■Summary

The RIZAP Group ＜2928＞ said, “People can change.” It is a comprehensive enterprise that develops diverse businesses in the three areas of health care/beauty, lifestyle, and investment, centering on the health promotion business, under the unique philosophy of “proving”. With the vision of “global No. 1 in the self-investment industry,” it achieved dramatic growth while actively utilizing M&A under the holding company system, and grew to have 67 group companies, including 5 listed subsidiaries, and 4,645 consolidated employees (as of the end of March 2024). Shares were listed on the Sapporo Stock Exchange Ambitious Market in 2006, and in the ongoing medium-term management plan, they are actively developing the new business “ChocoZap (R)” business with the aim of operating profit of 40000 million yen (fiscal year ending 2027/3).

1. Summary of financial results for the interim period ending March 31, 2025

Financial results for the second quarter of the fiscal year ending March 31, 2025 (hereinafter referred to as the interim period) were sales revenue of 85115 million yen (up 8.9% from the same period last year), operating loss of 2529 million yen (loss of 6023 million yen in the same period last year), loss before income tax of 4495 million yen (loss of 7423 million yen), and interim loss attributable to owners of the parent company was 4282 million yen (loss of 7596 million yen) As a result, profitability improved along with the increase in sales. Regarding sales revenue, the convenience store gym (R) “ChocoZap” business continued to grow, and the RIZAP related business (including the ChocoZap business) saw a significant increase in sales (7563 million yen increase from the same period). ChocoZap has increased by 321 stores since the end of the previous fiscal year, and the number of stores at the end of 2024/9 is 1,704 stores, and the number of members is 1.301 million people. During the progress period, measures to improve customer satisfaction, such as introducing new washer/dryers and karaoke services, introducing human support, and strengthening equipment maintenance and cleaning, are being implemented, and the withdrawal rate is suppressed within a certain period. The success of ChocoZAP also had a positive impact on RIZAP (body makeup), leading to an increase in RIZAP enrollment. In the existing business, while there was an increase in sales (4659 million yen increase) for Antirosa Co., Ltd., Isshin Watch Co., Ltd., MRK Holdings (9980), and BRUNO ＜3140＞, there was a decrease in sales (4342 million yen decrease) due to REXT Holdings Co., Ltd. (trading card (hereafter, trading card) market reaction decrease), Hotta Marumasa ＜8105＞ (decrease in order acceptance, high cost), etc. Regarding operating losses, since strategic investments were carried out in the first half of the ChocoZap business, consolidated operating deficits were recorded in the first half, but this is as planned and transient. Note, financial expenses (2024 million yen) are becoming heavier in connection with raising funds for store investments, but it is planned to reduce the burden by implementing refinancing in line with financial consolidation.

2. Earnings forecast for the fiscal year ending 2025/3

The earnings forecast for the fiscal year ending 2025/3 is sales revenue of 177700 million yen (6.9% increase from the previous fiscal year), operating income of 6300 million yen (loss of 594 million yen in the previous fiscal year), profit before income taxes of 3100 million yen (loss of 4524 million yen), net income attributable to owners of the parent company is 2000 million yen (loss of 4300 million yen), ahead of the ChocoZap business A full-year surplus conversion is predicted due to the end of the investment phase (as predicted at the beginning of the fiscal year). Regarding sales revenue, sales are expected to increase by continuing to open new stores in the ChocoZap business, expand the membership base, and promote measures to improve customer satisfaction. As a result of measures to improve the satisfaction of existing members carried out in the first half, the withdrawal rate has now been stabilized and suppressed. Since the second half of the fiscal year to the 2026/3 fiscal year will enter a full-scale payback phase, profits are expected to grow significantly. The ChocoZap business has already achieved a monthly surplus in terms of ability, and the entire company alone became operating surplus in the 2nd quarter, and the increase or decrease in investment has entered a stage where profitability is affected. Since the main upfront investments were completed in the first half, the evolution of ChocoZap's business model continues, such as the introduction of a new machine maintenance system and the reform of advertising methods, etc., and we believe that there is a high possibility that the profit plan will be achieved.

3. Growth Strategy and Topics

In 2024/11, NTT DOCOMO ＜9437＞ and RIZAP Co., Ltd., which is under the umbrella of the same group, concluded a business alliance agreement with the aim of expanding the healthcare business and maximizing value provided to customers, and began providing the “ChocoZap × DOCOMO package.” Through this partnership, the two companies will consider mutual customer delivery, joint product development and provision, d account (R) /d point collaboration, marketing cooperation, etc. In the “ChocoZap × DOCOMO PACKAGE,” the normal monthly fee for ChocoZap is 3,278 yen (tax included), and in addition to using ChocoZap, you can use the health management/promotion application “d healthcare (R) (440 yen including tax)” for smartphones provided by DOCOMO ※, and you can also earn up to 149 d points (limited period/use) of 5% of ChocoZap's monthly fee (excluding tax). The service has started on 2024/11/27.

*Only available on “d Healthcare” eligible models. Also, “d healthcare (purchases on the App Store)” is not eligible.

■Key Points

・In the interim period ending 2025/3, sales increased 8.9% compared to the same period last year, mainly due to the expansion of the ChocoZap business. Actively invest in measures to improve customer satisfaction (human service, machine failure countermeasures, enhanced cleaning, etc.)

・Sales and profit are expected to increase with sales of 177.7 billion yen and operating income of 6.3 billion yen for the fiscal year ending 2025/3. The return on investment phase will begin in the second half

・Respond to health seminars as an efficient member acquisition measure to reduce advertising costs. Start offering “ChocoZap x Docomo Package”

(Written by FISCO Visiting Analyst Hideo Kakuta)