| Indicator | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1252.5B | ¥1176.2B | +6.5% |
| Operating Income / Operating Profit | ¥24.8B | ¥29.0B | -14.7% |
| Ordinary Income | ¥29.2B | ¥29.9B | -2.5% |
| Net Income | ¥15.2B | ¥15.4B | -1.6% |
| ROE | 1.7% | 1.8% | - |
Cumulative results for FY2026 Q2 (first half) show Revenue ¥1252.5B (vs prior year +¥76.3B +6.5%), Operating Income ¥24.8B (vs prior year -¥4.2B -14.7%), Ordinary Income ¥29.2B (vs prior year -¥0.7B -2.5%), Net Income attributable to owners of parent ¥18.4B (vs prior year -¥1.2B -6.1%). Double-digit growth in overseas segments secured top-line expansion, but SG&A ratio rose by 35bp YoY causing a decline in operating profit. Improvement in non-operating items (net non-operating income +¥4.4B, prior year +¥0.9B) narrowed the decline at the ordinary income stage. A high effective tax rate of 46.9% depressed Net Income, however Operating Cash Flow was ¥73.2B (YoY +63.3%) — about four times Net Income — indicating solid cash generation capability.
[Revenue] Revenue was ¥1252.5B (YoY +6.5%). By region, North America was ¥235.9B (+20.3%) and Asia ¥142.4B (+16.3%), with double-digit overseas growth driving results; Japan was ¥876.1B (+2.0%) showing modest growth. Overseas ratio rose to 30.2% (prior year 27.1%). Gross profit was ¥738.2B (+6.2%) and gross margin was 58.9%, down 17bp YoY, indicating a slight increase in cost of goods sold. Segment revenue mix: Japan 69.8%, North America 18.8%, Asia 11.4%.
[Profitability] SG&A was ¥713.4B (+7.1%); since this outpaced revenue growth of +6.5%, SG&A ratio rose to 57.0% (prior year 56.6%), up 35bp. This is likely driven by inflation in fixed costs such as labor, rent, and logistics, and costs related to opening new overseas stores. Operating Income was ¥24.8B (-14.7%), and operating margin fell 49bp to 2.0% (prior year 2.5%). Net non-operating items were +¥4.4B (prior year +¥0.9B), with interest income ¥2.9B and foreign exchange gains ¥1.5B contributing and offsetting interest expense ¥1.8B. Ordinary Income was ¥29.2B (-2.5%), partially offsetting the operating decline via non-operating gains. Extraordinary losses were minor at ¥0.6B (impairment losses ¥0.2B, loss on disposal of fixed assets ¥0.3B). Income taxes and others were ¥13.4B (effective tax rate 46.9%), resulting in Net Income attributable to owners of parent of ¥18.4B (-6.1%). In conclusion: revenue up, profit down; improvement in non-operating items limited the decline at the ordinary income stage.
Japan: Revenue ¥876.1B (+2.0%) showing stable growth, Segment Profit ¥32.1B (prior year ¥34.8B) down. Rising domestic fixed costs and competition in existing stores are pressuring profitability.
North America: Revenue ¥235.9B (+20.3%) strong increase, but segment loss ¥7.2B (prior year loss ¥7.0B) continues. New store opening costs and low utilization rates are factors.
Asia: Revenue ¥142.4B (+16.3%), Segment Profit ¥4.2B (prior year ¥2.1B) — both revenue and profit up, supported by store maturation and increased customer counts.
Japan remains the primary contributor to Ordinary Income, but North America’s losses depress consolidated margins while Asia’s profit contribution is expanding.
[Profitability] Operating margin 2.0% (prior year 2.5%), Net margin 1.5% (prior year 1.7%) — declines of 49bp and 20bp respectively. ROE 1.7% (prior year 1.8%), ROA 1.1% (prior year 1.0%) indicating low capital efficiency. Gross margin 58.9% (prior year 59.1%), SG&A ratio 57.0% (prior year 56.6%) — SG&A rigidity is pressuring margins.
[Cash Quality] Operating Cash Flow ¥73.2B is approximately 3.99x Net Income ¥18.4B; OCF/EBITDA 0.91x indicating good cash backing. Accrual ratio -3.3% suggests high earnings quality.
[Investment Efficiency] Total asset turnover 0.76x (annualized), tangible fixed asset turnover 1.18x reflecting an asset-intensive business model. CAPEX/Depreciation 1.22x indicates continued growth investment.
[Financial Soundness] Equity Ratio 54.5% (prior year 55.3%), Current Ratio 126.4%, Interest-bearing debt / EBITDA 0.09x — conservative. Cash and deposits ¥213.0B are 28x short-term borrowings ¥7.5B, indicating very ample liquidity.
Operating Cash Flow was ¥73.2B (YoY +63.3%). Cash generated after changes in working capital of -¥3.1B (inventory -¥2.2B, trade receivables -¥1.4B, trade payables -¥2.4B) from operating subtotal ¥76.3B. Depreciation ¥55.7B yields EBITDA ¥80.5B and OCF/EBITDA 0.91x, which is healthy. Investing Cash Flow was -¥71.8B, including capital expenditures -¥68.1B (primarily new store and renovation investment), acquisition of investment securities -¥40.3B, and proceeds from disposals +¥10.8B. Free Cash Flow was ¥1.4B (Operating CF + Investing CF), slightly positive. Financing Cash Flow was -¥34.3B, including lease liability repayments -¥22.6B, net decrease in short-term borrowings -¥4.5B, and dividends -¥8.0B. Cash and cash equivalents decreased from ¥241.7B at the beginning of the period to ¥213.0B at the end, a decline of ¥28.7B. Although CAPEX exceeded depreciation, ample Operating CF supports stable funding.
