| Metric | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥392.8B | ¥335.3B | +17.1% |
| Operating Income / Operating Profit | ¥33.9B | ¥32.2B | +5.3% |
| Ordinary Income | ¥34.9B | ¥34.0B | +2.5% |
| Net Income / Net Profit | ¥25.3B | ¥23.2B | +8.9% |
| ROE | 12.4% | 12.6% | - |
For the fiscal year ended March 2026, the company achieved revenue of ¥392.8B (YoY +57.5B +17.1%), Operating Income of ¥33.9B (YoY +1.7B +5.3%), Ordinary Income of ¥34.9B (YoY +0.9B +2.5%), and Net Income attributable to owners of the parent of ¥25.2B (YoY +2.1B +8.9%), recording both higher sales and earnings. Revenue realized double-digit growth, but Operating Margin fell to 8.6% from 9.6% a year earlier (down 1.0pt) as upfront costs associated with M&A and new store investments slightly pressured profitability. ROE remained healthy at 12.4%, comprising Net Profit Margin 6.4% × Total Asset Turnover 1.24 × Financial Leverage 1.55x, an improvement of +0.8pt YoY. Operating Cash Flow (OCF) was steady at ¥24.7B (YoY +3.2B +15.1%), but working capital expanded due to inventory buildup to ¥112.0B (+24.9B), causing the OCF/EBITDA ratio to decline to 0.56x. Investing Cash Flow was -¥27.1B, driven mainly by capital expenditures of ¥12.7B and M&A-related outflows (acquisition of subsidiary shares ¥11.1B, business acquisitions ¥2.7B). Free Cash Flow (FCF) was -¥2.5B, reflecting funding needs in a growth investment phase. Dividends were maintained at an FY-end ¥85 (Payout Ratio 46.8%), but with negative FCF the company supplemented distributions with cash on hand and borrowings. The FY2027 full-year forecast anticipates Revenue of ¥457B (+16.4%) and Operating Income of ¥40.5B (+19.6%), expecting accelerated profit growth from full-year M&A contributions and store openings.
[Revenue] Revenue was ¥392.8B (YoY +57.5B +17.1%), achieving high growth. By segment, the Reuse Business recorded ¥372.7B (+17.6%) and led overall performance, while the Franchise (FC) Business totaled ¥23.6B (+3.7%), showing only modest growth. Growth in the Reuse Business was driven by M&A (one company newly consolidated in FY2025) contributing sales and robust traffic at existing stores. Gross margin declined 0.4pt to 68.2% from 68.6% year-on-year, affected by procurement cost environment and changes in product mix. Inventory expanded to ¥112.0B (YoY +24.9B +28.6%) alongside expanded buying and selling activities at reuse stores, and inventory turnover days were approximately 327 days (COGS basis), reflecting a business model with high inventory dependence. The FC Business, centered on royalty income, remained stable but growth was modest due to no significant increase in franchisee numbers.
[Profitability] SG&A expenses were ¥234.0B (YoY +35.6B +18.3%), rising faster than sales growth, and the SG&A ratio increased 0.6pt to 59.6% from 59.0% a year earlier. The increase was mainly due to higher personnel costs and rents from new store openings and M&A integration, and increased goodwill amortization (¥0.7B, prior year ¥0.1B); corporate expenses also rose to ¥35.3B (prior year ¥31.1B). Operating margin fell 1.0pt to 8.6% from 9.6% as operating leverage was less effective under the current cost structure. Non-operating income totaled ¥1.7B (dividend income ¥0.8B, foreign exchange gains ¥0.1B, etc.), while non-operating expenses were ¥0.7B including interest expense ¥0.6B, leading to Ordinary Income of ¥34.9B (YoY +2.5%). In extraordinary items, the company recognized ¥1.8B gain related to step acquisitions while recording impairment losses of ¥1.4B, a net uplift of roughly ¥0.3B. Pre-tax profit of ¥35.2B less income taxes of ¥10.0B resulted in Net Income of ¥25.3B (YoY +8.9%). In conclusion, while the company achieved higher sales and earnings, the margin decline partially constrained the quality of growth.
The Reuse Business posted Revenue ¥372.7B (YoY +17.6%), Operating Income ¥56.8B (YoY +12.3%), and a margin of 15.2%, maintaining solid performance as the core segment. New consolidations from M&A and stronger traffic at existing stores drove revenue growth, and the segment margin improved 0.2pt from 15.0% the prior year. The FC Business recorded Revenue ¥23.6B (YoY +3.7%), Operating Income ¥13.1B (YoY +1.3%), and an exceptionally high margin of 55.5% due to its royalty model, but its scale is small and it accounted for about 38% of consolidated Operating Income. Segment combined Operating Income was ¥70.0B, which, after allocation of corporate expenses of ¥36.1B (prior year ¥31.7B), resulted in consolidated Operating Income of ¥33.9B; the increase in corporate expenses (+13.9%) compressed overall margins. Revenue composition was 94.9% Reuse Business and 6.0% FC Business, indicating a very high concentration in the Reuse Business and leaving structural portfolio risk.
