Alpen Co.,Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥65.42B
• Operating Income: ¥616M
• Net Income: ¥804M
• EPS: ¥15.72

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

FY2026 Q1 was mixed for Alpen: revenue grew solidly, but margins compressed and net profit fell, with a heavy reliance on non-operating gains to support ordinary income. Revenue rose 4.9% YoY to 654.2, while operating income declined 22.4% YoY to 6.16 and ordinary income fell 24.0% YoY to 9.72. Net income decreased 24.7% YoY to 6.06, implying a net margin of 0.93%. Gross profit was 250.0, giving a gross margin of 38.2%, but SG&A at 242.1 (37.0% of sales) absorbed most of the gross profit, limiting operating leverage. Operating margin compressed by about 33 bps YoY to 0.94% (from ~1.27%). Ordinary income margin contracted by roughly 56 bps to 1.49% (from ~2.05%). Net margin contracted by about 36 bps to 0.93% (from ~1.29%). Non-operating income of 6.50 exceeded operating income (non-operating income ratio ~107%), indicating earnings support from non-core items this quarter. Interest expense remained small at 0.24, and interest coverage was robust at 25.7x, limiting near-term financial strain. Liquidity is adequate on a current ratio basis (149%) but the quick ratio is weak at 31% due to heavy inventories (929), underscoring working capital intensity. Inventory days look elevated for a retailer given quarterly COGS, increasing markdown risk if demand softens or weather turns unfavorable. ROE, via DuPont, is weak at ~0.5% on the quarterly snapshot, pressured mainly by margin compression, while leverage is moderate at 1.75x. Reported ROIC at 0.3% is below the 5% warning threshold, though quarterly readings can understate full-year returns for seasonal retailers. Cash flow data were not disclosed, preventing validation of earnings quality via OCF/NI and FCF coverage. Forward-looking, the key to restoring profitability will be gross margin protection (pricing/mix and markdown control) and SG&A discipline, alongside inventory normalization to improve cash conversion. With non-operating items propping up ordinary income in Q1, a cleaner operating profit recovery will be needed to sustain dividends and capital allocation plans.

Profitability Analysis

ROE decomposition (DuPont): Net Profit Margin (NPM) 0.9% × Asset Turnover 0.310 × Financial Leverage 1.75x = ROE ~0.5% (matches reported). The largest driver of the weak ROE is the contraction in net margin; operating margin fell to 0.94% (−33 bps YoY) and net margin to 0.93% (−36 bps), while leverage remained moderate and asset turnover appears stable for a seasonal Q1. Business drivers likely include higher SG&A intensity (37.0% of sales) and potential gross margin headwinds from mix/markdowns despite a solid 38.2% gross margin level. Non-operating income (6.50) offset weaker operations, lifting ordinary income above operating income, which masks underlying operating softness. Sustainability: margin pressure could ease if inventory is normalized and pricing/markdowns stabilize, but reliance on non-operating gains is not a sustainable earnings model. Concerning trend: the SG&A envelope (242.1) grew faster than operating income, indicating negative operating leverage; without YoY SG&A disclosure, we infer deleverage from the decline in operating profit versus revenue growth.

Growth Assessment

Top line grew 4.9% YoY to 654.2, showing resilient demand. However, profit growth was negative: operating income −22.4%, ordinary income −24.0%, and net income −24.7% YoY, indicating cost/margin pressure. Operating margin compressed to 0.94% (−33 bps), and net margin to 0.93% (−36 bps). Non-operating income supported ordinary profit, suggesting less robust underlying operating momentum in Q1. Revenue sustainability will hinge on category mix (seasonal sports, outdoor, and golf), weather effects, and price elasticity amid consumer sentiment. Profit quality is mixed: strong interest coverage and modest leverage help, but heavy inventories and reliance on non-operating gains detract. Outlook: focus on inventory normalization to mitigate markdowns, SG&A control to recover operating leverage, and maintaining gross margin through disciplined promotions. Without cash flow disclosures, we cannot validate whether growth is translating to cash; monitoring OCF in subsequent quarters is essential.

