Tokyo Lifestyle Co., Ltd. Issues 2026 Chairman’s Letter to Shareholders

Rhea-AI Summary

Tokyo Lifestyle (Nasdaq: TKLF) issued the 2026 chairman's letter reviewing 2025 results and outlining 2026 strategic priorities. Key 2025 moves included new stores in Hong Kong, Toronto, Bangkok and Ho Chi Minh City, a wholly-owned Shenzhen subsidiary (June 2025), and a Sydney joint venture with external strategic capital (May/Nov 2025). Operational metrics improved sharply: inventory turnover rose to 35x in H1 FY2026 from 13x in H1 FY2025, and total SKUs expanded to ~219,800. The company secured a Hong Kong revolving credit facility (June) and a Hong Kong-based strategic private investor (December). Outlook centers on store-level profitability, supply-chain integration and asset-light partnerships.

Positive

• Inventory turnover increased to 35x in H1 FY2026 from 13x in H1 FY2025
• Total SKUs expanded to approximately 219,800 in H1 FY2026
• Established a wholly-owned Shenzhen subsidiary (June 2025) for China expansion
• Secured a Hong Kong revolving credit facility (June 2025) and a strategic investor (Dec 2025)

Negative

• Global macroeconomic environment remained challenging in 2025 (geopolitics, FX, supply chains)
• Management notes high competitive intensity ahead despite easing macro uncertainty

Key Figures

Share price move 5.09% Price change over prior 24 hours before news

Inventory turnover 35 times vs 13 times First half FY 2026 compared with first half FY 2025

Total SKUs 219,800 First half fiscal year 2026 product assortment size

Total revenue $190.4M First six months of fiscal year 2026

Gross margin 8.3% First six months of fiscal year 2026

Net loss $0.9M First six months of fiscal year 2026

Accounts receivable $148.6M Balance as of September 30, 2025

Cash on hand $2.2M As of September 30, 2025

Market Reality Check

$3.05 Last Close

Volume Volume 13,379 versus 20-day average of 36,769 suggests limited participation in the move. low

Technical Shares at $2.89 are trading below the 200-day MA of $3.45, despite the positive news tone.

Peers on Argus 1 Up

TKLF gained 5.09% while peers were mixed: FTEL up 8.94%, TLF up 1.51%, BGFV flat, BQ and PTLE down. This points to a stock-specific reaction rather than a broad sector move.

Historical Context

Date	Event	Sentiment	Move	Catalyst
Dec 22	Interim dividend	Positive	-6.5%	Announced payment of interim dividend for fiscal year 2026.
Dec 19	Earnings update	Positive	+5.4%	Reported strong revenue growth but lower gross margin and net loss.
Dec 01	Strategic investment	Positive	-5.3%	Investment agreement to fund Hong Kong and Australia store expansion.
Nov 03	Store opening	Positive	+2.7%	Opened first directly operated Reiwatakiya store in Vietnam.
Oct 20	Online partnership	Positive	-5.1%	Cooperation with HK Artemis to enhance Hong Kong online sales.

Pattern Detected

Positive strategic and growth updates have produced mixed reactions, with several instances of the stock declining on seemingly constructive news.

Recent Company History

Over the past few months, Tokyo Lifestyle reported strong revenue growth to $190.4M with rising franchise and wholesale sales, but also a $0.9M net loss and lower 8.3% gross margin. The company expanded in Southeast Asia and North America, opened a Vietnam flagship, and entered a cooperation with HK Artemis to boost online sales. A strategic investment agreement in Hong Kong and Australia and an interim dividend for fiscal 2026 underscored shareholder returns and growth aims. Today’s chairman’s letter ties these developments into a broader 2026 efficiency and globalization narrative.

Market Pulse Summary

This announcement reiterates Tokyo Lifestyle’s 2025 achievements, including inventory turnover improving to 35 times and SKU expansion to 219,800, while emphasizing asset-light growth and global diversification. It builds on recent earnings that showed $190.4M in revenue but an 8.3% gross margin and a $0.9M net loss. Investors may watch how digital partnerships, new stores in Southeast Asia and North America, and the revolving credit facility translate into improved profitability and cash generation through fiscal 2026.

Key Terms

inventory turnover financial

"inventory turnover increased sharply to 35 times in the first half..."

Inventory turnover measures how many times a company sells and replaces the goods it keeps on hand during a given period, found by comparing how much it sells to the typical amount of inventory it carries. For investors it signals how efficiently a business converts stock into sales and cash: higher turnover often means strong demand and lower holding costs, while unusually high or low turnover can point to supply, pricing, or demand problems that affect profits.

gross profit margins financial

"gross profit margins remained at healthy high single-digit levels..."

Gross profit margin measures the share of sales revenue a company keeps after paying the direct costs to make or buy the products or services it sells. Think of revenue as a whole pizza and gross profit margin as the slice left after taking away the cost of the ingredients — it shows how efficiently a company turns sales into basic profit. Investors use it to compare profitability, spot pricing or cost trends, and assess how much is available to cover other expenses and generate net profit.

revolving credit facility financial

"With a revolving credit facility secured in Hong Kong in June..."

