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Introduction & Market Context
Laxus Technologies Inc (288A) reported a significant decline in profitability for its first quarter ended June 2025, despite only a moderate drop in sales. The luxury handbag subscription service provider presented its quarterly results on August 8, 2025, highlighting challenges in acquiring new subscription contracts while outlining strategic initiatives aimed at reversing negative trends.
The company’s stock, currently trading at 172, remains significantly below its 52-week high of 439, reflecting investor concerns about declining profitability despite management’s optimistic outlook for full-year sales growth.
Quarterly Performance Highlights
Laxus Technologies reported Q1 FY03/2026 net sales of 560 million yen, representing a 13% year-over-year decline from 640 million yen in the previous year’s first quarter. More concerning was the sharp drop in profitability, with operating profit plummeting 75.4% to 40 million yen compared to 180 million yen in Q1 FY03/2025.
As shown in the following comprehensive financial overview, the company experienced declines across all major profitability metrics:
The company maintained 17,048 subscription contracts (including Double Plans) during the quarter. While average customer spending showed a marginal increase of 0.5% to 9,039 yen, this positive development was insufficient to offset the overall decline in contract numbers.
Gross profit margin contracted to 74.3% from 78.9% in the previous year, while SG&A expenses increased by 15.6% year-over-year to 373 million yen, further pressuring profitability. The operating profit margin consequently fell to 8.2% from 29.1% a year earlier.
Factors Behind Performance Decline
Laxus Technologies attributed the significant profit decline to several key factors, primarily difficulties in obtaining new subscription contracts. The company provided a detailed breakdown of elements impacting operating profit:
As shown in the following waterfall chart, multiple factors contributed to the 142 million yen decline in operating profit:
The most significant negative impact came from reduced gross revenue due to declining subscription contracts (-90 million yen). Meanwhile, advertising expenses increased by 27 million yen (+33.9% year-over-year) as the company invested in new marketing channels. Other expenses rose by 31 million yen (+45.2%), which the company attributed partly to costs associated with shareholder meetings following its listing.
The SG&A expense breakdown reveals the company’s strategic shift toward higher marketing investment:
Strategic Initiatives
In response to these challenges, Laxus Technologies outlined several initiatives aimed at reversing the negative trend in subscription contracts. The company reported that its efforts began showing positive results in July 2025, with a shift from net decrease to net increase in contracts.
The company’s key performance indicators show the historical pattern of contract fluctuations and recent efforts to stabilize and grow the customer base:
Laxus has expanded its marketing channels to include video advertisements on platforms like TVer and ABEMA in the Tokyo area, as well as transit advertisements including taxi ads and ad-straps in Osaka. The company also implemented improvements to its landing pages and introduced comparison ads to boost conversion rates.
The company is also enhancing its digital user experience with personalized displays and AI-generated search tags to help users find their preferred bags more easily, potentially improving conversion rates.
Business Partnerships
A key element of Laxus Technologies’ growth strategy involves new business partnerships, particularly through its ShaaS (Sharing as a Service) initiative, which allows the company to provide its sharing service to other companies as an OEM offering.
The ShaaS approach aims to leverage existing customer bases of partner companies:
The company announced business tie-ups with four companies to expand its reach and increase contracts:
These partnerships with WORLD Group, AnotherADdress, AUCNET (Brandear), and TOP CONNECT represent a strategic effort to access new customer segments and distribution channels.
Additionally, Laxus opened its "Laxus Omotesando Shop" on June 20, 2025, located along Omotesando × Cat Street in Tokyo, creating a physical touchpoint with customers and establishing a direct-to-consumer sales channel for bags.
Forward-Looking Statements
Despite the challenging first quarter, Laxus Technologies maintained an optimistic outlook for the full fiscal year, forecasting 20% sales growth while acknowledging continued pressure on profitability due to growth investments:
The company projects net sales of 3,077 million yen for FY03/2026, a 20% increase from the previous year. However, operating profit is expected to decline by 24% to 448 million yen, and net profit is forecast to drop by 23.1% to 335 million yen.
Management emphasized three key strategic priorities for the remainder of the fiscal year:
1. Increased advertising expenses to drive new contract acquisition
2. Introduction of a shareholder benefit scheme
3. Expansion of the ShaaS (Sharing as a Service) business model
The company’s willingness to sacrifice short-term profitability for long-term growth suggests confidence in its strategic direction, though investors may remain cautious until evidence of sustainable growth materializes.
Full presentation:
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