Transcript: Tokyo Lifestyle FY 2026 Earnings Conference Call

Tokyo Lifestyle (NASDAQ: TKLF ) held its full-year earnings conference call on Friday.

Below is the complete transcript from the call.

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View the webcast at Summary Tokyo Lifestyle Co Ltd reported a 77.6% increase in total revenue for fiscal year 2026, reaching $373.2 million, driven by strong luxury product sales and expansion in franchise and wholesale operations.

The company achieved double-digit growth across all core operating channels, validating its transformation into a diversified consumer lifestyle platform.

Despite revenue growth, gross margin declined by 3.9 percentage points to 7.5% due to a shift in revenue mix toward lower margin franchise and wholesale businesses.

Operating expenses rose by 29.6% due to higher logistics, payroll, and promotional costs, contributing to a decrease in net income to $0.7 million from $6.6 million the previous year.

Strategic initiatives include opening new stores and distribution centers globally, optimizing the omnichannel retail network, and expanding the luxury goods segment.

The company remains confident in delivering sustainable long-term growth through disciplined execution, despite macroeconomic challenges and tax-related impacts on profitability.

Cash and cash equivalents were $2.1 million as of March 31, 2026, with significant accounts receivable collections post-fiscal year-end enhancing liquidity.

Full Transcript OPERATOR Good day, ladies and gentlemen.

Thank you for standing by and welcome to Tokyo Lifestyle Co Ltd's fiscal year 2026 earnings conference call.

During today's presentation, all parties will be in a listen-only mode.

This conference is being recorded today, Friday, July 10, 2026.

If you have any objections, you may disconnect at this time.

Joining us today from Tokyo Lifestyle Co Ltd is the Company's Representative, Cissy Wong.

Before we continue, I would like to remind you that some information discussed on this call will contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the U.S.

Private Securities Litigation Reform Act of 1995.

These forward-looking statements involve known and unknown risks and uncertainties.

The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances or changes in its expectations except as may be required by law.

Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's annual report on Form 20-F and in its other filings with the SEC.

With that, I will now turn the call over to Cissy Wong, the Company's representative.

Please go ahead.

Cissy Wong (Company Representative) Thank you, operator, and thank you all for joining Tokyo Lifestyle Co Ltd's fiscal year 2026 earnings conference call today.

On today's call, I will provide an overview of our performance for the fiscal year ended March 31, 2026, followed by a detailed review of our financial results.

Fiscal year 2026 was a year of strong execution across our business, delivering robust revenue growth in all of our core operating channels.

Our directly operated stores, franchise network, and wholesale operations each achieved double-digit growth, demonstrating the effectiveness of our strategy to diversify our portfolio, broaden our customer base, and accelerate global market expansion.

This result further validates our transformation from a traditional retailer into a diversified consumer lifestyle platform integrating retail, franchise, wholesale, and luxury goods businesses to create sustainable long-term value.

During the year, we continued advancing our affiliate growth strategy by expanding our franchise and wholesale operations with a particular focus on the high-end merchandise segment.

While these channels generally generate lower gross margins than our directly operated stores, they require significantly less capital investment and operating expense, allowing us to scale more efficiently and generate attractive long-term returns.

As a result, the change in our revenue mix reflects a deliberate optimization of our business model rather than a deterioration in operating performance.

Another standout achievement of the year was the outstanding performance of our luxury goods business.

In particular, our luxury goods segment quickly emerged as a meaningful contributor to growth, reflecting strong customer demand and the successful execution of our product expansion strategy.

At the same time, continued expansion of our wholesale customer base and distribution network further strengthened our market reach, diversified our revenue stream, and enhanced the resilience of our business.

Supporting this growth, our total assets increased by 48% during fiscal year 2026, and we remained profitable for the third consecutive year.