Alpen Co.,Ltd. FY2026 FY Earnings Report

Quick View

Executive Summary

Revenue maintained its upward trend for six consecutive periods, but both the gross profit margin and operating margin declined from the previous year, indicating a slight slowdown in profitability at the operating level. Revenue was ¥2,859.5B (+6.4% YoY), Operating Income was ¥85.4B (+0.3%), Ordinary Income was ¥100.7B (-3.7%), and Net Income was ¥62.7B (+12.4%). Operating Income was nearly flat, while Ordinary Income declined partly due to higher non-operating expenses. However, Net Income achieved double-digit growth as the large impairment and other extraordinary losses recorded in the previous year decreased.

Factors Affecting Business Performance

【Revenue】Revenue was ¥2,859.5B, representing a 6.4% YoY increase. The company operates a single segment, the retail business for sports-related products, and does not disclose a breakdown by business. Gross profit increased 5.1% YoY to ¥1,130.4B, below the rate of revenue growth, and the gross profit margin declined by approximately 51bp to 39.5% from 40.0% in the previous year. Although qualitative information supporting the breakdown of revenue growth is limited, the fact that gross profit growth lagged revenue growth suggests margin pressure from pricing and product mix.

【Profit and Loss】Although SG&A expenses increased 5.5% YoY to ¥1,044.9B, the SG&A ratio improved slightly to 36.5% from 36.9% in the previous year. Operating Income was limited to ¥85.4B (+0.3%), and the operating margin declined to 3.0% from 3.2% in the previous year, as the deterioration in the gross profit margin offset the benefits of improved SG&A efficiency. Non-operating expenses increased to ¥10.6B from ¥8.1B in the previous year, mainly due to higher interest expenses, resulting in a 3.7% decline in Ordinary Income to ¥100.7B. Meanwhile, extraordinary losses declined significantly to ¥9.8B, including ¥8.6B in impairment losses, from ¥29.7B in the previous year. After deducting extraordinary gains of ¥2.8B from ¥6.0B in the previous year, Profit Before Tax increased 15.6% YoY to ¥93.7B, and Net Income was ¥62.7B (+12.4%). The divergence between Ordinary Income and Net Income was primarily attributable to the reduction in extraordinary losses, indicating a significant contribution from temporary factors. Overall, this was a year in which revenue increased but growth stagnated at the operating and ordinary income levels, while extraordinary income and expenses resulted in bottom-line growth.

Key Financial Metrics

【Profitability】The operating margin was 3.0% (3.2% in the previous year, -17bp), while the net profit margin was 2.2% (2.1% in the previous year, +13bp), indicating that profit margins remained broadly flat despite top-line growth. ROE was 5.0%, a slight improvement from 4.7% in the previous year, but remained low in absolute terms. Basic EPS was ¥164.88 (+14.0% YoY), exceeding Net Income growth (+12.4%), as the decline in the weighted-average number of shares during the period due to share repurchases contributed to the increase.【Cash Quality】Operating Cash Flow (OCF) was ¥107.1B (+18.0% YoY), or 1.71 times Net Income of ¥62.7B, providing a certain level of cash backing for accounting earnings. However, the ¥25.1B increase in inventories was a use of cash, resulting in a difference between the growth rates of earnings and cash flow.【Investment Efficiency】Capital expenditures were ¥87.6B, or 1.37 times depreciation and amortization of ¥64.0B, indicating an allocation weighted toward growth investments exceeding maintenance investments. Total asset turnover was approximately 1.33x (Revenue of ¥2,859.5B ÷ Total Assets of ¥2,144.4B).【Financial Soundness】The Equity Ratio was 58.9%, essentially unchanged from 58.8% in the previous year and remaining at a high level. Interest-bearing debt totaled ¥125.0B (¥45.0B short-term and ¥80.0B long-term) against cash and deposits of ¥155.8B, resulting in a positive net cash position. The current ratio was approximately 170.9% (current assets of ¥1,175.4B ÷ current liabilities of ¥687.6B), indicating stable liquidity.

Cash Flow Analysis

Operating Cash Flow was ¥107.1B, an 18.0% YoY increase, and remained above Net Income of ¥62.7B. Within working capital, the ¥25.1B increase in inventories and the ¥8.2B increase in trade receivables were uses of cash, while the ¥15.1B increase in trade payables was a source of cash. After deducting ¥36.9B in income taxes paid, these items resulted in the reported OCF. Investing Cash Flow was an outflow of ¥105.8B, primarily reflecting ¥87.6B in capital expenditures, indicating continued investment in stores, logistics facilities, and other assets. Financing Cash Flow was limited to an outflow of ¥4.6B. The company allocated ¥55.4B to share repurchases, while ¥40.0B raised through long-term borrowings partially offset the outflow. Free Cash Flow, calculated as the sum of OCF and Investing Cash Flow, was ¥1.4B, a tight level. During the period, the combination of inventory accumulation and capital expenditures limited the company’s internally generated funding capacity.

Earnings Quality

The divergence between Ordinary Income and Net Income for the period was primarily attributable to changes in extraordinary income and expenses, and the two should be assessed separately when evaluating recurring earnings power. Extraordinary losses declined significantly to ¥9.8B, including ¥8.6B in impairment losses, from ¥29.7B in the previous year. After offsetting extraordinary gains of ¥2.8B against ¥6.0B in the previous year, Profit Before Tax increased 15.6% YoY to ¥93.7B. This improvement in extraordinary income and expenses was the key factor driving Net Income higher, and it should be noted that Net Income growth (+12.4%) was somewhat above the company’s underlying performance at the operating and ordinary income levels. Of non-operating income of ¥25.9B, other non-operating income accounted for ¥13.4B and may include items that cannot necessarily be characterized as recurring income. Comprehensive Income was ¥77.2B, ¥14.5B above Net Income of ¥62.7B, primarily due to an adjustment of +¥12.9B related to retirement benefits. This difference is influenced by factors such as the investment environment for pension assets and should be viewed separately from the company’s core earnings power as an accrual-related item.

Earnings Forecasts and Guidance

For the next fiscal year, the company forecasts Revenue of ¥3,060.0B (+7.0% YoY), Operating Income of ¥105.0B (+22.9%), Ordinary Income of ¥119.0B (+18.1%), EPS of ¥167.71, and dividends of ¥60.00. The operating margin is expected to improve from 3.0% in the current period to approximately 3.4% (¥105.0B ÷ ¥3,060.0B), implying a plan based on an improvement of slightly more than +40bp. In light of the decline in the gross profit margin and operating margin observed in the current period, the key factors for achieving next year’s guidance will be stabilization of the gross profit margin and progress in improving SG&A efficiency.

Shareholder Returns

Annual dividends were ¥55 (¥25 interim and ¥30 year-end), and the Payout Ratio declined slightly to 33.4% from 34.6% in the previous year. Total dividends increased 7.0% to ¥20.6B from ¥19.3B in the previous year, and the company plans to increase dividends to ¥60 next fiscal year. During the period, the company conducted ¥55.4B in share repurchases, compared with none in the previous year. Total shareholder returns, including dividends and share repurchases, amounted to ¥76.0B, exceeding Net Income of ¥62.7B. The Total Return Ratio reached approximately 121%, representing returns substantially exceeding internally generated funds relative to Free Cash Flow of ¥1.4B. However, the company’s cash and deposits of ¥155.8B, positive net cash position, and low level of interest-bearing debt supported the returns during the period.

Risk Factors

1. Gross Margin and Inventory Risk: The gross profit margin declined by approximately 51bp from the previous year to 39.5%, while inventories remained high at ¥835.3B (+3.1% YoY). The simultaneous increase in inventories and decline in the gross profit margin could lead to pressure from markdown sales and inventory valuation, potentially affecting profitability.

2. Working Capital and Cash Generation Risk: The increase in inventories absorbed ¥25.1B of cash through OCF, leaving Free Cash Flow at only ¥1.4B. As capital expenditures continue, if working capital efficiency does not improve, the company may become increasingly dependent on cash on hand or borrowings to fund investments and shareholder returns.

3. Sustainability of Capital Allocation: Total shareholder returns of ¥76.0B, including ¥55.4B in share repurchases, exceeded Net Income of ¥62.7B and Free Cash Flow of ¥1.4B. Although the company’s net cash position and low-leverage financial base provide support, improvement in cash-generation capacity will be required if returns at the same level are to continue.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (retail)

Profitability and Returns

Both the operating margin and net profit margin were below the industry median, placing the company somewhat toward the lower end of the industry in terms of profitability.

Growth and Capital Efficiency

The revenue growth rate exceeded the industry median, indicating that top-line growth was relatively strong within the industry.

※Source: Compiled by the Company

Key Points from the Financial Results

1. While Revenue increased 6.4%, both the gross profit margin (-51bp) and operating margin (-17bp) declined from the previous year, indicating stagnation in profitability from the perspective of the quality of revenue growth.

2. Net Income increased 12.4%, primarily due to the significant reduction in extraordinary losses (from ¥29.7B in the previous year to ¥9.8B in the current period). Given that Ordinary Income declined 3.7%, the growth in final profit included a contribution from temporary factors.

3. Total shareholder returns, including ¥55.4B in share repurchases, exceeded Net Income. Meanwhile, next year’s guidance assumes an improvement in the operating margin from 3.0% to approximately 3.4%, making stabilization of the gross profit margin and optimization of inventory levels key prerequisites for achieving the plan.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit five-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥2,803–¥2,965 at ±1% for the cost of equity, and ¥2,869–¥2,891 at ±0.1 for ω.

Notes:

• Amortization of goodwill of ¥3.6 per share has been added back to earnings (as a non-cash expense and to improve comparability with IFRS companies).
• Since forecast ROE is below the cost of equity, the theoretical value is below book value per share.

(Calculation model: Residual Income Model / Interest rate reference month: 2026-07 / This value does not predict or guarantee the future share price)

---

This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with professionals as necessary.

---End of Report---