A revolving credit facility is a type of loan that a business can borrow from whenever it needs money, up to a set limit. It’s like having a credit card for companies—allowing them to borrow, pay back, and borrow again as needed, providing flexibility for managing cash flow or funding short-term expenses.

wholly-owned subsidiary financial

"we established a wholly-owned subsidiary in Shenzhen..."

A wholly-owned subsidiary is a company whose entire ownership is held by another company, called the parent, so the parent controls all shares, board appointments and major decisions. For investors this matters because the subsidiary’s profits, losses, assets and liabilities are treated as part of the parent’s financial picture, affecting valuation and risk exposure — imagine a parent owning a single storefront outright and consolidating its receipts and bills into the parent’s books.

joint venture financial

"we formed a joint venture and subsequently launched our first..."

A joint venture is when two or more companies team up to work on a specific project or business idea, sharing both the risks and the rewards. It’s like friends starting a lemonade stand together—each contributes resources and they split the profits, making it easier to succeed than going alone.

asset-light financial

"Expanding asset-light partnership models to accelerate global brand..."

A business described as "asset-light" relies on few owned physical assets—such as factories, real estate, or heavy equipment—and instead uses partners, contractors, or lease arrangements to deliver products or services. For investors, this model can mean lower upfront investment, faster scaling and often higher profit margins, but it also increases dependence on outside providers and can create less predictable costs and supply risks—like renting tools instead of owning them.

AI-generated analysis. Not financial advice.

-- Global Expansion Delivers Significant Progress, Operational Efficiency Substantially Enhanced

TOKYO, Dec. 29, 2025 (GLOBE NEWSWIRE) -- Tokyo Lifestyle Co., Ltd. (Nasdaq: TKLF) (“Tokyo Lifestyle” or the “Company”), a retailer and wholesaler of Japanese beauty and health products, sundry products, luxury products, electronic products, collectible cards, trendy toys as well as other products in Hong Kong, Japan, North America, Thailand, Vietnam, the United Kingdom and Australia, today announced that Mr. Mei Kanayama, Representative Director and Principal Executive Officer of the Company, has issued a letter to shareholders.

In the letter, Mr. Kanayama reviews the Company’s operational resilience amid a complex and volatile macroeconomic environment in 2025 and outlines Tokyo Lifestyle’s strategic vision for 2026 and beyond.

The full text of the letter to shareholders is as follows:

To Our Esteemed Shareholders,

As 2026 approaches, on behalf of the management of Tokyo Lifestyle Co., Ltd., I would like to review our strategic execution in 2025 and outline the strategic priorities that will guide us in 2026 and beyond.

In 2025, the global macroeconomic environment remained challenging, shaped by geopolitical tensions, supply chain realignments, and volatile foreign exchange fluctuations. Rather than retreating defensively in the face of these pressures, the Company pursued proactive, forward-looking strategic adjustments coupled with disciplined execution. We successfully transitioned from a strategy of “scale expansion” to one centered on “quality improvement and efficiency enhancement.” As a result, we demonstrated strong operational resilience amidst uncertainties while achieving meaningful progress in key financial metrics and building a more sustainable and diversified global footprint.

Core Achievements in 2025: Globalization and Diversification in Tandem
Over the past year, we adhered to our strategy of “multi-regional layout and differentiated operations,” driving solid growth across our core global markets:

1. Deepening Existing Markets and Exploring New Opportunities (East Asia and Southeast Asia)

• Core Markets - Hong Kong and Japan: We continued to strengthen our position and presence in Hong Kong and Japan, which serve as our primary cash flow markets. By adding two new directly operated stores in Hong Kong and expanding wholesale channels, we further reinforced our local sales network. Benefiting from the recovery of tourism, sales of high-margin categories, such as cosmetics and luxury goods, rebounded significantly.
• Strategic Extension of Product Category: By accurately capturing consumption trends among Generation Z, we rapidly introduced pop toys and trading cards into our product portfolio. This initiative not only optimized the stock-keeping unit (“SKU”) mix but also meaningfully lowered the average age of our customer base, injecting renewed youthful vitality into our brand.
• Mainland China and Southeast Asia: In June 2025, we established a wholly-owned subsidiary in Shenzhen, marking a deliberate step toward broader and deeper penetration of the mainland Chinese market. In Southeast Asia, we adopted a capital-efficient model combining “direct-operated flagship benchmarks with franchise replication,” successfully launching flagship stores in Bangkok (February) and Ho Chi Minh City (October). We believe that these milestones laid a strong foundation for future expansion in these markets.

2. Expanding into Developed Markets (North America and Oceania)

• North American: The opening of our new store in Toronto (May) expanded our North American direct-operated network to seven locations, further validating the scalability and replicability of our Asian retail model in the North American market.
• Oceania: In May, we formed a joint venture and subsequently launched our first direct-operated store in Sydney, Australia in November, while introducing external strategic capital. This milestone not only strengthened our global footprint but also established the operational and financial foundation for future expansion in the Southern Hemisphere.

