| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥4812.5B | ¥4276.7B | +12.5% |
| Operating Income / Operating Profit | ¥142.4B | ¥112.5B | +26.6% |
| Ordinary Income | ¥153.5B | ¥122.2B | +25.6% |
| Net Income / Net Profit | ¥123.7B | ¥-35.5B | +448.1% |
| ROE | 12.6% | -3.9% | - |
For the fiscal year ended March 2026, Revenue was ¥4812.5B (YoY +¥535.8B, +12.5%), Operating Income was ¥142.4B (YoY +¥29.9B, +26.6%), Ordinary Income was ¥153.5B (YoY +¥31.3B, +25.6%), and Net Income attributable to owners of the parent was ¥87.4B (YoY +¥123.0B, turned from a ¥-35.5B loss in the prior year to profit). In addition to resilience in the domestic market, sales in the Asia region grew double digits to ¥311.7B (from ¥256.2B, +21.7%), resulting in a regional composition of Japan 90.0%, Asia 6.5%, North America 3.3%. Operating margin improved slightly to 3.0% (up +0.4pt from 2.6% a year earlier), achieving profit growth through maintaining a gross margin of 39.4% while reducing SG&A ratio to 36.4% (from 37.3%). Net income turned positive due to the reversal from prior-year special losses (impairment ¥31.4B) and this period’s special income of ¥15.9B (gain from negative goodwill) offset partially by special losses of ¥45.1B (impairments ¥42.8B), resulting in final profitability. Operating Cash Flow (OCF) was ¥194.8B (YoY +143.1%), showing strengthened cash-generating ability.
[Revenue] Revenue expanded steadily to ¥4812.5B (YoY +12.5%). By region, Japan grew to ¥4330.2B (YoY +14.6%) sustaining growth in the core market; Asia maintained high growth at ¥311.7B (YoY +21.7%); North America declined significantly to ¥158.4B (YoY -34.4%). Gross margin remained nearly flat at 39.4% (down -0.5pt from 39.9%), producing Gross Profit of ¥1894.5B (YoY +11.0%). Although a single-segment retail services company, domestic same-store resilience and overseas expansion progress pushed the top line.
[Profitability] Operating Income rose to ¥142.4B (YoY +26.6%), outpacing revenue growth as operating leverage functioned effectively. SG&A increased to ¥1752.1B (YoY +9.9%), but the SG&A-to-sales ratio improved to 36.4% (down -0.9pt from 37.3%), demonstrating scale benefits. Non-operating items included non-operating income of ¥28.1B (e.g., foreign exchange gains ¥7.6B, insurance proceeds ¥2.2B) and non-operating expenses of ¥17.0B (including interest expense ¥10.1B), resulting in Ordinary Income of ¥153.5B (YoY +25.6%). In extraordinary items, a gain from negative goodwill of ¥15.9B was recorded as special income, while special losses including impairment losses of ¥42.8B totaled ¥45.1B, producing Profit Before Tax of ¥124.3B (YoY +39.4%). After deducting income taxes of ¥36.0B (effective tax rate 29.0%), Net Income attributable to owners of the parent was ¥87.4B (turning positive from ¥-35.5B the prior year), delivering both revenue and profit growth.
[Profitability] Operating margin was 3.0% (improved +0.4pt from 2.6%), and net margin was 2.6% (turned positive from -0.8%). Although gross margin edged down slightly to 39.4% (from 39.9%), the improved SG&A ratio of 36.4% (from 37.3%, -0.9pt) raised operating-stage profitability. ROE was 12.6% (the prior-year numerator was negative, hence a reference value), supported by improved net margin and higher financial leverage. ROA (on an ordinary-income basis) was 5.6%, indicating improved total asset efficiency. [Cash Quality] OCF was ¥194.8B, 2.23x the Net Income of ¥87.4B, indicating strong cash generation. The accruals ratio was -3.6%, a negative figure showing cash exceeded accounting profit, reflecting sound quality. OCF/EBITDA was 0.87x; increases in working capital such as inventory +¥37.8B and accounts receivable +¥28.6B partially constrained cash flow. [Investment Efficiency] Total asset turnover was 1.63x, broadly maintaining asset efficiency. Capital expenditures were ¥131.3B, 1.62x depreciation of ¥81.1B, indicating a growth investment phase. Tangible fixed assets increased to ¥645.0B (from ¥562.8B, +14.6%), notably Japan ¥331.3B (+19.5%) and Asia ¥59.6B (+87.3%). [Financial Soundness] Equity ratio was 33.3% (down -2.4pt from 35.7%), affected by asset expansion and higher interest-bearing debt. Current ratio was 357.7% and quick ratio 217.4%, indicating very strong short-term liquidity; cash and deposits ¥866.6B far exceeded current liabilities ¥549.0B. Conversely, D/E was 2.01x (up from 1.80x), and Interest-bearing Debt/EBITDA was 4.16x, showing a rising leverage trend. Interest coverage (EBIT / interest expense) was 14.1x, indicating sufficient interest-paying capacity.
