| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥613.5B | ¥587.3B | +4.5% |
| Operating Income / Operating Profit | ¥79.5B | ¥78.5B | +1.3% |
| Ordinary Income | ¥79.4B | ¥78.6B | +1.1% |
| Net Income / Net Profit | ¥54.8B | ¥53.2B | +3.1% |
| ROE | 6.5% | 6.2% | - |
For FY2027 Q1 (Mar–May 2026), Revenue was ¥613.5B (YoY +¥26.3B, +4.5%), Operating Income was ¥79.5B (YoY +¥1.0B, +1.3%), Ordinary Income was ¥79.4B (YoY +¥0.9B, +1.1%), and Net Income was ¥54.8B (YoY +¥1.6B, +3.1%), delivering both higher sales and profits. Gross margin improved to 59.7% (up +0.8pt from 58.9% a year earlier), reflecting a better product mix, but SG&A ratio rose to 46.7% (up +1.1pt from 45.6%) due to higher personnel costs and increased bonus reserves, resulting in an Operating Margin of 13.0% (down -0.4pt from 13.4%). By segment, the Apparel Business led the company with Revenue ¥383.2B (+5.8%) and Operating Income ¥60.8B (+6.5%), yielding a high margin of 15.9%, while the Miscellaneous Goods Business recorded Revenue ¥229.9B (+2.7%) but Operating Income ¥18.7B (-12.6%), lowering its margin to 8.1%. Progress against the full year plan (Revenue ¥2,530.0B, Operating Income ¥294.0B, Net Income ¥190.0B) stands at Revenue 24.3%, Operating Income 27.1%, Net Income 28.8%, with Net Income outpacing the standard pace (25%).
[Revenue] Revenue was ¥613.5B, up +4.5% YoY. The Apparel Business supported growth with ¥383.2B (+5.8%), accounting for 62.4% of consolidated Revenue. The Miscellaneous Goods Business grew to ¥229.9B (+2.7%), trailing Apparel. Externally, the pace was below the retail industry median revenue growth of 7.7%, indicating relatively conservative growth within the industry.
[Profitability] Cost of sales amounted to ¥247.2B, yielding Gross Profit of ¥366.3B and a Gross Margin of 59.7% (up +0.8pt YoY) due to product mix optimization and restrained discounting. SG&A was ¥286.8B (SG&A ratio 46.7%), up ¥19.9B YoY; the +7.5% increase exceeded Revenue growth of +4.5%. On the balance sheet, bonus reserves were significantly increased to ¥45.5B (from ¥32.3B, +40.6%), suggesting higher fixed personnel costs as the main driver. Consequently, Operating Income was ¥79.5B (+1.3%) and Operating Margin fell to 13.0% (down -0.4pt). Non-operating items were immaterial (Interest Income ¥0.04B, Interest Expense ¥0.49B), so Ordinary Income of ¥79.4B (+1.1%) remained close to the operating level. Extraordinary losses were limited to ¥0.23B (Impairment Loss ¥0.19B, Loss on Retirement of Fixed Assets ¥0.03B). Pre-tax income was ¥79.2B; after Income Taxes of ¥24.4B (effective tax rate 30.8%), Net Income was ¥54.8B (+3.1%). In conclusion, improved gross margin and steady Apparel performance drove higher sales and profits, while SG&A increases pressured profit margins.
The Apparel Business achieved Revenue ¥383.2B (from ¥362.3B, +5.8%) and Operating Income ¥60.8B (from ¥57.1B, +6.5%), delivering Revenue and profit growth and maintaining a high segment margin of 15.9% (up +0.1pt from 15.8%). As the core segment contributing 76.5% of consolidated Operating Income, it remains a stable contributor. The Miscellaneous Goods Business posted Revenue ¥229.9B (from ¥223.9B, +2.7%) but Operating Income fell to ¥18.7B (from ¥21.4B, -12.6%), with margin deteriorating to 8.1% (from 9.5%, -1.4pt). The decline in profitability is mainly attributable to expense growth outpacing revenue gains, with logistics costs and promotional expense efficiency remaining key issues. Other segments recorded Revenue ¥0.9B (-40.1%) and an Operating Loss of ¥0.01B; although small-scale, the deficit narrowed.
[Profitability] Operating Margin was 13.0% (from 13.4%, -0.4pt) and Net Margin was 8.9% (from 9.0%, -0.1pt), showing slight declines but remaining well above industry medians (Operating Margin 3.4%, Net Margin 2.2%). ROE of 6.5% indicates efficient use of equity capital. [Cash Quality] Accounts Receivable were ¥183.6B (from ¥130.8B, +40.4%), increasing far faster than revenue and suggesting extended collection terms. Inventories were ¥202.0B (from ¥180.8B, +11.7%), rising relative to sales and raising concerns about inventory turnover. [Investment Efficiency] With Total Assets of ¥1,618.5B, the asset turnover corresponds to approximately 1.52x on an annualized basis (quarterly sales multiplied by 4), indicating good asset efficiency. [Financial Soundness] Equity Ratio was 52.2% (from 52.4% slight decrease), Current Ratio 219.4%, Quick Ratio 184.0%, indicating very high liquidity; Cash and Deposits of ¥850.8B sufficiently cover short-term liabilities. Interest-bearing debt totaled ¥132.9B (Short-term Borrowings ¥9.9B + Long-term Borrowings ¥120.8B + Securitized portion ¥2.2B), and Interest Coverage was 162x (Operating Income ÷ Interest Expense), indicating negligible interest burden.
Cash flow statement details are not disclosed, so funding trends are analyzed from balance sheet movements. Cash and Deposits decreased materially to ¥850.8B (from ¥962.6B, -¥111.8B), reflecting investment into working capital. Accounts Receivable increased +¥52.8B YoY and Inventories increased +¥21.2B, while Electronically Recorded Obligations (accounts payable equivalent) decreased -¥48.0B, leading to expanded net working capital needs. Shortened payables timing combined with rising receivables intensified cash tied up in the operating cycle. Accrued corporate taxes decreased to ¥26.7B (from ¥50.2B, -¥23.5B), indicating tax payments also contributed to cash outflow. Asset retirement obligations of ¥52.9B (from ¥51.3B) rose slightly, reflecting ongoing buildup of future expenditures related to store network maintenance.
This quarter’s profits are high-quality and driven by core operations. Non-operating income was ¥0.49B (including Interest Income ¥0.04B, Foreign Exchange Gains ¥0.05B) and non-operating expenses were ¥0.58B (Interest Expense ¥0.49B, Other ¥0.08B), both representing under 0.1% of Revenue—immaterial. Ordinary Income of ¥79.4B aligns closely with Operating Income of ¥79.5B. Extraordinary losses were limited to ¥0.23B (Impairment Loss ¥0.19B, Loss on Retirement of Fixed Assets ¥0.03B), having negligible impact on pre-tax income of ¥79.2B. The gap between Ordinary Income and Net Income is mainly due to tax burden (effective tax rate 30.8%) and Non-controlling Interests of ¥0.07B; no accounting distortions are apparent. Comprehensive Income was ¥54.9B (nearly equal to Net Income of ¥54.8B); Other Comprehensive Income totaled ¥0.01B (Foreign Currency Translation Adjustments ¥0.19B, Retirement Benefit Adjustments -¥0.16B), immaterial and not affecting Net Income quality. While improved Gross Margin indicates enhanced earning power, the rising SG&A ratio is compressing Operating Margin—fixedization of cost structure warrants attention for future earnings stability.
Against the full year forecast (Revenue ¥2,530.0B, Operating Income ¥294.0B, Ordinary Income ¥294.0B, Net Income ¥190.0B), Q1 progress rates are: Revenue 24.3%, Operating Income 27.1%, Ordinary Income 27.0%, Net Income 28.8%. Profitability metrics are running ahead of the standard 25% pace, particularly Net Income which exceeds the standard by +3.8pt. Improvement in Gross Margin and limited extraordinary losses contributed to the Net Income outperformance. Compared to prior full-year Operating Income of ¥271.4B, this year’s forecast of ¥294.0B (+8.3%) represents growth; Q1 Operating Income of ¥79.5B is only modestly higher YoY (+1.3%) and is conservative relative to the full-year plan, but considering seasonality, it is a satisfactory start. No revisions to guidance have been made; the company expects to achieve the initial plan.
The dividend forecast for this quarter is ¥0 and no interim dividend will be paid. The full-year dividend forecast is also ¥0. The company holds 114.4 million treasury shares (acquisition cost ¥36.7B), representing 6.2% of 185.1 million outstanding shares. Given Cash and Deposits of ¥850.8B and Net Income ¥54.8B, the lack of dividend payments suggests a preference to prioritize growth investments and financial buffers. Retained earnings are ample at ¥775.7B, so dividend capacity exists; however, in a phase of expanding working capital (increases in receivables and inventory), the decision appears to prioritize cash preservation.
Deterioration in working capital efficiency: Accounts Receivable grew +40.4% YoY (+¥52.8B), far outpacing Revenue growth of +4.5%, implying extended collection terms. Inventories rose +11.7% (+¥21.2B), indicating slowing inventory turnover. With Electronically Recorded Obligations down -¥48.0B and shortened payables, working capital needs have expanded; this could weaken Operating Cash Flow generation and raise the risk of higher credit costs.
Earnings deterioration in the Miscellaneous Goods Business: The segment’s Operating Margin fell to 8.1% (from 9.5%, -1.4pt) and Operating Income declined -12.6%; as it accounts for 37.5% of Revenue, failure to improve logistics and promotional efficiency could lead to prolonged dilution of consolidated margins.
Persistence of SG&A inflation: SG&A ratio rose to 46.7% (from 45.6%, +1.1pt) and SG&A growth of +7.5% outpaced Revenue growth of +4.5%. The significant increase in bonus reserves (+40.6%) indicates fixed personnel cost buildup; sustained pressure from rent and logistics costs could entrench Operating Margin deterioration and structurally weaken profitability.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 13.0% | 3.4% (0.8%–7.7%) | +9.6pt |
| Net Margin | 8.9% | 2.2% (0.5%–6.2%) | +6.7pt |
Profitability is markedly high within the industry; both Operating and Net Margins substantially exceed medians, placing the company in the top quartile.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 4.5% | 7.7% (0.8%–14.6%) | -3.2pt |
Revenue growth lags the industry median, indicating a relatively conservative growth pace within the sector.
※Source: Company aggregation
The Apparel Business’s high-profit profile continues to support consolidated results; with a segment margin of 15.9%, it remains significantly above industry averages. Improvement in the Miscellaneous Goods Business’s profitability is key to raising consolidated margins, so progress on logistics and promotional efficiency will be closely watched.
Expansion of working capital (Accounts Receivable +40.4%, Inventories +11.7%) has driven a large decrease in Cash and Deposits (-¥111.8B). Inventory digestion and strengthening collections are prerequisites for normalizing Operating Cash Flow. While progress on full-year profit targets is satisfactory, recovery of cash generation is essential for sustainable growth.
If the SG&A ratio increase (+1.1pt) offsets Gross Margin improvement (+0.8pt) and Operating Margin decline becomes entrenched, structural deterioration in profitability could result. The effectiveness of measures to improve personnel and logistics efficiency will be a mid-term evaluation point.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial disclosure data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference figures compiled by the firm based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as necessary before making investment choices.