A Qualitative Leap in Operational Efficiency and Balance-Sheet Strength

Through digital transformation and refined management practices, we achieved a step-change improvement in operational efficiency in 2025:

• Significant Improvement in Inventory Turnover Rate: Supported by optimized supply-chain management and diversified sales channels, inventory turnover increased sharply to 35 times in the first half of fiscal year 2026, compared with 13 times in the same period of fiscal year 2025. This strong performance highlights our strong ability to monetize inventory and deploy capital efficiently.
• SKU Expansion with Stable Profitability: Despite a substantial increase in total SKUs to approximately 219,800 in the first half of fiscal year 2026, up from 165,120 in the first half of fiscal year 2025 and 201,300 for fiscal year 2025, gross profit margins remained at healthy high single-digit levels, underscoring our ability to preserve profitability quality during scale expansion.
• Asset-Light Digital Transformation: Through our strategic partnership with HK Artemis Limited (“HK Artemis”), we introduced specialized capabilities in e-commerce and live streaming. This “authorized operation plus performance-based compensation” model significantly reduced trial-and-error costs and opened a new, low-risk growth avenue for the Company.
• Optimized Capital Structure: With a revolving credit facility secured in Hong Kong in June and the introduction of a Hong Kong-based strategic private investor in December, we further optimized our capital structure, strengthened liquidity and enhanced financial flexibility to support future mergers, acquisitions and global expansion.

Strategic Outlook for 2026: Long-Term Perspective and Sustainable Value Creation

Looking ahead to 2026, while macroeconomic uncertainties are gradually easing, competitive intensity remains high. Tokyo Lifestyle will continue to adhere to its operating philosophy of “bold planning, prudent validation and decisive execution.” Building on our global footprint and superior operational efficiency, we will focus on:

1. Continuously improving store-level profitability (unit economics);
2. Deepening supply chain integration to further unlock margin potential; and
3. Expanding asset-light partnership models to accelerate global brand penetration.

I would like to express my sincere gratitude for your continued support, confidence and trust. Our performance to date demonstrates our ability to navigate economic cycles, both upcycles and downcycles. Together, we will continue to shape the Company’s future and remain firmly committed to delivering sustainable, long-term value for our shareholders.

Sincerely,

Mei Kanayama
Representative Director and Principal Executive Officer
Tokyo Lifestyle Co., Ltd.

About Tokyo Lifestyle Co., Ltd.

Headquartered in Tokyo, Japan, Tokyo Lifestyle Co., Ltd. (formerly known as Yoshitsu Co., Ltd) is a retailer and wholesaler of Japanese beauty and health products, sundry products, luxury products, electronic products, collectible cards, trendy toys, and other products in Hong Kong, Japan, North America, Thailand, Vietnam, the United Kingdom and Australia. The Company offers various beauty products (including cosmetics, skincare, fragrance, and body care products), health products (including over-the-counter drugs, nutritional supplements, and medical supplies and devices), sundry products (including home goods), collectible cards and trendy toys (including Pokémon cards, BE@RBRICK and other trendy products) and other products (including food and alcoholic beverages). The Company currently sells its products through directly-operated physical stores, through online stores, and to franchise stores and wholesale customers. For more information, please visit the Company's website at https://www.ystbek.co.jp/irlibrary/.

Forward-Looking Statements

Certain statements in this press release are 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 and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy, and financial needs. Investors can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to,” or other similar expressions. 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 filings with the U.S. Securities and Exchange Commission.

For more information, please contact:

Tokyo Lifestyle Co., Ltd.
Investor Relations Department
Email: ir@ystbek.co.jp

Ascent Investor Relations LLC
Tina Xiao
President
Phone: 1-646-932-7242
Email: investors@ascent-ir.com

FAQ

What operational improvement did Tokyo Lifestyle (TKLF) report for H1 FY2026?

Inventory turnover rose to 35x in H1 FY2026 versus 13x in H1 FY2025.

Which markets did Tokyo Lifestyle (TKLF) expand into in 2025?

Tokyo Lifestyle opened new stores in Hong Kong, Toronto, Bangkok, Ho Chi Minh City and launched a Sydney JV.

When did Tokyo Lifestyle (TKLF) establish a Shenzhen subsidiary?

Tokyo Lifestyle established a wholly-owned Shenzhen subsidiary in June 2025.

What capital actions did Tokyo Lifestyle (TKLF) complete in 2025 to strengthen liquidity?

The company secured a revolving credit facility in Hong Kong (June 2025) and introduced a Hong Kong-based strategic private investor (Dec 2025).

How large was Tokyo Lifestyle's SKU expansion reported for H1 FY2026?

Total SKUs increased to approximately 219,800 in H1 FY2026, up from 165,120 in H1 FY2025.

What are Tokyo Lifestyle's (TKLF) main strategic priorities for 2026?

The company will focus on improving store-level profitability, deepening supply-chain integration, and expanding asset-light partnerships.