| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥5423.2B | ¥5446.0B | -0.4% |
| Operating Income / Operating Profit | ¥310.1B | ¥332.3B | -6.7% |
| Ordinary Income | ¥291.6B | ¥310.0B | -5.9% |
| Net Income / Net Profit | ¥173.1B | ¥171.4B | +1.0% |
| ROE | 5.8% | 6.5% | - |
For the fiscal year ended February 2026, Revenue was ¥5,423.2B (YoY -¥22.8B -0.4%), Operating Income was ¥310.1B (YoY -¥22.2B -6.7%), Ordinary Income was ¥291.6B (YoY -¥18.4B -5.9%), and Net Income was ¥173.1B (YoY +¥1.7B +1.0%). Revenue was essentially flat, while an improvement in Gross Margin (33.8%, +0.2pt YoY) was offset by a rise in SG&A ratio (29.7%, +0.8pt YoY), resulting in a decline in Operating Margin to 5.7% (from 6.1%, -0.4pt). At the ordinary income level, margin contracted to 5.4% (from 5.7%, -0.3pt), but gains on sale of investment securities of ¥42.5B and impairment losses of ¥42.8B largely offset in extraordinary items, leading to a slight increase in Net Income. Comprehensive income rose substantially to ¥332.4B (YoY +75.5%) driven by valuation gains on securities of ¥154.9B, strengthening Net Assets to ¥2,981.8B (YoY +¥338.8B +12.8%). Operating Cash Flow was ¥365.4B (flat YoY), remaining at a high level at 2.1x Net Income, and Free Cash Flow generated ¥251.8B, comfortably covering total dividends and share buybacks of ¥87.0B.
【Revenue】Revenue of ¥5,423.2B (YoY -0.4%) landed in a flat range. By segment, the core Home Center Business recorded ¥4,762.7B (share 87.8%, YoY -0.9%), slightly down due to weak existing-store customer traffic and sluggish inventory turnover. Conversely, the Exprice Business grew steadily to ¥657.9B (share 12.1%, YoY +3.4%), with EC demand capture supporting overall sales. Other businesses were ¥2.5B (YoY +2.8%) and limited in scale. Gross margin improved to 33.8% (YoY +0.2pt), with a higher proportion of private brand products and price revisions / mix optimization securing Gross Profit of ¥1,830.9B. Cost of sales ratio rose slightly to 66.2% (from 66.0%, +0.2pt), but gross profit in absolute terms remained on par with the prior year due to product mix adjustments.
【Profitability】SG&A was ¥1,612.9B (SG&A ratio 29.7%, +0.8pt YoY), and increases in fixed costs such as personnel, logistics, and utilities, plus certain M&A integration-related costs, compressed margins. The continued reverse spread—SG&A growth outpacing sales growth—led to a decrease in Operating Income to ¥310.1B (YoY -6.7%), and Operating Margin declined to 5.7% (from 6.1%, -0.4pt). Non-operating items comprised non-operating income of ¥13.5B (including dividend income ¥5.5B and foreign exchange gains ¥3.0B) and non-operating expenses of ¥32.0B (mainly interest expense ¥30.6B), yielding Ordinary Income of ¥291.6B (YoY -5.9%) and Ordinary Margin of 5.4% (from 5.7%, -0.3pt), reflecting the operating-level decline. In extraordinary items, gains on sale of investment securities ¥42.5B and impairment losses ¥42.8B almost offset, resulting in Profit Before Tax of ¥282.3B. After deducting Income Taxes of ¥109.2B (effective tax rate 38.7%), Net Income was ¥173.1B (YoY +1.0%). The sustainability of the final profit, which includes one-off factors, is limited; structurally, the tug-of-war between gross margin improvement and SG&A control continues. In conclusion, while top-line was flat and gross margin improved, higher SG&A led to operating-level profit decline, and Net Income edged up slightly due to one-off items—an increase-in-revenue-but-decline-in-profit trend.
The Home Center Business posted Revenue of ¥4,762.7B (YoY -0.9%), Operating Income of ¥315.3B (YoY -7.6%), and margin of 6.6% (from 7.1%, -0.5pt). Weakness in existing-store sales and delayed synergies from store integrations were drivers of the profit decline, and the deterioration in the core business, which accounts for the bulk of corporate Operating Income, weighed on consolidated results. The Exprice Business recorded Revenue of ¥657.9B (YoY +3.4%), Operating Income of ¥8.4B (YoY +62.3%), and margin of 1.3% (from 0.8%, +0.5pt), demonstrating its role as a growth driver. EC demand capture and product mix optimization contributed to revenue and profit growth; while margins remain low, the business is scaling. Other businesses (holdings company transactions etc.) showed stable Operating Income of ¥173.3B (YoY +0.4%). Significant margin dispersion across segments means improving margins in the Home Center Business and scaling the Exprice Business are keys to improving consolidated profitability.
