| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥4450.9B | ¥4418.8B | +0.7% |
| Operating Income | ¥490.1B | ¥582.0B | -15.8% |
| Profit Before Tax | ¥445.1B | ¥557.9B | -20.2% |
| Net Income | ¥148.3B | ¥110.9B | +33.7% |
| ROE | 3.5% | 2.6% | - |
For the fiscal year ended February 2026 (IFRS consolidated), Revenue was ¥4,450.9B (YoY +¥32.1B +0.7%), Operating Income was ¥490.1B (YoY -¥91.9B -15.8%), Profit Before Tax was ¥140.9B (YoY +¥41.2B +41.3%), and Net Income attributable to owners of the parent was ¥148.3B (YoY +¥37.4B +33.7%). Revenue edged up while Operating Income declined double-digits. Gross margin improved to 48.4% (prior year 48.1%, +0.3pt), but SG&A ratio rose to 37.0% (prior year 36.0%, +1.0pt), compressing operating profit margin to 11.0% (prior year 13.2%, -2.2pt). Profit Before Tax and Net Income increased significantly due to lower financial expenses despite a one-off decline from the prior year's step-acquisition gain of ¥85.3B, indicating an underlying trend of revenue and profit increase.
Revenue: ¥4,450.9B (YoY +0.7%), a slight increase. Core Department Store Business remained firm at ¥2,677.4B (+1.7%), accounting for 60.2% of revenue. The SC Business was strong at ¥660.3B (+4.4%) and maintained high margins. Conversely, the Developer Business declined substantially to ¥602.0B (-12.9%), and the Payments & Financial Business contracted to ¥42.8B (-20.4%), which, together with other items, constrained overall growth.
P&L: Cost of sales was ¥2,296.8B (prior year ¥2,292.8B), resulting in Gross Profit of ¥2,154.1B (prior year ¥2,126.0B) and Gross Margin improvement to 48.4% (+0.3pt). SG&A increased to ¥1,648.1B (prior year ¥1,591.1B), up ¥57.0B (+3.6%), raising the SG&A ratio to 37.0% (+1.0pt). Consequently, Operating Income was ¥490.1B (-15.8%), and Operating Margin contracted to 11.0% (-2.2pt). Financial income was ¥8.0B versus financial expenses of ¥62.9B (prior year ¥42.7B), increasing interest burden by ¥20.2B. Equity-method investment income was ¥10.0B (prior year ¥10.7B), a slight decrease. Other operating income dropped significantly to ¥41.3B (prior year ¥118.3B), down ¥77.0B, reflecting a decline in gains on sales of fixed assets. Profit Before Tax was ¥445.1B (-20.2%); after income taxes of ¥164.4B (effective tax rate 36.9%), profit for the period was ¥280.8B. Net income attributable to owners of the parent was ¥282.8B (prior year ¥414.2B), reflecting the one-off reduction from the prior year's ¥85.3B step-acquisition gain, but underlying recurring earnings increased, maintaining an overall revenue-and-profit growth posture.
OCF was ¥669.9B (YoY -21.9%), maintaining quality at roughly 2.4x Net Income attributable to owners of the parent ¥282.8B. OCF subtotal (pre-working capital changes) was ¥898.9B; after working capital movements including inventories increase -¥14.7B, accounts payable decrease -¥19.6B, and trade receivables collection +¥13.4B, and after tax payments -¥177.3B, interest payments -¥60.2B, and lease payments -¥260.4B, the resulting OCF was as reported. Investing Cash Flow was -¥151.5B, comprising capital expenditures -¥141.6B, intangible asset acquisitions -¥45.6B, investment property acquisitions -¥24.4B, partly offset by proceeds from property sales +¥34.5B and investment property sales +¥21.6B. Free Cash Flow was a plentiful ¥518.4B, sufficiently covering dividend payments ¥143.4B and share buybacks ¥150.7B (total shareholder return ¥294.1B), with surplus applied to financing cash flows such as short-term borrowings repayment ¥150.0B and long-term borrowings repayment ¥284.3B. Cash and cash equivalents decreased by ¥188.8B to ¥361.0B (prior year ¥549.8B), a planned reduction accompanying capital allocation of surplus funds, and liquidity is not a concern.
