Sales and Operating Profit Rose 13.2% and 17.1% Year-On-Year, Respectively
Sales rose 13.2% year-on-year to ¥30.394 billion. In addition to the rise in sales of the Curves Fitness Club business by 22.5% year-on-year with an increase in shopping sales due to the launch of a new protein product and strengthened sales, sales of the karaoke club business grew 6.9% year-on-year with new club openings.
Operating profit rose 17.1% year-on-year to ¥3.687 billion. Although the profit of the Curves Fitness Club business rose only 2.6% year-on-year due to a temporary expenditure incurred from the acquisition of the global headquarters of Curves, the profit of the karaoke club business rose 45.4% year-on-year as the clubs in the Metropolitan Area (Tokyo and 3 surrounding prefectures) performed well and improved efficiency. The decline in tax burden ratio (38.5% → 34.0%) allowed net profit to rise 28.5% year-on-year to ¥2.320 billion.



The sales of the existing clubs stood at 99.7% of the previous year. Sales of the clubs in regional areas fell short of the plan due to their poor performance while those increased for the clubs in the Metropolitan Area. Sales increased due to new club openings (this boosted sales by ¥1.166 billion). Koshidaka continues to expand its club network in the Metropolitan Area, and 9 out of 15 new clubs were opened in the Metropolitan Area in the first half of the current year. As of the end of the first half, the number of clubs was 506 (477 at the end of the first half of the previous term and 499 at the end of the previous term), of which 497 were Manekineko karaoke clubs (467 at the end of the first half of the previous term and 488 at the end of the previous term) and 9 were One Kara karaoke clubs (10 at the end of the first half of the previous term and 10 at the end of the previous term).
As for profit, the full-scale profit contribution has become visible from the clubs that have been opened concentratedly in the Metropolitan Area since 2014, due to improvement in club operation efficiency by adjusting personnel allocation and operation hours as well as business operation being on track. While cost of labor and rent increased with an increase in the number of clubs, depreciation, advertising expenses, charges on closing down the clubs, etc. declined.

In overseas markets, sales in both Singapore and South Korea rose. Opening new clubs with food services available allowed sales to rise in South Korea, while sales in Singapore, in which 1 club was closed down also showed a rise. As for profit and loss, increased sales and subsiding of depreciation burden allowed operating loss to decline from ¥53 million to ¥30 million in South Korea. On the other hand, the business in Singapore has remained profitable despite a slight fall in profit.

As a result of 38 new club openings likewise the same period of the previous year (1 club closed), the number of Curves Fitness Clubs in Japan rose 100 or 5.7% year-on-year from 1,760 to 1,860 (1,823 at the end of the previous term). The number of members rose 22,000 or 2.8% year-on-year from 784,000 to 806,000 (821,000 at the end of the previous term). By age distribution, the number of members in their 40s, 50s, 60s, and 70s and above stood at 8.0%, 22.5%, 39.9% and 26.1%, respectively, with the total number of members over 50 years of age accounting for 88.5% of total memberships.
Spot sales declined by ¥224 million in reaction to increased replacement of equipment in its 10th year in the first half of the previous term, but shopping sales rose ¥2.489 billion as the membership rate increased from 30% to 40% due to the launch of a new protein product, etc.
As for profit, segment profit rose only 2.6% year-on-year as there was a temporary expenditure of ¥328 million incurred from the acquisition of the global headquarters of Curves in the second quarter.
Curves Holdings Co. Ltd., (hereinafter referred to as "CVH"), which is a consolidated subsidiary, acquired all of the issued shares of a total of 6 companies: Curves International, Inc. (hereinafter referred to as "CVI"), the global franchiser of the Curves Fitness Club business; Curves International Holdings, Inc. (hereinafter referred to as CVIH"), the 100% parent company; Curves For Women II, L.C. (hereinafter referred to as "CFW), which sells equipment of the Curves Fitness Club business to franchisees; Curves International Japan, LLC (hereinafter referred to as "CVIJ), a subsidiary of CVI, a Hong Kong subsidiary and a Chinese subsidiary for ¥18.4 billion through a Special Purpose Company (hereinafter referred to as SPC) on March 31. After the stock acquisition, "CVI" effected an absorption-type merger of "SPC," "CVIH," "CFW" and "CVIJ."

Despite the decline in segment profit due to expenses (¥15 million yen) incurred outside the budget from refurbishment of facilities, etc. in addition to the fall in sales (¥8 million), surplus was maintained. Energy expenses (up ¥11 million), labor cost (up ¥5 million), consumable goods expenses (up ¥12 million), etc. rose.


Total assets at the end of the first half of the current year were ¥43.664 billion, which is almost at the same level as the end of the previous term. On the debit side, cash and deposits were on decline on one hand as interest bearing liabilities were cut down, working capital increased and new club openings, and fixed assets increased on the other hand. On the credit side, net asset increased on one hand, and interest bearing liabilities decreased on the other hand. As a result, capital adequacy ratio improved by 4.5 points to 54.1% from the end of the previous term.