[Profitability] Operating Margin 8.6% (prior year 9.6%), Gross Margin 68.2% (prior year 68.6%), SG&A Ratio 59.6% (prior year 59.0%) — margins have slightly contracted. ROE 12.4% (prior year 12.5%) remains stable, with Net Profit Margin 6.4%, Total Asset Turnover 1.24x, and Financial Leverage 1.55x. Interest burden factor 1.04x (Non-operating income ¥1.7B / Interest expense ¥0.6B) indicates adequate tolerance for financial costs. [Cash Quality] Operating Cash Flow / Net Income is 0.98x and broadly consistent, but OCF/EBITDA is 0.56x and has declined due to inventory buildup. Inventory turnover days are approximately 327 days (COGS basis), and inventories represent 35.4% of total assets. Accrual ratio is 0.2% ((Operating CF - Net Income)/Total Assets), low and indicating good quality of earnings. [Investment Efficiency] ROIC is 8.4% (NOPAT ¥33.9B × (1 - 0.283 tax rate) / Invested Capital ¥402B (Equity ¥202B + Interest-bearing debt ¥59B - Cash ¥33B)), exceeding capital costs, though inventory expansion somewhat dampens invested capital efficiency. Total Asset Turnover 1.24x is standard for retail. [Financial Health] Equity Ratio 64.3% (prior year 71.3%) declined slightly but remains healthy. D/E ratio 0.55x, Debt/EBITDA 1.26x indicate sufficient debt capacity. Current Ratio 189%, Quick Ratio 64.5% secure short-term liquidity, but Cash / Short-term Debt ratio 0.65x with short-term borrowings of ¥50.9B and cash of ¥33.1B makes refinancing management important. Interest Coverage is 53x (EBIT ¥33.9B / Interest expense ¥0.6B), extremely robust and implies high resilience to rising rates.
Operating Cash Flow was ¥24.7B (YoY +15.1%) but from Operating CF subtotal ¥35.2B, working capital movements — inventory increase -¥10.4B, accounts receivable increase -¥1.5B, accounts payable decrease -¥0.8B — caused a -¥12.7B outflow, and after corporation tax payments -¥10.7B the net result was as reported. Inventory buildup was the main constraint on cash generation, and improving inventory turnover is a key future challenge. Investing Cash Flow was -¥27.1B, with main outflows of tangible fixed asset acquisitions -¥12.7B (new store openings and renovations), intangible asset acquisitions -¥2.3B, acquisition of subsidiary shares -¥11.1B (M&A), and business acquisitions -¥2.7B. FCF was -¥2.5B, reflecting funding needs in the growth investment phase. Financing Cash Flow was +¥5.2B, led by increases in short-term borrowings +¥18.9B; outflows included long-term debt repayments -¥1.6B, lease liability repayments -¥1.3B, and dividend payments -¥10.8B. Overall, cash position increased by +¥3.0B and ending cash was ¥33.1B. EBITDA, including depreciation ¥10.4B, was ¥44.3B, and OCF/EBITDA was 0.56x, low during this inventory accumulation phase; inventory optimization and working capital management will be key to restoring cash conversion.
Earnings quality is generally good, with Operating Income ¥33.9B driven by core operations. Non-operating income ¥1.7B mainly comprised dividend income ¥0.8B and foreign exchange gains ¥0.1B, representing a minor 0.4% of Revenue. Extraordinary gains ¥1.8B were mostly gains on step acquisitions and represent a temporary boost from M&A execution. Extraordinary losses ¥1.4B were impairment losses related to declines in store asset profitability. The gap between Ordinary Income ¥34.9B and Net Income ¥25.3B is mainly due to income taxes ¥10.0B, implying an effective tax rate of 28.3%, an appropriate level. Operating CF ¥24.7B relative to Net Income ¥25.3B yields an Operating CF/Net Income ratio of 0.98x, and an accrual ratio of 0.2% indicates sound earnings quality. Comprehensive income ¥30.4B (Net Income + Other Comprehensive Income ¥5.1B) reflects valuation gains outside core business, including an increase in unrealized gains on securities ¥4.7B and foreign currency translation adjustments ¥0.4B. Ordinary Income did not diverge materially from core operating profit, and excluding one-off items, earnings quality is stable; however, the decline in OCF/EBITDA signals a temporary weakness in cash conversion due to inventory dependence.