Financial Health

Liquidity: Current ratio 149.1% (adequate but slightly below the >150% benchmark), quick ratio 31.1% (weak due to large inventories). No explicit warning trigger as current ratio >1.0. Solvency: Total liabilities 902.3 vs equity 1,206.7; D/E 0.75x is moderate and within conservative thresholds (<1.5x). Interest coverage is strong at 25.7x. Maturity mismatch: current liabilities 787.3 are well covered by current assets 1,173.7, but cash (102.5) and receivables (107.5) cover only a fraction of near-term obligations; the remainder relies on inventory conversion, increasing liquidity sensitivity to sales velocity. Short-term loans 100.1 are roughly matched by cash on hand, limiting immediate refinancing risk. No off-balance sheet obligations were disclosed in the provided data.

Cash Flow Quality

Operating cash flow was not disclosed, so OCF/Net Income and FCF cannot be assessed. Given inventories of 928.6 versus quarterly COGS of 373.6, implied inventory days are elevated, which can suppress operating cash conversion and increase markdown risk if sell-through slows. With non-operating income exceeding operating income, quality of earnings skews away from core operations this quarter. Dividend and capex coverage by FCF cannot be evaluated due to missing data; watch for working capital release in subsequent quarters to support cash generation.

Dividend Sustainability

Dividend data were largely unreported. The calculated payout ratio of 320.9% likely reflects a mismatch between an annualized dividend assumption and a single-quarter net income base; it should not be interpreted as an actual cash payout ratio for the quarter. Without OCF and FCF, coverage cannot be validated. Policy outlook depends on restoring operating profitability and stabilizing cash conversion; near-term sustainability is more sensitive to inventory normalization and margin recovery than to leverage, which is moderate.

Risk Assessment

Business Risks:

• Inventory risk and potential markdowns given high inventory relative to quarterly COGS
• Gross margin pressure from promotions and mix shifts
• Seasonality and weather dependency for sports/outdoor categories
• Supplier and logistics cost volatility affecting COGS and lead times

Financial Risks:

• Liquidity reliance on inventory conversion given a low quick ratio (31.1%)
• Earnings reliance on non-operating income in Q1 (non-operating income > operating income)
• ROIC at 0.3% in the quarter, below the <5% warning threshold, implying weak capital efficiency
• Potential FX exposure on imported merchandise impacting margins

Key Concerns:

• Operating margin compressed to 0.94% (−33 bps YoY) despite revenue growth
• Net income declined 24.7% YoY, with effective tax rate at 34.7% providing limited relief
• Working capital intensity and elevated inventory days could weigh on OCF if demand slows
• Limited visibility on cash flows, capex, and dividends due to unreported items

Investment Implications

Key Takeaways:

• Top-line growth (+4.9% YoY) but negative operating leverage drove profit declines
• Non-operating gains cushioned ordinary profit, highlighting weaker core operations
• Liquidity adequate by current ratio, but inventory-heavy balance sheet increases cash conversion risk
• Moderate leverage (D/E 0.75x) and strong interest coverage provide balance sheet support
• ROIC/ROE are low on the quarterly snapshot, requiring margin and asset efficiency improvements

Metrics to Watch:

• Inventory levels and inventory days versus sell-through
• Gross margin trajectory and markdown rates
• SG&A ratio and fixed-cost containment
• Operating cash flow and free cash flow once disclosed
• Same-store sales and category mix (e.g., outdoor, golf, winter sports)
• Non-operating income composition and recurrence

Relative Positioning: Within Japanese sports retail, Alpen shows resilient sales but weaker operating leverage versus peers with tighter inventory and higher quick ratios; its balance sheet is sound, yet earnings quality leans on non-operating items this quarter, placing emphasis on execution to normalize inventory and restore margins.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis