■Summary

RIZAP Group <2928> is a Comprehensive Enterprise that develops various businesses primarily in health promotion, Health Care, beauty, lifestyle, and investment under the unique philosophy of proving that "people can change." The vision is to become "Global No.1 in Self-Investment Industry," and under the holding company system, the company has achieved tremendous growth by actively utilizing M&A, growing to 67 group companies including 5 listed subsidiaries and a consolidated employee count of 4,645 as of the end of March 2024. It was listed on the Sapporo Securities Exchange's Ambitious Market in 2006, and the ongoing mid-term management plan aims for an operating profit of 40,000 million yen (for the fiscal year ending March 2027), actively expanding the new business "chocoZAP (R)".

1. Overview of the 2025 Fiscal Year First Half Results

In the second quarter of the fiscal year ending March 2025 (hereinafter referred to as the interim period), revenue was 85,115 million yen (an increase of 8.9% compared to the same period last year), operating loss was 2,529 million yen (a loss of 6,023 million yen in the same period last year), pre-tax loss was 4,495 million yen (a loss of 7,423 million yen in the same period last year), and the interim loss attributable to the owners of the parent company was 4,282 million yen (a loss of 7,596 million yen in the same period last year), showing an improvement in profitability along with an increase in revenue. Regarding revenue, the growth of the convenience gym (R) "chocoZAP" business continues, and RIZAP-related businesses (including chocoZAP) have significantly increased revenue (with an increase of 7,563 million yen). Since the end of the previous fiscal year, chocoZAP has seen an increase of 321 stores, bringing the total number of stores to 1,704 and memberships to 1.301 million as of the end of September 2024. In the ongoing fiscal period, measures to improve customer satisfaction such as the introduction of new services for washing and drying machines, karaoke, personnel support, equipment maintenance, and cleaning are being implemented, successfully keeping the withdrawal rate within certain limits. The success of chocoZAP has had a positive effect on RIZAP (Body Make), leading to an increase in new members. In existing businesses, there was an increase in revenue from companies such as Antiroza Co., Ltd., Isshin Clock Co., Ltd., MRK Holdings <9980>, and BRUNO <3140> (which increased by 4,659 million yen), while there were declines in revenue (decreased by 4,342 million yen) due to impacts from REXT Holdings (trading card market downturn) and Hottamaru Sho <8105> (decreased orders, higher costs). Regarding operating loss, the chocoZAP business has implemented strategic investments in the first half, resulting in a consolidated operating loss, which is in line with plans and is temporary. As for funding related to store investments, financial expenses (2,024 million yen) have become burdensome, but with the improvement of financial soundness, refinancing is being planned to alleviate this burden.

2. Performance Outlook for the Fiscal Year Ending March 2025

For the fiscal year ending March 2025, the performance outlook expects revenue of 177,700 million yen (an increase of 6.9% compared to the previous fiscal year), operating profit of 6,300 million yen (a loss of 594 million yen in the previous fiscal year), pre-tax profit of 3,100 million yen (a loss of 4,524 million yen in the same period last year), and net profit attributable to the owners of the parent company of 2,000 million yen (compared to a loss of 4,300 million yen in the same period last year), forecasting a turnaround to profit for the entire fiscal year due to the completion of the ahead investment phase for the chocoZAP business (as initially projected). The continued growth in revenue is anticipated by expanding new store openings and enhancing the membership base, as well as implementing measures to improve customer satisfaction. The withdrawal rate has stabilized recently as a result of the measures to enhance the satisfaction of existing members carried out in the first half. From the second half to the fiscal year ending March 2026, entering a serious phase of investment recovery, significant profit growth is expected. The chocoZAP business is already capable of achieving monthly profitability, and the entire company has also seen operating profitability in the standalone second quarter, entering a stage where investment adjustments influence profitability. Major ahead investments were completed in the first half, and the evolution of the chocoZAP business model continues with the introduction of a new machinery maintenance system and reforms in publicity methods; the company believes the possibility of achieving profit plans is high.

Growth Strategy and Topics:

In November 2024, NTT Docomo <9437> and its group subsidiary RIZAP Co., Ltd. signed a business partnership agreement aimed at expanding the Health Care business and maximizing customer value, launching the "chocoZAP × Docomo Package." Through this partnership, both companies are exploring mutual customer referrals, joint product development and offering, integration with d-account (R)/d-points, and marketing collaboration, etc. The "chocoZAP × Docomo Package" allows users to utilize the standard monthly fee of 3,278 yen (tax inclusive) for chocoZAP, in addition to the use of the health management and improvement app for smart phones provided by Docomo, "d Health Care (R) (tax 440 yen)," and earn up to 149 points of d points, which equates to 5% of the chocoZAP monthly fee (excluding tax), subject to time and use limitations. This package has been available since November 27, 2024.

※ Available only for devices eligible for "d Health Care". Additionally, "d Health Care (purchases on the App Store)" is not eligible.

■Key Points

・For the interim period ending March 2025, revenue increased by 8.9% year-on-year primarily due to the expansion of the chocoZAP business. Actively investing in customer satisfaction improvement measures (human services, machine failure countermeasures, enhanced cleaning, etc.).

・For the fiscal year ending March 2025, revenue is expected to be 177.7 billion yen and operating profit 6.3 billion yen, indicating increased revenue and profit. Entering the investment recovery phase starting in the latter half of the year.

・Generating positive results from health seminars as an efficient membership acquisition strategy to reduce advertising expenditure. Started offering the "chocoZAP × Docomo Package."

(Written by FISCO Guest Analyst, Hideo Kakuta)