OCF increased substantially to ¥194.8B (from ¥80.1B, +143.1%), starting from Profit Before Tax ¥124.3B and adding non-cash charges such as depreciation ¥81.1B and impairment losses ¥42.8B. Adjustments for working capital included increases in inventories -¥24.6B, changes in accounts receivable -¥23.3B, and decreases in accounts payable -¥6.5B, producing a subtotal of ¥251.8B, from which tax payments -¥47.6B were deducted. Investing Cash Flow was -¥153.4B (prior year -¥124.9B), driven mainly by acquisitions of tangible fixed assets -¥131.3B and intangible assets -¥27.4B, partially offset by term deposit maturities ¥15.2B. As a result, Free Cash Flow was positive ¥41.4B (OCF ¥194.8B - Investing CF ¥153.4B), indicating capex can be largely covered by internal funds. Financing Cash Flow was a large inflow of ¥224.9B (prior year ¥107.8B, +108.7%), driven by long-term borrowings proceeds ¥350.0B and bond issuance proceeds ¥55.5B, offset by long-term debt repayments -¥108.5B, net short-term borrowings reduction -¥20.0B, and dividend payments -¥13.5B, resulting in increased cash. Ending cash balance was ¥917.5B (from ¥647.6B, +¥269.9B), strengthening the liquidity buffer. On working capital, inventory days were about 96 days (inventories ¥770.6B ÷ daily sales ¥13.2B × 365), increasing year-on-year; normalizing inventory turnover will be key to further strengthening cash generation.
Earnings quality centers on Operating Income of ¥142.4B as recurring profit, with non-operating income of ¥28.1B (0.6% of sales) limited in scale—foreign exchange gains ¥7.6B, interest/dividend income ¥1.8B, insurance proceeds ¥2.2B, etc. One-off items included special income ¥15.9B (gain from negative goodwill ¥15.9B) and special losses ¥45.1B (impairment losses ¥42.8B, loss on disposal of fixed assets ¥2.4B), netting to a ¥-29.2B drag. The divergence from Ordinary Income ¥153.5B to Net Income ¥87.4B is approximately -43%, mainly attributable to special losses and income taxes of ¥36.0B. Accrual quality is strong: OCF ¥194.8B is 2.23x Net Income ¥87.4B, showing a cash-driven profit structure. However, OCF/EBITDA of 0.87x falls slightly below the 0.9x threshold, with inventory and receivables increases partially pressuring cash flow. Comprehensive income was ¥91.2B (compared to Net Income ¥123.7B after adjusting FX translation adjustments ¥2.5B and securities valuation differences ¥0.4B), showing limited divergence from net income. For evaluating sustainable earning power, accumulation of recurring earnings centered on operating income is crucial; EBITDA excluding special items was ¥223.5B (EBITDA margin 4.6%) and serves as an indicator of underlying earning capacity.
Full-year guidance projects Revenue ¥5100.0B (YoY +6.0%), Operating Income ¥130.0B (YoY -8.7%), Ordinary Income ¥125.0B (YoY -18.6%), and Net Income attributable to owners of the parent ¥60.0B. While revenue is expected to continue growing, operating income is forecast to decline, assuming an operating margin deterioration to 2.5% (down -0.5pt from this period’s 3.0%). Factors presumed to drive profit decline include rising inventory and logistics costs, manpower and wage pressures, and startup costs for overseas expansion. Progress against current-period results shows achievement rates of 94.4% for Revenue, 109.5% for Operating Income, and 122.8% for Ordinary Income, indicating outperformance particularly on profit metrics where one-off factors (foreign exchange gains, negative goodwill) contributed materially. EPS is forecast at ¥150.9 (down sharply from ¥219.8 actual), and dividend guidance is annual ¥17.0 (payout ratio 11.3%), set conservatively. Key considerations for margin improvement are normalization of inventory turnover and containment of SG&A growth, sustained growth in Asia, and the extent to which foreign exchange and one-off income reverse and pressure profitability.
