| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2257.2B | ¥2107.5B | +7.1% |
| Operating Income / Operating Profit | ¥124.7B | ¥122.7B | +1.7% |
| Ordinary Income | ¥125.7B | ¥123.0B | +2.2% |
| Net Income / Net Profit | ¥89.9B | ¥89.1B | +0.8% |
| ROE | 11.6% | 12.7% | - |
For the full year ending February 2026, Revenue was ¥2,257.2B (YoY +149.7B, +7.1%), Operating Income was ¥124.7B (YoY +2.0B, +1.7%), Ordinary Income was ¥125.7B (YoY +2.7B, +2.2%), and Net Income was ¥89.9B (YoY +0.7B, +0.8%), representing year-over-year increases in both revenue and profit. While top-line expanded steadily, the operating margin declined slightly to 5.5% (from 5.8% in the prior year, -0.3pt), so profit growth lagged revenue growth. Gross margin was 24.7% (down -0.3pt YoY) while the SG&A ratio was contained at 22.0% (flat YoY), with utility expenses contributing to cost efficiency by falling from 41.2B to 37.6B (-8.7%). Operating Cash Flow (OCF) rose sharply to ¥262.0B (YoY +64.9%), demonstrating cash generation of about 2.9x net income. An increase in accounts payable of +124.6B contributed to working capital improvement, and after capital expenditures of 126.9B, Free Cash Flow (FCF) remained a healthy positive ¥121.8B.
Revenue expanded solidly to ¥2,257.2B (+7.1%). Cost of Sales rose to ¥1,635.8B (+6.6%), somewhat below revenue growth, yielding Gross Profit of ¥621.4B (+8.5%). However, Gross Margin declined to 24.7% (from 27.7% prior year, -3.0pt), potentially reflecting price investment and changes in product mix. On the income statement, SG&A rose to ¥496.7B (+7.4%), slightly outpacing revenue growth, but the SG&A ratio was held roughly flat at 22.0%. Within SG&A, utility expenses improved markedly (-8.7%) to 37.6B, advertising expenses were ¥15.1B (+7.9%), and repair expenses were ¥10.9B (-3.0%), indicating selective spending control. Operating Income was ¥124.7B (+1.7%), with an operating margin of 5.5% (from 5.8%, -0.3pt). Non-operating items were minimal (interest income 0.3B, interest expense 1.0B), resulting in Ordinary Income of ¥125.7B (+2.2%), Ordinary Income margin 5.6% (down -0.3pt). Extraordinary items were negligible (extraordinary gains 0.1B, extraordinary losses 0.1B), yielding profit before tax ¥125.7B (+3.3%) and income taxes of ¥35.8B (effective tax rate 28.5%), leading to Net Income of ¥89.9B (+0.8%) and Net Margin 4.0% (from 4.2%, -0.2pt). In conclusion, the company achieved revenue and profit growth, but declines in gross margin led to 0.2–0.3pt lower margins across stages, indicating growth led by top-line expansion.
Profitability: Operating margin 5.5% (from 5.8%, -0.3pt), Ordinary Income margin 5.6% (down -0.3pt), Net Margin 4.0% (down -0.2pt). Despite a Gross Margin decline to 24.7% (down -0.3pt), SG&A ratio was maintained at 22.0% (flat), supported by an -8.7% reduction in utility expenses. ROE was 11.6%, slightly below the prior year, composed as Net Margin 4.0% × Total Asset Turnover 1.66x × Financial Leverage 1.75x. Compared with the prior year, the decline in Total Asset Turnover from about 1.87x to 1.66x was a main drag, reflecting asset increases from aggressive capex (Total Assets +¥231.4B) outpacing revenue growth.
Cash Quality: Operating Cash Flow / Net Income ratio was 2.91x, indicating strong conversion of profits to cash. OCF rose to ¥262.0B (YoY +64.9%), substantially supported by an accounts payable increase of +124.6B, so temporary working capital improvement is included. FCF remained ample at ¥121.8B, even after capex of 126.9B (2.49x depreciation of 50.9B).
Investment Efficiency: Total Asset Turnover was 1.66x (down from ~1.87x prior), and Tangible Fixed Asset Turnover was 2.55x, reflecting a temporary decline in efficiency during the ramp-up of capex. Construction in progress increased to 54.6B (from 39.2B), suggesting piling up of ongoing projects.
Financial Soundness: Equity Ratio was 57.2% (down from 62.2%), a healthy level. Interest-bearing debt consists only of long-term borrowings of 65.4B, with Debt/EBITDA of 0.37x and Interest Coverage approximately 130x, indicating conservative leverage. However, current ratio 82.6% and quick ratio 69.6% are below 100%, reflecting high reliance on short-term liabilities centered on accounts payable of 237.9B. Asset retirement obligations are 37.5B (6.4% of liabilities), representing a material size.
OCF increased sharply to ¥262.0B (YoY +64.9%), about 2.1x pre-tax profit of ¥125.7B and about 2.9x net income of ¥89.9B. OCF before working capital changes was ¥298.1B, with depreciation of 50.9B and other non-cash expenses contributing. In working capital, accounts payable increased by +124.6B, significantly boosting OCF as operating scale expanded and payment terms shifted. Inventories increased by -6.3B and trade receivables increased by -2.5B, representing modest cash outflows, and contract liabilities (advances received) increased by +1.1B. After tax payments of -35.3B and interest paid of -0.8B, final OCF was ¥262.0B. Investing Cash Flow was -¥140.2B, led by capex of -126.9B and including intangible asset acquisitions -2.4B and acquisition of subsidiary shares -5.3B. Small receipts such as subsidy receipts 0.1B were present, but the company continues an active growth investment stance. FCF (OCF + Investing CF) was a generous ¥121.8B. Financing Cash Flow was -¥25.1B, with net repayment against long-term borrowings (proceeds 31.0B vs. repayments -34.9B), lease liabilities repayment -3.8B, dividend payments -14.5B, and share buybacks -3.6B, resulting in cash increasing by ¥96.7B to an ending balance of ¥230.6B. While the high OCF driven by working capital merits attention for sustainability, core cash generation from operations is extremely robust.
Earnings quality is high, driven by recurring core operations. Non-operating income was small at 2.0B (interest income 0.3B, other non-operating income 0.5B), indicating limited one-off gains. Non-operating expenses were also modest at 1.1B, centered on interest expense 1.0B, so financial costs are minimal. Extraordinary items were nearly neutral (extraordinary gains 0.1B, extraordinary losses 0.1B), including asset retirement losses roughly 0.1B, within normal range. The gap between Ordinary Income of ¥125.7B and Net Income of ¥89.9B (~-28%) is mainly due to tax burden at an effective rate of 28.5%, with minimal non-recurring impacts. From a cash flow perspective, OCF of ¥262.0B reached about 2.9x Net Income ¥89.9B, supported by depreciation of 50.9B and working capital improvement via accounts payable +124.6B. Accrual (Net Income - OCF) was -172.1B, a significant negative indicating cash generation exceeded profit recognition. However, because part of the uplift was due to accounts payable growth, monitoring working capital trends in subsequent periods is necessary. Overall, the company can be assessed as having a high-quality profit structure centered on recurring earnings, not reliant on temporary factors.
For the full year ending February 2027, management guides Revenue ¥2,456.2B (+8.8%), Operating Income ¥125.9B (+0.9%), Ordinary Income ¥125.8B (+0.1%), and Net Income ¥86.6B (-3.6%). This implies revenue growth but near-flat operating income and a decline in net income. The projected operating margin is about 5.1%, embedding a -0.4pt decline from the current 5.5%, reflecting continued price investment under competitive conditions and a cautious stance on cost environment. The projected decline in net income may reflect higher tax burden and conservative assumptions. Revenue growth is expected to accelerate to +8.8% (above current +7.1%), driven by enhancements at existing stores and new store openings. Full-year dividend is planned at ¥36 (annualized -34 from current year ¥70), with a payout ratio around 8.9%, set low to prioritize retained earnings. Progress ratios are Revenue 2,257.2B ÷ 2,456.2B = 91.9% and Operating Income 124.7B ÷ 125.9B = 99.0%, indicating results are already close to the full-year plan and the guidance appears conservative assuming accelerated growth in the second half.
The annual dividend was ¥70 (interim ¥34, year-end ¥36), representing a payout ratio of 16.7% against Net Income ¥89.9B, a conservative level. This is a significant increase from prior year dividend of ¥26 (+169.2%), with the interim dividend including a ¥2 commemorative dividend for achieving ¥200.0B in operating revenue. Total dividends were ¥14.5B, providing FCF coverage of 8.4x, indicating ample capacity. Share buybacks of ¥3.6B were executed, bringing total shareholder returns to ¥18.1B and a Total Return Ratio of 20.1%. Cash and deposits of ¥230.6B were held, and interest-bearing debt consists only of long-term borrowings of ¥65.4B, indicating very strong financial capacity. The FY2027 dividend plan of ¥36 represents a cut from ¥70 in the current year, but excluding the commemorative dividend the base payout appears maintained to increased. The low payout ratio indicates a policy prioritizing retained earnings for growth investment while preserving discretionary capacity for mid-term dividend increases.
Industry Position (reference): Within the retail sector, the company’s Operating Margin of 5.5% exceeds the industry median 4.6% (IQR 1.7–8.2%), placing it at middle-to-upper levels. Net Margin 4.0% also exceeds the industry median 3.3% (IQR 0.9–5.8%). Total Asset Turnover 1.66x is substantially above the industry median 1.17x (IQR 0.85–1.55), indicating superior asset efficiency within the sector. ROE 11.6% is well above the industry median 5.9% (IQR 2.6–12.0%), placing the company in the upper quartile. Revenue growth +7.1% exceeds the industry median +4.3% (IQR 2.2–13.0%), demonstrating solid growth. Payout Ratio 16.7% (Total Return Ratio 20.1%) is well below the industry median 27.0% (IQR 20.0–34.0%), reflecting a conservative return policy that emphasizes retention. Equity Ratio 57.2% slightly exceeds the industry median 50.2% (IQR 40.1–63.6%), indicating healthy balance sheet strength. Current ratio 82.6% is significantly below the industry median 1.84x (IQR 1.26–2.54), placing the company lower in terms of liquidity and reflecting a payables-driven funding cycle. Capex/Depreciation 2.49x is much higher than the industry median 1.16x (IQR 0.75–1.92), highlighting an aggressive growth investment posture. Cash conversion rate (OCF / Net Income) 2.91x exceeds the industry median 1.57x (IQR -0.03–2.75), indicating top-tier cash conversion capability. Overall, the company features high asset efficiency and profitability alongside aggressive growth investment and conservative leverage, but carries the sector-typical liquidity structure risk.
This report was auto-generated by AI analyzing XBRL financial statement disclosures. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm from public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.