| Indicator | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥511.0B | ¥511.8B | -0.2% |
| Operating Income / Operating Profit | ¥7.8B | ¥12.4B | -37.2% |
| Ordinary Income | ¥8.0B | ¥13.0B | -38.5% |
| Net Income / Net Profit | ¥2.9B | ¥2.5B | +18.3% |
| ROE | 1.0% | 0.9% | - |
For the fiscal year ending April 2026, Revenue was ¥511.0B (YoY -¥0.9B -0.2%), essentially flat, while cost pressures weighed on profitability. Operating Income was ¥7.8B (YoY -¥4.6B -37.2%), Ordinary Income was ¥8.0B (YoY -¥5.0B -38.5%), and Net Income attributable to owners of parent was ¥2.9B (YoY +¥0.5B +18.3%). Net Income includes special losses such as impairment losses of ¥2.5B; however, tax burden reduction led to a year-on-year increase. Operating margin fell to 1.5% (down 0.9pt from 2.4% a year earlier), revealing a weak profit structure driven by slight revenue decline and rising SG&A expenses.
[Revenue] Revenue was ¥511.0B (YoY -¥0.9B -0.2%), remaining largely unchanged. As a single-segment company (Delicatessen Business), regional and product disclosures are not provided, but it is likely that either customer traffic or average spend at existing stores underperformed. Gross margin edged down to 57.3% (prior 57.4%), suggesting some absorption of higher raw material costs through pricing and mix.
[Profitability] Operating Income declined substantially to ¥7.8B (YoY -¥4.6B -37.2%). SG&A rose to ¥285.2B (YoY +¥3.7B +1.3%) despite lower sales, with the SG&A ratio increasing to 55.8% (up 0.8pt from 55.0%). Higher fixed-cost items such as personnel, logistics, and energy costs drove a reversal of operating leverage. Non-operating income totaled ¥0.6B (dividend income ¥0.1B, insurance dividends ¥0.2B, etc.), while non-operating expenses ¥0.4B including foreign exchange losses ¥0.4B led to Ordinary Income of ¥8.0B (YoY -¥5.0B -38.5%). Special losses of ¥3.1B (impairment losses ¥2.5B, loss on liquidation of subsidiaries ¥0.5B) were recorded. Corporate taxes and other tax expenses of ¥3.9B (effective tax rate 79.9%, up sharply from 48.7% prior year) compressed pre-tax profit to ¥4.9B, resulting in Net Income of ¥2.9B, a modest year-on-year increase. In summary: slight revenue decline, large decline in operating income, large decline in ordinary income, and modest increase in net income.
[Profitability] Operating margin 1.5% (prior 2.4%), Net margin 0.6% (prior 0.5%). Profitability at the operating level deteriorated materially due to higher SG&A ratio, while Net Income remained roughly flat since special losses had already compressed prior-year net profit. ROE 1.0% (prior 1.1%) remains very low. Structure: Total Asset Turnover 1.47x × Financial Leverage 1.22x × Net Margin 0.6%. [Cash Quality] Operating Cash Flow (OCF) ¥23.1B is approximately 8x Net Income ¥2.9B, absorbing non-cash charges including Depreciation ¥19.2B and inventory increase △¥1.5B, indicating solid cash generation. OCF/Revenue 4.5% (prior 4.0%) improved. [Investment Efficiency] Total Asset Turnover 1.47x (prior 1.45x) was largely unchanged. Capital expenditures ¥13.8B were below Depreciation ¥19.2B, reflecting a maintenance-focused, restrained investment stance. [Financial Soundness] Equity Ratio 82.1% (prior 81.9%) and Current Ratio 336% (prior 340%) indicate a very healthy balance sheet. Cash and deposits ¥131.6B versus interest-bearing debt consisting only of long-term borrowings ¥1.8B (prior ¥2.8B), essentially net cash. Lease liabilities remain ¥6.8B total (current ¥3.1B, non-current ¥3.7B) but can be comfortably covered by cash positions.
OCF was ¥23.1B (YoY +¥2.9B +14.2%), solid, derived from profit before income taxes ¥4.9B before tax adjustments plus Depreciation ¥19.2B, impairment losses ¥2.5B and other non-cash items. Working capital movements included inventory increase △¥1.5B partially offset by accounts payable increase ¥0.9B, and corporate tax payments △¥2.0B. Investing Cash Flow was △¥17.1B, mainly acquisition of tangible fixed assets △¥13.8B and intangible assets △¥1.8B. Time deposit placements △¥4.2B and withdrawals +¥4.2B offset, leaving effective investment outlays of about ¥15.6B for facilities and software. Free Cash Flow was ¥6.0B (OCF + Investing CF), just covering dividend payments of ¥6.0B. Financing Cash Flow was △¥10.3B, driven by dividend payments △¥6.0B, repayment of long-term borrowings △¥1.0B, and lease liabilities repayment △¥3.3B. Cash and cash equivalents ended at ¥127.5B (YoY △¥4.4B), a slight decline but maintaining ample liquidity.
Against Ordinary Income of ¥8.0B, special losses of ¥3.1B (impairment losses ¥2.5B, loss on liquidation of subsidiaries ¥0.5B) temporarily compressed pre-tax profit to ¥4.9B. Non-operating income ¥0.6B is immaterial at 0.1% of revenue, mainly recurring items such as dividend income ¥0.1B and insurance dividends ¥0.2B. Of non-operating expenses ¥0.4B, foreign exchange losses ¥0.4B are a transient factor. OCF reached about 8x Net Income, indicating negative accruals and strong cash backing. However, inventory increase △¥1.5B ties up working capital, suggesting room to improve inventory turnover. The impairment and high effective tax rate (79.9%) are likely one-off factors, so next fiscal year the gap between Ordinary Income and Net Income is expected to narrow.
Full Year guidance projects Revenue ¥521.6B (YoY +2.1%), Operating Income ¥5.3B (YoY -32.0%), Ordinary Income ¥5.8B (YoY -27.2%), and Net Income attributable to owners of parent ¥3.1B. While Revenue is expected to tick up slightly, Operating Income is guided down further from this fiscal year’s ¥7.8B under conservative assumptions, likely incorporating sustained high fixed costs such as personnel and logistics. Net Income is projected at ¥3.1B (up from ¥2.9B this year), implying assumptions of the cessation of special losses and normalization of the effective tax rate. Full-year dividend guidance of ¥9.0 per share is a major cut from this year’s ¥24.0, indicating that this year’s extremely high payout ratio (approximately 656%) was temporary. Progress through Q3 cumulative periods has not been disclosed, so the likelihood of achieving full-year guidance will require monitoring of future quarterly progress.
Annual dividend was ¥24.0 (interim ¥9.0, year-end ¥15.0), unchanged from prior year. With Net Income attributable to owners of parent ¥2.9B (on 26.1 million shares outstanding basis), the Payout Ratio is about 656%, an extremely high level driven by temporary compression of Net Income from special losses and high effective tax rate. Free Cash Flow ¥6.0B exactly matched total dividend payments ¥6.0B, and ample cash on hand ¥131.6B supports distributions in the short term. Next fiscal year’s dividend forecast is ¥9.0, a large reduction from this year, which can be interpreted as an adjustment to a more realistic level assuming normalization of Net Income. No share buybacks were executed; shareholder returns are composed solely of dividends.
SG&A escalation risk: SG&A ratio at 55.8% (YoY +0.8pt) is rising. Given the high fixed-cost nature of personnel, logistics, and energy, slight revenue decline reverses operating leverage. With Operating margin at 1.5%, further cost increases would directly erode earnings.
Inventory management risk: Inventories increased to ¥10.7B (YoY +¥1.5B +16.2%), tying up working capital. Given the perishability inherent in the Delicatessen Business, risks of freshness management issues and higher spoilage exist, making improvement in inventory turnover urgent.
Profitability decline and dividend sustainability risk: Operating margin 1.5% and ROE 1.0% are very low, and the Payout Ratio temporarily reached 656%. While cash on hand ¥131.6B and a net-debt-free position support dividends, if profitability does not improve, medium- to long-term dividend maintenance is uncertain.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 1.5% | 5.0% (3.3%–8.4%) | -3.5pt |
| Net Margin | 0.6% | 3.2% (1.9%–6.6%) | -2.6pt |
Profitability is well below the industry median, primarily due to a high SG&A ratio. The company sits in the lower tier within the industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -0.2% | 5.4% (1.0%–8.6%) | -5.6pt |
Revenue growth is flat and below the industry median, suggesting stagnation in same-store performance. The company is in the low-growth group within the industry.
※Source: Company compilation
Rising SG&A under flat Revenue reduced Operating margin by about -0.9pt, resulting in an Operating margin of 1.5% well below the industry median of 5.0%. Priority is to restrain fixed costs such as personnel and logistics and to restore profitability through price and mix improvements.
OCF of ¥23.1B is robust, about 8x Net Income, indicating strong cash generation. With cash and deposits ¥131.6B and Equity Ratio 82.1%, the financial foundation is extremely healthy and short-term financial risk is limited. However, without improvement in Operating margin, enhancing shareholder value in the medium to long term will be difficult.
Next fiscal year management forecasts Revenue +2.1% but a conservative Operating Income outlook (-32.0%), suggesting cost-structure improvements remain incomplete. Net Income is expected to rise assuming the absence of special losses and tax normalization; progress in inventory turnover and operational efficiency will be critical.
This report is an earnings analysis automatically generated by AI from XBRL financial statement disclosure data. It is not 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 professionals as necessary.