【Profitability】Operating Margin of 5.7% fell 0.4pt from 6.1% as improvement in Gross Margin was offset by a rise in SG&A ratio. ROE of 5.8% is composed of Net Profit Margin 3.2%, Total Asset Turnover 0.81x, and Financial Leverage 2.25x, and shows a downward trend from the prior year. Total Asset Turnover is flat amid inventory increases and accumulation of investment securities, and Net Profit Margin rose slightly due to extraordinary items but declined at the operating level. ROIC (reference; Operating Income × (1 - effective tax rate 38.7%) ÷ (Net Assets + Interest-bearing Debt)) is estimated at roughly 3.5%, indicating substantial room to improve capital efficiency. 【Cash Quality】Operating Cash Flow / Net Income is high at 2.11x, and the accrual ratio is -2.9%, within a healthy range. OCF/EBITDA is 0.82x (EBITDA ¥444.5B = Operating Income ¥310.1B + Depreciation ¥133.8B), which is on the favorable side, though working capital drag remains. 【Investment Efficiency】Capital expenditure of ¥119.1B is 0.89x Depreciation ¥133.8B, indicating maintenance-centered investment; including M&A investment ¥66.3B, total investment remains within Free Cash Flow and capital discipline is maintained. Inventory turnover days are 172 days (Inventory ¥1,653.6B ÷ Cost of Sales ¥3,500.1B × 365) and heavy, and CCC is 153 days (DIO 172 days + DSO 9 days - DPO 28 days), with cash binding pressures dampening profit generation efficiency. 【Financial Soundness】Equity Ratio is 44.4% (from 40.8%, +3.6pt), Current Ratio 242.5%, Quick Ratio 95.4%, indicating good short-term liquidity. Debt/EBITDA is 4.28x (Interest-bearing Debt ¥1,903.5B ÷ EBITDA ¥444.5B) and relatively high, making leverage improvement a task, but Interest Coverage is 10.15x (EBIT ¥310.1B ÷ Interest Expense ¥30.6B), showing adequate interest-bearing capacity.
Operating Cash Flow was ¥365.4B (flat YoY), arriving at that level after subtracting working capital changes and Income Taxes paid ¥123.2B from operating cash subtotal ¥511.2B. In working capital, an increase in Accounts Payable of ¥75.8B contributed cash inflow, while Inventory increase ¥18.9B and Accounts Receivable increase ¥9.6B caused outflows, leaving net working capital outflow modest. Operating Cash Flow / Net Income remained high at 2.11x, reflecting good accrual quality. Investing Cash Flow was -¥113.6B, with Capital Expenditure -¥119.1B partially offset by proceeds from sale of securities ¥62.7B; including M&A investment -¥66.3B, total investment was controlled. Free Cash Flow generated ¥251.8B (Operating CF ¥365.4B + Investing CF -¥113.6B), sufficiently covering dividend payments ¥63.9B and share buybacks ¥23.1B totaling ¥87.0B. Financing Cash Flow was -¥595.7B, mainly due to long-term borrowings repayment -¥533.9B and bond redemptions -¥100.0B, reducing Cash and Deposits to ¥855.1B (from ¥1,194.3B, -¥339.2B), but liquidity on hand still substantially exceeds short-term liabilities.
Recurring earnings are centered on retail core operations, and non-operating income of ¥13.5B (0.25% of sales) is minor. In extraordinary items, gains on sale of investment securities ¥42.5B and impairment losses ¥42.8B nearly offset, and one-off contributions are estimated at about 25% of Net Income ¥173.1B. Non-operating expenses are led by interest expense ¥30.6B, which is 9.9% of Operating Income and at a manageable level; the interest burden coefficient is 0.90 ((Operating Income - Interest Expense) ÷ Operating Income), which is healthy. The accrual ratio is -2.9%, and Operating Cash Flow exceeding Net Income confirms cash-backed profit generation. The divergence between Ordinary Income ¥291.6B and Net Income ¥173.1B (gap ¥118.5B) is mainly due to tax burden at an effective rate of 38.7% and net impact of extraordinary items; the tax burden coefficient 0.613 caps final profit margin. Real underlying earning power should be assessed at the Operating Income level excluding extraordinary items, and the sustainability of Net Income that includes one-offs is limited.