Ordinary Income ¥29.2B comprises Operating Income ¥24.8B plus net non-operating income ¥4.4B. Non-operating income ¥6.4B (interest income ¥2.9B, foreign exchange gains ¥1.5B, other income ¥1.0B, etc.) is 0.5% of sales, indicating low dependence on non-core items and largely arising from natural interest/FX gains. Non-operating expenses ¥1.9B (interest expense ¥1.8B, etc.) are minor. Extraordinary losses ¥0.6B (impairment losses ¥0.2B, loss on disposal of fixed assets ¥0.3B) are temporary and do not hinder recurring profitability. Comprehensive income ¥35.5B exceeds Net Income ¥15.2B by ¥20.3B, mainly due to foreign currency translation adjustments +¥20.3B reflecting valuation gains on overseas assets. With Operating CF approximately four times Net Income and a negative accrual, cash backing of earnings is extremely strong. The gap from Ordinary Income to Net Income is mainly due to the high tax rate (effective tax rate 46.9%), and no structural degradation of earnings quality is observed.
Full Year (FY) forecast: Revenue ¥2570.0B (+4.9%), Operating Income ¥50.0B (-8.4%), Ordinary Income ¥52.0B (-15.8%), Net Income ¥30.0B (EPS forecast ¥37.74). First half progress rates are: Revenue 48.7%, Operating Income 49.5%, Ordinary Income 56.1%, Net Income 61.2% (on parent company shareholders basis). The Net Income progress exceeding the standard 50% by 11.2pts is attributable to the front-loading of non-operating items and the assumption of back-loaded new store costs and promotional expenses in H2. Operating Income progress is around the standard, and H2 will require fixed cost absorption and growth in existing stores. Dividend forecast is ¥15 per year (payout ratio approx. 39.7%); after the 1:2 stock split in May 2026, the year-end dividend on a post-split basis corresponds to ¥7.5. No revisions to forecasts or dividends in this period. Achieving full-year targets hinges on improving Japan profitability, narrowing North America losses, and expanding Asia profits.
No dividend for the first half. Full-year forecast dividend ¥15 (pre-split basis; post-split year-end equivalent ¥7.5), implying a payout ratio of approximately 39.7% against forecast EPS ¥37.74. Total annual dividend amount is about ¥12.0B (based on 79.5 million shares outstanding); first-half FCF ¥1.4B is insufficient alone, but ample cash balance ¥213.0B and robust full-year Operating CF can cover distributions. Share buybacks are not disclosed; shareholder returns are dividend-focused. A payout around 40% is assessed as sustainable, balancing growth investment. No dividend forecast revisions; scope for dividend increases depends on persistently improved margins and cash generation.
Fixed Cost Inflation Risk: SG&A ratio at 57.0% (YoY +35bp) with continued upward pressure on labor, rent, and logistics. If SG&A growth (+7.1%) persistently exceeds revenue growth (+6.5%), operating margin faces further downside risk. Monitor SG&A/sales trend and labor cost ratio.
North America Loss Continuation Risk: Despite Revenue ¥235.9B (+20.3%), North America showed a loss of ¥7.2B. New store opening costs and low utilization are the primary drivers; delays in turning profitable will pressure consolidated margins. Store maturation and improvements in customer counts/average spend are key to meeting full-year profit targets.
High Effective Tax Rate Pressuring Profitability: Effective tax rate 46.9% is high, causing a wide gap from Ordinary Income ¥29.2B to Net Income ¥18.4B. If tax burden normalization (to the 30% range) is delayed, impacts on ROE and dividend capacity could persist. Tax strategy and utilization of deferred tax assets warrant close attention.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.0% | – | – |
| Net Margin | 1.2% | – | – |
Industry median data are limited so relative evaluation is constrained, but Operating Margin 2.0% and Net Margin 1.2% are low for the restaurant/retail sector, suggesting a structure where fixed cost burden and overseas investment costs are compressing margins.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 6.5% | – | – |
Revenue growth of 6.5% is driven by double-digit overseas increases and indicates solid top-line expansion. Comparison to industry medians is limited by data availability, but the mix of Japan +2.0% in a mature domestic market and double-digit overseas growth is sustaining consolidated growth.
※ Source: Company compilation
Balancing Overseas Growth and Cash Generation: North America +20.3% and Asia +16.3% revenue growth together with Operating CF ¥73.2B (YoY +63.3%) demonstrate a foundation that balances growth investment and financial safety. FCF is ¥1.4B, modestly positive, but cash balance ¥213.0B and low interest-bearing debt (¥7.5B) provide ample investment capacity; sustainability for further new store investment and existing store enhancements in H2 is high.
Path to Profitability Improvement: The rise in SG&A ratio to 57.0% (+35bp) and decline in operating margin to 2.0% (-49bp) are short-term headwinds, but if North America turns profitable and Asia continues profit expansion, consolidated margins may bottom out. Key to watch is a shift where SG&A growth rate falls below revenue growth and stabilization of gross margin.
Interpretation of Net Income Progress 61.2%: The first-half Net Income progress exceeding the full-year forecast by 11.2pts is due to front-loaded non-operating income and an expectation of back-loaded new store and promotional expenses in H2. If H2 concentrates new store costs and promotions, achieving full-year targets will require improvement in existing-store performance and fixed cost absorption; monitor quarterly margin trends and existing-store metrics.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your own responsibility; please consult a professional advisor as needed.