provide JPY100 products, and we are watching to see if these gains continue.

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Here, you can see the changes in operating profit margin, the cost of sales ratio, and the SG&A to sales ratio over the past 10 years. Due to large sales in December, profits are lower and costs are higher in the interim period than in the full fiscal year. Operating profit margin is on the road to recovery.

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Next is the historical breakdown of the SG&A to sales ratio over the past 10 years. It has shown slight improvement due to efficiency gains resulting from higher same-store sales.

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Next are sales by business segment. Sales from directly managed stores were JPY253.1 billion, up 8.3%. Franchise sales were JPY1.9 billion, up 9.6%. Sales from wholesale, overseas sales, etc., were JPY500 million in total, down 29.1%. The Company is focusing on increasing sales from directly managed stores. The percentage of sales coming from directly managed stores has reached 99% and is expected to continue to increase.

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Next are sales by product segment. Sundries accounted for JPY252.5 billion, plus 8.3%. Confectionery and food items accounted for JPY2.9 billion, down 3.4%. Others accounted for JPY200 million, up 7%. The ratio of sundries in net sales was slightly up YoY at 98.8%. The Company will continue to deploy merchandise in each store that matches customer demand and purchase costs.

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Next are positive and negative factors that contributed to a change in ordinary profit. Due to the steady performance of same-store sales, sales have made a significant contribution to the profit. Factors related to costs also made positive contribution. SG&A expenses are generally under control, but there has been a rather large increase in salaries and allowances. There were no other significant losses.

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Next are positive and negative factors that contributed to a change in net income. The major factor was an increase of JPY4,294 million in ordinary profit, and there were no other significant losses.

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Next is the status of inventory turnover. Inventory turnover was 6, down 0.04 from the same period of the previous year. Store inventories are managed by an order support system, but in August, the system parameters were changed in light of smaller and thinner products. Because of that, we witnessed an impact of built-up inventories in H1, but sales increased in H2, which helped recover the inventory turnover. We will continue to monitor developments closely.

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Next is the cash flow situation. In terms of operating cash flow, inventories increased due to the effect mentioned earlier, but other major items remained stable. There is no particular problem with investment cash flow because this is due to the increase and decrease in the deposit and withdrawal of time deposits, which relates to financing associated with the acquisition of treasury shares and higher interest rates. As for financial cash flow, spending was much higher due to the acquisition of treasury shares. We will continue to monitor earnings trends, strive to increase operating cash flow, and aim for further growth by continuing to make capital investments based on the adequate review of the return on investment.

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Next is the YoY change of directly managed existing stores. In H1, despite the high bar set in the previous year, higher numbers were recorded due to increased number of customers. In H2, the growth rate increased more than the decline of the standard set in the previous year. We are paying attention to future trends.

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Next is the situation of opening and closing of directly managed stores. The main locations of newly opened shops remain to be in either commercial districts or in bigger shops. The number of store openings is on a downward trend, and we feel the need to create a system that will enable us to find and manage projects more smoothly. In terms of store closing, we've made a certain progress in liquidating unprofitable stores. Moving forward, we will continue to monitor trends and aggressively close unprofitable stores, while carefully proceeding with new store openings based on a thorough examination of profitability.

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The following chart shows the number of store openings and closures including franchised stores, as well as the number of stores by type. Currently, new openings are only for the store type of Color the days, accounting for 84% of the total store count.

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Next, you can see the number of stores, the situation of openings and closures, and sales growth by region. Sales grew YoY in all regions. Although the largest number of new store openings were in the Kanto Koshinetsu region, Kyushu Okinawa experienced the largest increase in sales YoY. As for Tokai Hokuriku, we closed old stores with small sales and opened new stores. Therefore, sales increased by 7.2%, although the number of stores increased by only two YoY. With the number of stores exceeding 2,000, the number of redevelopment projects replacing old stores with newly built stores is increasing nationwide. There are regions across the country where we don't have stores yet or those that have new, better facilities where we can potentially relocate to, and they are not limited only to the Kanto Koshinetsu and Chugoku Shikoku regions. Therefore, we will continue our efforts in further development.

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Finally, I would like to present our financial forecast for the fiscal year ending March 2027. Net sales are expected to be JPY273.6 billion, up 7% YoY.

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As for profit forecast, we expect operating profit of JPY21.1 billion, up 0.6%, ordinary profit of JPY21.4 billion, up 0.5%, and net income of JPY14.8 billion, up 0.7% for the full fiscal year.

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Next is a breakdown of H1 and H2, as well as the assumptions underlying the forecast. We are expecting the cost to sales ratio to rise and the situation surrounding costs to be hard, mainly in labor costs. Based on that estimation, the ongoing trends, and the bar set in H2 of the previous year, we have estimated the net sales of directly managed existing stores to be 107% for H1, 100.8% for H2, and 103.8% for the full fiscal year YoY. The Company expects to open 120 new directly managed stores and close 60 directly managed stores. The cost to sales ratio is expected to increase due to the situation in the Middle East. With regard to the SG&A to sales ratio, we are expecting a 5% increase in hourly wage of part-time workers.

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Now, we look at dividends and profitability. Since earnings per share rose due to share buybacks and higher profits, the dividend payout ratio declined to 34.2% even with a JPY5 increase in dividend. However, all of the return on equity, the ratio of ordinary profit to total assets, and the ratio of dividends to net assets went up. For the current fiscal year, we again expect to increase the annual dividend by JPY5 to JPY80, while the dividend payout ratio is expected to remain almost unchanged at 33.9%. We will continue to take appropriate actions in consideration of various circumstances.

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Finally, I would like to explain our initiatives. In terms of products, we will continue to review product specifications and strive to curb rising costs through the development of low-cost products. In addition, as the only store providing purely JPY100 products, we will continue to specialize in products whose price is JPY100 and strive to expand our customer base. As for store-related measures, we will continue to strengthen relationships with companies with whom we can expect multiple projects. This will be done through measures such as sharing information from time to time on potential stores we could open. In light of the increasingly saturated market environment, we will also carefully cultivate areas scattered across the country where we don't have stores yet, while closely reviewing competition within the Company and proceed with redevelopment projects replacing old stores with newly built ones. Finally, in terms of operational efficiency, we are beginning to see signs of gains as a survivor in the segment. On the other hand, in order to ensure that we grab the gains, we believe it is necessary to further improve efficiency. In anticipation of further growth, we will steadily promote labor-saving efforts in all operations. In addition, as we proceed with a close examination of our operations, we will figure out which systems should be handled in-house or should be outsourced in order to curb costs and speed up work. This concludes the financial results briefing for the fiscal year ended March 2026. Thank you very much for your kind attention.

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Question & Answer

Moderator [M]: We will now have a question-and-answer session. First, we will answer the questions we have received in advance, and then we will accept questions from web participants. If you prefer to ask questions in writing, I will read them out. The answers will be provided through audio. For those asking questions through phone calls, I will call your name when it is your turn. Please ask your questions after stating the name of your company and your name. We will now answer three questions we have received in advance. When there are more than one questions asking the same thing, I will read out once for all of them. Participant [Q]: First, please tell us about the impact of the instability in the Middle East, notably Iran, on your business and your response to it, as well as your future outlook and strategies. Kawai [A]: First of all, the supply of naphtha and other raw materials was already on the decline in Japan so far mainly due to a decline in the number of plants. However, domestic plastic manufacturers will be particularly affected this time. We have heard that if we do not accept a price increase, domestic manufacturers will probably not be able to continue their business. Therefore, we are planning to accept the pain for the time being in order to protect the domestic industry. The impact is estimated to be a cost increase of about 0.7% in H1 and about 0.8% in H2, which translates into an impact of about JPY2 billion. On the other hand, the impact will be limited to this level because we manufacture about 30% in Japan and about 60% in China, and the situation in China is a little different. We have heard that for the portion manufactured in China, it is not as unstable as in Japan. Hence, we have made this forecast based on this level of impact. That is all. Participant [Q]: I would like to ask if there are any changes in the environment of competition in the JPY100 store industry, and if so, what are they? Kawai [A]: This time, same-store sales grew 5.5% during the full fiscal year, and this is the largest growth since the listing. The growth was particularly strong in H2. Although detailed figures are not available from the largest company in the industry, Daiso, we are estimating the market for JPY100 products or those with similar prices will remain mostly unchanged at just under JPY700 billion, according to fragmentary information we gather. In this field, we are assuming there has most likely been a shift towards purchasing our JPY100 products. There has been a gradual movement in this direction up to now, but I have the impression that this trend strengthened slightly in H2 of the previous fiscal year. That is my answer. Participant [Q]: Recently, we often see your shop included in a supermarket opening. Is there any difference in product lineups, etc., between opening a store in a commercial facility and one in a supermarket? Kawai [A]: I think this is unique to JPY100 stores, but the quantity of shelves that can fit varies depending on the size and location of stores. In our case, among approximately 28,000 products, we arrange our products in order of probability the customer will likely want it at that point in time. If there is another store with the same size of area on the same day, the product selection will be the same. This is set as an initial value. However, there are not many examples like this, and we have new openings in different stores every day with various sizes. Therefore, the product lineup changes daily. We take that as an initial value, and the store lineup will change from that point based on the probability of customers actually buying the product. Hence, the lineup will change at any time depending on the location of the new store, the timing of the store opening, the size of the store, and subsequent customer demand. That is my answer.

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Moderator [M]: Thank you. We will now take questions from those attending on the web. Mr. Sumi, please ask your questions. Sumi [Q]: Thank you. I am Sumi from Tokai Tokyo Intelligence Laboratory. I have two questions. Earlier, you presented your estimation of cost increase for this fiscal year. Regarding current negotiations with manufacturers, is it that you see the rise in cost very likely because you have already received many requests for a price hike or do you expect it as a worst-case scenario? May I ask for your thoughts on the assumptions based on which this estimation was made? Kawai [A]: One particular problem is companies that make molded plastic products in Japan. The cost of goods is very much linked to the price of naphtha, and the industry is constantly looking at forward prices to see how the price of naphtha will change in the future. Based on that, they are asking for a price increase. In addition, as I mentioned earlier, the procurement of such materials in Japan has become extremely fragile, and the industry itself will not be able to survive without us accepting price increase this time. Therefore, in this respect, we made this estimate on the premise that we will also bear a burden as much as possible. That said, cost was improved through our efforts so far, so there is some leeway here. I can't say for sure about this because it also relates to product mix, but we are working on it this way. Sumi [Q]: Thank you for your answer. Secondly, I would like to ask you about your approach to shareholder returns. You explained that the dividend payout ratio has declined in part due to last year's share buyback. I believe that you are planning to increase the dividend per share this time as well. I would like to ask your policy on shareholder returns moving forward, and in addition, regarding cash and deposits, there's operating cash your company gains, and I think there will be a decline in the total amount of dividends due to a decrease in the number of shares. Can you tell us whether you have any KPIs, etc., in terms of the use of cash and deposits moving forward, as well as your viewpoints on shareholder return? Kawai [A]: Regarding the actual capital, I don't have any concrete KPI at this stage, or rather, there is still plenty of room for growth. It is also difficult to say in advance how fast that will happen and how much excess cash will accumulate, so we will have to think about it each time we do it. In case of share buyback as well, we cannot anticipate that such a number of shares will be available, so in any case we need to prepare. However, after acquiring that scale of treasury shares, it became easier to handle it, so to speak. Since the total amount of dividends decreased considerably, it became also easier to increase dividends. So, we want to do what we can. We do not have any particular KPI because our current approach is to try to do at least what is considered optimal at the time, so as not to have any distortion later. That is my answer. Sumi [M]: I understand. Thank you. That's all from me. Moderator [M]: Thank you. Next, Mr. Kanamori, please ask your questions. Kanamori [Q]: This is Kanamori from SMBC Nikko Securities. I would like to ask two questions. The first one is related to cost increase as well. I think you used the term survivor's advantages earlier and made a comment saying your company is already number one in the industry when it comes to JPY100 products. Is this positioning something that will give you an advantage in terms of negotiating terms with suppliers, etc., in this situation with rising costs? In your explanation today, you expressed it in a way that you would rather accept pain temporarily in a cooperative way. Does that mean for now you wouldn't rather use this bargaining power that could have been used and make use of it for something else in the future?

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Also, if there are any products whose stock have become difficult to secure as a result of rising purchase prices, is there any factors coming from having the number one market share that turned out to be useful in this situation, such as a competitive edge of having the number one position or that you have already made procurement in a pre-emptive move, etc.? Kawai [A]: Thank you. As you say, the impact has been kept to this level this time. The products affected by naphtha are those such as plastic containers like lunch boxes, and they are mainly manufactured in the country. There are some factories in Japan, and if we were to say we would stop manufacturing these products because of the naphtha price increase, the transactions with these factories would be terminated. Therefore, we would accept the price increase and cover it on our side on the basis that it's a temporary thing. On the other hand, for items made overseas, we are the number one supplier, as you mentioned. And today, various companies are competing with each other for this. As for the cost, there is still some leeway for control. Therefore, we have both of these aspects. We are temporarily accepting certain factors, but we are also leveraging our large scale of transactions. If sales grow, the surrounding costs are going to improve. I think there are both aspects. That is my answer. Kanamori [Q]: Thank you. Regarding the part about accepting the pain for the time being, do you mean that it is possible to make adjustments on the parts that are hit when the naphtha price normalizes? Kawai [A]: Yes. As you said, there is quite up and down in terms of, let's say, future prices, but I think it will start to drop by the end of this year or around January or February next year based on the current feeling of the market. If that happens, we expect it to be corrected gradually, which would be a more gradual fall probably compared to how it rose, but we are hoping that the prices will be corrected to reflect that. Kanamori [Q]: I understand. As a second question, in terms of cost efficiency, you mentioned earlier about separating operations between those to be done in-house and to be outsourced. Do you have any more details you can share? Kawai [A]: As an easy-to-understand example, our ordering terminals had been outsourced for more than 20 years, or approximately 30 years, but now they are being sourced in-house. We are working on more userfriendly things in a speedier way. That is why this is rather sourced in-house. On the other hand, for example, we use an external system for reception of outside calls so that AI responses, etc., separate in-house work, and we do not have to take outside calls so often. We are using external things for this kind of sophisticated things. Kanamori [M]: I understand. Thank you. Moderator [M]: Thank you. We have received some questions by writing. I would like to read them out. A question from Mr. Ito of Nomura Asset Management. Ito [Q]: How long will you maintain the JPY100 flat pricing, assuming inflation continues at 2% to 3% over the long term? How weak do other companies need to become before you raise prices to, for example, JPY110 flat pricing? Please let us know your thoughts, even if it's just a rough idea at the moment. Kawai [A]: This is very difficult to tell. I don't know when this happens myself either, but at the moment, it is still better to leave it as it is. We still have the ability to make products that customers want for JPY100 before tax, and although the product mix may change due to the impact of the situation in the Middle East, our policy is to maintain this for the time being without changing, even if it temporarily reduces our earnings. If this continues for a long time, there is a possibility that the product mix will change again, but I think the most probable approach is to go as far as we can in that way.