Against the full-year company plan (Revenue ¥5,773.0B, Operating Income ¥312.0B, Ordinary Income ¥294.0B, Net Income ¥174.0B), results achieved about 94% of Revenue, 99% of Operating Income, 99% of Ordinary Income, and 99% of Net Income, landing broadly on plan. The Revenue shortfall is thought to reflect weak same-store performance and sluggish inventory turnover, while profit was roughly on plan due to Gross Margin improvement and cost restraint. Progress rates of 99% for Operating Income and 99% for Net Income are within a conservative outlook, and plan deviation is not large. Going forward, inventory efficiency, recovery in same-store sales, and restraint in SG&A growth will be key to achieving future plans.
Dividends comprise an interim dividend of ¥23 and a year-end dividend of ¥24 for a total annual dividend of ¥47 (same as prior year), with a Payout Ratio of 35.2% (total dividends approximately ¥64.7B against Net Income ¥173.1B), at a sustainable level. Share buybacks of ¥23.1B (recorded in Financing CF) were conducted, bringing combined returns to shareholders to approximately ¥87.8B and a Total Return Ratio of about 50.7%. Against Free Cash Flow ¥251.8B, total returns ¥87.8B represent coverage of 2.87x, indicating ample room and high dividend sustainability. Considering cash and deposits of ¥855.1B and Operating CF generation ¥365.4B, maintaining dividends and share buybacks is financially feasible; a Total Return Ratio in the 50% range balances capital efficiency and shareholder returns. However, given Debt/EBITDA 4.28x and the need for inventory optimization, allocating funds toward inventory reduction and debt repayment rather than excessive expansion of total returns may better enhance corporate value over the medium term.
Inventory efficiency and cash binding risk: Inventory turnover days 172 days and CCC 153 days indicate heavy cash binding, and risks of inventory obsolescence or markdowns may press margins. Inventory ¥1,653.6B accounts for 24.6% of total assets; if inventory reduction is delayed, Operating CF generation could weaken and working capital burden increase.
SG&A increase and reverse operating leverage risk: A rising SG&A ratio 29.7% (+0.8pt YoY) is compressing Operating Margin, and continued reverse spread where SG&A growth outpaces sales growth represents a risk. High stickiness of fixed costs such as personnel, logistics, and utilities means Operating Margin could deteriorate further if same-store sales remain weak.
M&A integration risk and goodwill impairments: Goodwill of ¥508.7B (17.1% of Net Assets, 7.6% of Total Assets) is recorded, and if PMI progress for newly consolidated subsidiaries such as Encho and Hometech is delayed, realization of integration synergies may be postponed, increasing the risk of future impairment losses. Given impairment increased from ¥18.6B last year to ¥42.8B this year, monitoring integration outcomes is necessary.
Profitability / Returns
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.7% | 4.6% (1.7%–8.2%) | +1.1pt |
| Net Profit Margin | 3.2% | 3.3% (0.9%–5.8%) | -0.2pt |
Operating Margin is 1.1pt above the industry median and favorable; Net Profit Margin is around median, affected by extraordinary items and tax burden.
Growth / Capital Efficiency
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -0.4% | 4.3% (2.2%–13.0%) | -4.7pt |
Revenue growth rate trails the industry median by 4.7pt, with weak same-store performance hindering growth.
※Source: Company compilation
Inventory efficiency as top-priority KPI: Inventory turnover days 172 and CCC 153 show large potential to improve capital efficiency. Reducing inventory to cut working capital and boost Operating CF is key to ROIC improvement and shareholder value enhancement. Accelerating inventory turnover also reduces markdown risk and helps maintain gross margin, serving as a starting point for medium-term margin recovery.
Realization of M&A integration synergies: The integration progress and synergy realization of five newly consolidated companies including Encho and Hometech will determine Operating Margin improvement in subsequent periods. The Home Center Business margin declined to 6.6% (from 7.1%), so early realization of integration effects is expected to reverse margin trends. Given goodwill ¥508.7B and associated amortization / impairment risk, monitoring PMI progress is important.
SG&A restraint and recovery of operating leverage: Rising SG&A ratio 29.7% (+0.8pt YoY) is squeezing Operating Margin; reducing fixed costs through DX promotion, labor-saving measures, and logistics efficiency, together with recovery in same-store sales to restore positive operating leverage, are conditions for margin improvement. Cash generation is strong and dividends / total returns are sustainable, but given Debt/EBITDA 4.28x, allocating cash to inventory reduction and debt repayment may better support medium-term value creation.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on public financial statement data. Investment decisions should be made at your own responsibility and, if necessary, in consultation with a professional advisor.