HIROTA GROUP HOLDINGS Co.,Ltd. (3346) Stock Price

Hirotag Group Holdings is a holding company primarily engaged in the manufacturing and sales of Western-style confectionery. Its core products are original cream puffs and ice cream puffs. Under the "Hirota Western Confectionery" brand, the company operates stores in the Greater Tokyo and Kansai regions, offering products through a combination of direct-operated stores and wholesale channels.

The company's main customers include individual consumers shopping at its direct stores and retail outlets and corporate clients purchasing through wholesale. Additionally, its beauty and healthcare business, which handles cosmetics and supplements, primarily serves duty-free shops as customers and has secured stable revenue backed by inbound tourism demand.

The business is divided into two main segments: the sweets business and the beauty and healthcare business. In the sweets business, Yougashi no Hirota Co., Ltd. focuses on cream puff products, Awaya Sohbei handles Japanese confectionery and specialty items, and Trianon Yougashi Shop manages cakes and baked goods. MEX Shoji sells cosmetics and supplements to duty-free retailers.

In response to recent performance deterioration, the company has prioritized "achieving continuous operating profitability" alongside revenue expansion as its primary growth objective. The latest consolidated financial results showed an operating loss of 357,816 thousand yen and a net loss attributable to parent company shareholders of 412,068 thousand yen. Although net assets reached 189,696 thousand yen following a third-party capital increase, operating cash flow remains negative. The company is targeting profitability in the second half and sustained operating profit going forward.

Key investment areas are product development and manufacturing infrastructure strengthening. The company plans to exit unprofitable direct operations and new development projects early, while outsourcing distribution functions through a business partnership with Taguchi Foods to focus on manufacturing. This approach will significantly reduce selling, general and administrative expenses, allowing the company to concentrate resources on cost reduction and quality improvement to enhance profitability and competitive differentiation. The company will leverage strengths such as Hirota's shoe-based products and region-specific offerings across brands, while ruthlessly reviewing low-margin businesses.

For new market development, inbound demand and beauty healthcare operations serve as growth pillars. The company aims for second-half profitability by developing and selling inbound-focused products. For MEX Shoji, which handles cosmetics and supplements for duty-free retailers, the company plans revenue growth through enhanced marketing and rapid expansion. Additionally, the company is improving profitability in existing channels through expanded OEM supply partnerships, increased per-store sales at direct outlets, and product strategies emphasizing seasonal items and repeat purchases.

Regarding technological innovation, the company is focusing on product development and cost management. It is reducing cost of sales through manufacturing process efficiency and rigorous quality control, while implementing detailed cost management at the operational level and reviewing supply structures. The company is also advancing initiatives to enhance marketing effectiveness through digital-driven sales promotion and rapid product launches. Through these efforts, the company aims to rebuild its profit foundation.