Investing in Japan: Geo Holdings' financial results for FY 2019

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At-home consumption increased but market contraction dragged down profits


Geo Holdings Corporation, located in Aichi prefecture, provides DVD rental service and second hand merchandises including used smartphones. The company has recently been expanding used smartphone business taking advantage of a related law revision in October 2019 which is expected to expand used smart phone market. 
Geo Holdings announced its consolidated financial results for FY 2019

 On May 11, Geo Holdings Corporation announced its consolidated financial results for the fiscal year ending March 2020. Although sales increased 4.3% year on year to 305 billion yen, operating income fell by 36% to 10 billion yen, ordinary income decreased 38.9% to 10.7 billion yen and net income was down 62.7% to 3.8 billion yen. 
Geo Holdings announced its consolidated financial results for FY 2019

 Demand from at-home consumption grew due to the spread of new coronavirus infections, but the contraction of the rental market for DVDs and videos gave negative impacts on its profits. In addition, as sales of downloaded game software expanded, Geo Holdings’ sales of new game consoles and software at actual stores were sluggish. 

 On the other hand, sales at existing second-hand stores such as “2nd Street” were firm against the backdrop of second-hand market expansion in Japan.

Geo aims to grow in the second-hand market


Regarding the future forecast, the company expects downward trend to continue in rental merchandise market. Because of that, the company’s sales for the fiscal year ending March 2021 will fall 1.7% year on year to 300 billion yen, operating income will decrease 40.1% to 6.0 billion yen, and net income is forecasted to be 3.2 billion yen, falling 16.8%. 

 As for future business development, Geo aims to enhance sales of used smartphones and online transactions while continuing to expand number of its second-hand stores such as “2nd Street” both in Japan and overseas in order to capture growing demand for reuse and online businesses. 

 Right now, Geo Holdings Corporation faces severe business environment, but the company accumulated enough financial assets during recent profitable time to ride through present rough situation. With a recent correction in the Japanese stock market, Geo Holdings Corporation’s stock price may look fairly attractive to value seeking investors.


Geo Holdings announced its consolidated financial results for FY 2019

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