■Summary

The RIZAP Group ＜2928＞ said, “People can change.” It is a comprehensive enterprise that develops diverse businesses in the 3 areas of healthcare/beauty, lifestyle, and investment, centering on the health promotion business, under the unique management 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 68 group companies, including 5 listed subsidiaries, and 4,606 consolidated employees. The stock was listed on the Sapporo Stock Exchange Ambitious Market in 2006, and a medium-term management plan was formulated in 2022/9, but this was revised in 2024/2, and the new business “ChocoZap” business is being actively developed with the aim of operating income of 40,000 million yen (fiscal year ending 2027/3).

1. Financial Summary for the Fiscal Year Ending March 31, 2024

As for the fiscal year ending 2024/3, sales revenue was 166,298 million yen (up 7.6% from the previous fiscal year), operating loss was 594 million yen (loss of 4,948 million yen in the same period last year), net loss before income tax was 4,524 million yen (loss of 7,031 million yen), and net loss attributable to owners of the parent company was 4,300 million yen (loss of 12,673 million yen). A surplus of 4,175 million yen was achieved in the fourth quarter alone on an operating income basis due to the surplus conversion in the ChocoZap business. Regarding sales revenue, the RIZAP related business (including the ChocoZap business) increased drastically (20,100 million yen increase from the same period) by focusing on expanding the convenience store gym “ChocoZap,” which is in full swing. In existing businesses, while there was an increase in sales (same increase of 4,198 million yen), starting with Antirosa Co., Ltd., there was a decrease in sales (same 5,998 million yen decrease) due to store structural reforms such as REXT Co., Ltd., and the effects of selling the Sikata business under the umbrella of the subsidiary BRUNO ＜3140＞ at the end of the previous fiscal year (same decrease of 5,111 million yen). Regarding operating losses, the ChocoZap business transitioned to a payback period, and the Group as a whole improved due to surplus in the second half of the 2024/3 fiscal year and the success of business portfolio reforms such as REXT.

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

The earnings forecast for the fiscal year ending 2025/3 predicts a full-year surplus with sales revenue of 177,700 million yen (up 6.9% from the previous fiscal year), operating income of 6,300 million yen (loss of 594 million yen in the previous fiscal year), net income before income taxes of 3,100 million yen (loss of 4,524 million yen), and net income attributable to owners of the parent company of 2,000 million yen (loss of 4,300 million yen). Regarding sales revenue, sales are expected to continue to increase due to the opening of new stores and expansion of the membership base in the ChocoZap business. The 2025/3 fiscal year will shift the focus to “improving the satisfaction of existing members.” Measures include speeding up the introduction of new services, introducing a little bit of support, and concierges. Since investment to improve quality and customer satisfaction is concentrated in the first half, growth in operating profit is expected to slow down, but profit growth is expected to grow significantly from the second half to the 2026/3 fiscal year. The ChocoZap business has already become profitable on a monthly basis, and we believe that the business model will be further strengthened by investing in new services and human services, and that it will surpass profit plans and achieve results.

3. Growth Strategy and Topics

The company has drawn up a development concept divided into 3 phases and is putting it into practice. There are 3 phases: phase 0 (making gyms barrier-free), phase 1 (making gyms barrier-free), and phase 2 (making health social infrastructure). Less than 2 years have passed since launch, and now phase 0 (making gyms barrier-free) has been completed, and we are in the midst of shifting that goal to phase 1. In phase 1 (making it a universal service), we will pursue improving quality and raising the level of universal services. Specifically, human-like services such as a little bit of support and concierge will be added, and “people x DX optimization” will be challenged. Also, by strengthening the introduction of new services, customer satisfaction at existing stores and new stores will be improved. Little Support is an effort to patrol RIZAP trainers who play various roles such as making plans, how to use apps, exercise and meal advice, machine maintenance and cleaning, etc., and it is a reliable presence for new members and training beginners. By the end of 2024/6, we are aiming for a system of 500 trainers with a little bit of support, and significant enhancements have been implemented. ChocoZap's business model began with the concept of “unmanned,” but it is evolving into a new service model by assigning specialized human resources of about 1 person (estimated with 500 people for 1,500 stores) to approximately 3 stores.

■Key Points

・In the fiscal year ending 2024/3, the ChocoZap business turned into a surplus and achieved a surplus. ChocoZap has 1,500 stores and over 1.2 million members (as of 2024/5)

・The capital adequacy ratio starts to rise. The net asset ratio recovered to 25.4% at the end of January 2024. Further improvements are expected as the ChocoZap business becomes profitable

・Add targets to the medium-term management plan and aim for operating profit of 40,000 million yen for the fiscal year ending 2027/3. ChocoZap starts advertising platform business as second source of revenue

・There will be no distribution until 2024/3. Recovery needles from the 2025/3 fiscal year. ChocoZap Announces Japan's Best Achievement Commemorative Special Offer

(Written by FISCO Visiting Analyst Hideo Kakuta)