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The prospect I have is that other companies will reduce the number of JPY100 products. Right now, I would estimate our market share is probably about 38% of the domestic industry. I believe the additional gain will decrease if this goes up to 40% or 50%, and by that point I think it could be reasonable to revisit the prices. That is my answer. Moderator [M]: Thank you. We have a question from Mr. Tanaka from Phillip Securities. Tanaka [Q]: Same-store sales continue to grow strongly. Do you think this is because of the increased market share in JPY100 products due to other companies abandoning the JPY100 price setting? Do you think the growth is unrelated to the sticker boom? Do you feel confident that the strong performance of same-store sales will continue? Kawai [A]: In fact, since last summer, demand for stickers has been the biggest factor in boosting sales, peaking at about 2% of sales growth in January, and it is currently about 1.5%. This is a ratio to the sales growth rate of existing stores directly managed by the Company, so the impact rate has dropped to about 10%, but other categories are growing in a very balanced manner. I don't know what triggered it, and I don't know if it was the special demand for stickers that caused it, but I think it is sustainable because the growth is well balanced in a broader range of categories. The estimation of 107% of same-store sales in H1 of this fiscal year is certainly the highest I have ever set, but this is based on the expectation of sustainability. That is my answer. Moderator [M]: Thank you. Next is Mr. Komori from Seino branch of Gifu Newspaper. We have received three questions. Komori [Q]: Firstly, please tell us about the current impacts the situation in the Middle East has and those expected in the future as well, including whether there are likely to be changes in the product mix. Kawai [A]: First of all, we will not change the product lineup. There may be some colors that will be missing, but for the time being, to the best of our ability, we do not expect any major changes, at least during the current term. However, there are some structural issues, so I think it may gradually change. Or, if there is indeed a portion that cannot be supplied at all, the possibility of not having stock of the product itself is not absolutely zero. However, we have about 28,000 SKUs, and I believe that only a small percentage will be affected in this way. Under normal circumstances, we do not expect our products to be missing from the shelves unless there is a logistics disruption. Komori [Q]: Second question. To what extent did you factor in the impact of the situation in the Middle East in the making of the business forecast for the fiscal year ending March 2027? Kawai [A]: After offsetting deterioration with cost improvement I mentioned earlier, we are expecting deterioration in costs to be around 0.7%, which amounts to approximately JPY2 billion. Komori [Q]: As a third question, what is the impact of rising interest rates? Kawai [A]: The Company will not be affected much by rising interest rates. We don't have any borrowing, and we are now earning interest in our savings accounts, so I think the balance is a little bit better on that end. That is all. Moderator [M]: Thank you. Next, we have questions by writing from Mr. Okada of SangyoTimes Inc. Okada [Q]: First question. How many of the store openings in the previous and this fiscal year are redevelopment projects replacing old stores with newly built ones?

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Kawai [A]: I think simple redevelopment projects replacing old stores with newly built ones would be about 30 stores. Okada [Q]: Second question. Other JPY100 product companies have said they are witnessing customers hoarding their products. How about your company's products? Kawai [A]: I think there is a slight increase in demand for garbage bags this March and April, but I am not sure if this is due to hoarding. The demand has been increasing for some time, and if this is due to hoarding, there should be a rebound at some point, but we have not seen that yet. So, I don't know if that is hoarding or not, but it is certain that the demand is becoming a little stronger. Moderator [M]: Thank you. We would like to finish the question-and-answer session now. This concludes the financial results briefing of Seria for the fiscal year ended March 2026. Thank you very much for your kind attention. Kawai [M]: Thank you. Yasuda [M]: Thank you. [END]

Document Notes 1. 2. 3. 4.

Portions of the document where the audio is unclear are marked with [inaudible]. Portions of the document where the audio is obscured by technical difficulty are marked with [TD]. Speaker speech is classified based on whether it [Q] asks a question to the Company, [A] provides an answer from the Company, or [M] neither asks nor answers a question. This document has been translated by SCRIPTS Asia.

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