Annual dividend was ¥34.0 (interim ¥17.0, year-end ¥17.0), with total dividends of approximately ¥1.35B. Payout ratio was 15.5% (based on Net Income ¥87.4B), a very conservative level, and dividend coverage relative to FCF ¥41.4B was 3.06x, indicating ample capacity. Next-year dividend guidance is annual ¥17.0, implying a payout ratio of 11.3% on forecast EPS ¥150.9, further conservative and suggesting priority on retained earnings for growth investment and strengthening financial soundness. No share repurchase was confirmed; shareholder returns are composed solely of dividends. Given the increase in interest-bearing debt (long-term borrowings ¥930.5B, up from ¥714.8B, +30.2%), it is rational to suppress payout ratio in the near term while prioritizing leverage control and improving inventory efficiency to stabilize the financial base.
Inventory stagnation / obsolescence risk: Inventories rose to ¥770.6B (from ¥738.9B, +4.3%), and inventory days reached about 96 days. Prolonged inventory aging could lead to valuation losses or markdown-driven gross margin compression and cash-flow deterioration. Normalizing inventory turnover (target below 75 days) is urgent.
Rising leverage risk: D/E of 2.01x and Interest-bearing Debt/EBITDA of 4.16x approach watch levels. Long-term borrowings increased significantly to ¥930.5B (YoY +¥215.8B), and in a rising rate environment financial costs and refinancing risk could materialize. Although interest coverage is 14.1x, low-margin operations (Operating margin 3.0%) provide limited resilience in case of profit deterioration.
Recurrence of impairment losses risk: The company recognized impairment losses of ¥42.8B this period following ¥31.4B the prior year, representing sizable write-downs. Of tangible fixed assets ¥645.0B, low-return stores or investments may again be impairment candidates, risking delayed recovery of invested capital and margin pressure. Delays in overseas rollout (notably Asia tangible fixed assets ¥59.6B, +87.3% YoY) also elevate impairment risk.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.0% | 4.6% (1.7%–8.2%) | -1.6pt |
| Net Margin | 2.6% | 3.3% (0.9%–5.8%) | -0.8pt |
Both operating margin and net margin lag the industry median, placing the company in the lower tier on profitability within the retail sector.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 12.5% | 4.3% (2.2%–13.0%) | +8.2pt |
Revenue growth substantially exceeds the industry median, ranking the company among the industry leaders in top-line expansion.
※ Source: Company compilation
The acceleration of the top line and realization of operating leverage resulting in Revenue +12.5% and Operating Income +26.6% is commendable; however, an operating margin of 3.0% remains below the industry median of 4.6%, indicating substantial room for profitability improvement. Normalizing inventory days to 96 → target below 75 and further reducing SG&A ratio are key to margin expansion, with a medium-term objective to lift EBITDA / Sales above 5%.
OCF ¥194.8B, 2.23x Net Income ¥87.4B, demonstrates strong cash generation and an accrual ratio of -3.6% indicates healthy earnings quality, but OCF/EBITDA of 0.87x falls under the 0.9x threshold due to rising inventory and working capital. FCF ¥41.4B covers dividends of ¥1.35B (coverage 3.06x), and capex ¥131.3B can be largely funded internally. Nonetheless, increased interest-bearing debt (D/E 2.01x, Debt/EBITDA 4.16x) points to rising leverage; compressing inventory and sustainably expanding OCF are prerequisites for preserving financial soundness.
Next fiscal year guidance is conservative—Revenue +6.0% vs. Operating Income -8.7%—factoring in higher inventory/logistics costs, labor cost increases, and upfront costs for overseas investments. This year benefited from one-offs such as foreign exchange gains ¥7.6B and negative goodwill ¥15.9B, which may reverse next year and, along with structural cost increases, likely compress margins. Maintaining a conservative payout ratio of 11.3% (forecast basis) while monitoring whether Asia sales growth (+21.7%) converts into profit contribution and whether inventory efficiency and SG&A productivity improvements materialize will be decisive for full-year outcomes.
This report is an earnings analysis document automatically generated by AI from XBRL earnings release data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions are your responsibility; consult a professional advisor as appropriate.