For the fiscal year ending March 2027, the company forecasts Revenue ¥457B (YoY +16.4%), Operating Income ¥40.5B (YoY +19.6%), Ordinary Income ¥41.0B (YoY +17.5%), and Net Income ¥33.0B (YoY +30.9%), expecting continued revenue and profit growth. While M&A effects were recognized for half a year in the current period, full-year contributions are expected in the next fiscal year, and margin recovery is projected from maturation of new stores and profit improvements at existing stores achieving scale benefits. Operating Margin is planned to improve to 8.9% (¥40.5B/¥457B) from 8.6% this period (+0.3pt), premised on suppressed SG&A growth and normalization of inventory turnover. Progress rates based on current results are Revenue 85.9% (¥392.8B/¥457B) and Operating Income 83.7% (¥33.9B/¥40.5B), indicating near-achievement; accelerated growth in H2 and expense control are key to meeting the plan. The company announced an increase in the year-end dividend to ¥85, signaling a stronger shareholder return stance. Assumptions include M&A integration progressing as planned, inventory turnover improvement, and SG&A efficiency gains; sensitivity to interest rates and market conditions is notable given the high ratio of short-term borrowings.
Dividends were set at a year-end ¥85 (prior year ¥78, +¥7), with a Payout Ratio of 46.8%, within an appropriate range on a profit basis. Prior-year dividends were ¥78 at year-end with the same Payout Ratio of 46.8%, demonstrating a stable dividend policy. However, FCF was -¥2.5B and dividend payments of ¥10.8B were not covered by cash generation, yielding a dividend cash coverage (FCF/Dividends) of -0.23x. Dividend funding was supplemented by cash on hand and borrowings, and sustainability depends on normalization of inventory turnover and Investing Cash Flow. No share buybacks were conducted this period (¥0.0B). With Debt/EBITDA at 1.26x and modest interest burden, short-term continuation of dividends is feasible, but medium-to-long-term expansion of total return capacity requires improvement in Operating CF and restoration of positive FCF. The dividend payout level is appropriate and reflects a commitment to stable dividends, but balancing with growth investment will be a monitoring point.
Prolonged inventory turnover and obsolescence risk: Inventory turnover days are approximately 327 days and inventory has expanded to ¥112.0B (YoY +28.6%). Given the nature of reuse goods, shifts in trends or product deterioration may force markdowns or disposal losses, causing inventory write-downs and gross margin erosion. With inventory/Total Assets at 35.4%, more than one-third of assets, the impact on cash flows could be significant.
Concentration of funding in short-term liabilities and refinancing risk: Short-term borrowings of ¥50.9B account for most interest-bearing debt, with a short-term debt ratio of 91%, extremely high. Cash/Short-term Debt ratio is 0.65x, and short-term liabilities total ¥89.7B against cash on hand ¥33.1B, posing liquidity risk if refinancing stalls. Interest burden is currently light, but sudden changes in the funding environment could manifest in cash flow and funding cost pressures.
Concentration in the Reuse Business and sensitivity to external environment changes: 94% of revenue comes from the Reuse Business, resulting in a business portfolio concentrated in a single segment. The rise of EC competitors, changes in consumer selling behavior, and supply-demand fluctuations in the reuse market could directly affect performance. Although the FC Business is highly profitable, its small scale (6% of revenue) limits diversification benefits. The company is structurally less resilient to external shifts.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.6% | 4.6% (1.7%–8.2%) | +4.0pt |
| Net Profit Margin | 6.4% | 3.3% (0.9%–5.8%) | +3.1pt |
Profitability materially exceeds the industry median, ranking high due to high gross margins in the reuse business and the contribution of the FC business.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 17.1% | 4.3% (2.2%–13.0%) | +12.8pt |
Growth driven by M&A and new store openings is extremely rapid within the industry, indicating top-tier growth capability.
※ Source: Company compilation
Trade-off between high growth and margin decline: While achieving high growth of +17.1% in Revenue, Operating Margin declined to 8.6% (YoY -1.0pt) as upfront costs for M&A and store openings slightly pressured profitability. The FY2027 plan targets Operating Income growth of +19.6% and acceleration in profit growth, and if full-year M&A contributions and cost absorption proceed, margins may recover. Inventory turnover improvement and SG&A efficiency are preconditions for realizing scale benefits.
Room to improve inventory management and cash generation: Inventory turnover days are ~327 days and OCF/EBITDA is 0.56x with inventory buildup pressuring cash conversion; FCF this period was -¥2.5B. Inventory increased YoY +28.6%, making working capital management the top priority. If inventory optimization progresses, OCF will improve and there will be greater scope to balance investments and dividends, enhancing dividend sustainability.
Balancing M&A execution and financial soundness: Goodwill surged to ¥10.6B (prior year ¥1.6B) but goodwill/EBITDA is 0.24x, indicating limited burden and impairment risk is currently limited. Debt/EBITDA 1.26x and Interest Coverage 53x suggest sufficient financial flexibility, and there remains room for additional M&A and growth investment. Despite the 91% short-term debt ratio, refinancing track record is stable and resilience to rate increases is high, enabling a potential balance between aggressive growth strategy and sound finances.
This report was auto-generated by AI analyzing XBRL financial statement data and is a financial analysis document. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions should be made at your own responsibility and, as necessary, after consulting a professional advisor.