Overall quality of earnings is good: of Operating Income ¥490.1B, the majority is recurring from Department Stores and SC operations, and equity-method investment income ¥10.0B is a stable contributor. A one-off factor was the decline in Other Operating Income from ¥118.3B to ¥41.3B (-¥77.0B), reflecting a drop in prior-year gains on sales of fixed assets. Outside operating income/expenses, financial expenses rose to ¥62.9B (YoY +¥20.2B), with interest on leases and borrowings weighing on profit. OCF is about 2.4x Net Income attributable to owners of the parent, indicating strong cash backing (high accrual quality). However, OCF/EBITDA is 0.72x, below the ideal, as tax and lease payments suppress cash conversion. Despite the one-off step-acquisition gain of ¥85.3B in the prior year, underlying recurring earnings are on an improving trend and recurring earning power is maintained.
For FY ending February 2027, guidance is Revenue ¥4,690.0B (YoY +5.4%), Operating Income ¥470.0B (-4.1%), Net Income attributable to owners of the parent ¥290.0B (+2.5%), EPS ¥118.16, and dividend ¥28 (prior-year actual ¥54, -48.1%). The guidance showing revenue growth but operating profit decline is consistent with conservative assumptions that incorporate continued SG&A increases (personnel, maintenance, renovation) and heavy financial costs. Operating Income guidance of ¥470.0B vs actual ¥490.1B shows the company has already exceeded the plan, but next fiscal year’s Operating Income outlook is cautious, with the balancing of cost inflation and margin defense as the focus. Payout Ratio based on next year’s forecast profit is about 24%, a substantial cut from the actual payout ratio of 51–52%, indicating a shift toward prioritizing reinvestment and financial flexibility.
The dividend for FY2026 was ¥54 per share (interim ¥27 + year-end ¥27), with total dividend payments of approximately ¥144.3B (as dividend cash outflow). Payout Ratio against Net Income attributable to owners of the parent ¥282.8B is about 51–52%, a sustainable level. Share buybacks of ¥150.7B were executed, bringing Total Return Ratio (dividends + share buybacks) to about 104%, and coverage versus Free Cash Flow ¥518.4B is about 1.8x, indicating the capital returns were executed within FCF and with discipline. The forecast dividend for next fiscal year is ¥28 (annualized), a significant cut of -48.1% from ¥54, implying a forecast Payout Ratio of roughly 24% on projected Net Income ¥290.0B and a policy shift to prioritize reinvestment and financial flexibility. Given cash on hand ¥361.0B and strong FCF generation (OCF ¥669.9B), dividend sustainability is maintained, though next year’s conservative dividend guidance may be revised upward depending on performance.
SG&A Inflation Risk: SG&A ratio rose to 37.0% (prior year 36.0%, +1.0pt), with fixed costs such as personnel, maintenance, and renovation increasing at a pace (+3.6%) exceeding Revenue growth (+0.7%). Next year’s guidance assumes operating profit decline, and if cost inflation becomes structural, further pressure on Operating Margin could occur. Managing SG&A/Revenue growth and the effectiveness of efficiency measures will be key.
Liquidity Risk: Current Ratio of about 0.70x is low, with Current Assets ¥2,275.2B vs Current Liabilities ~¥3,245.0B. Most short-term liabilities are operating payables and lease liabilities, but rapid deterioration in consumer sentiment or inventory stagnation could squeeze working capital and cash flow. Cash and cash equivalents ¥361.0B represent only about 11% of current liabilities, so ensuring stable OCF and maturity mismatch management is important.
Developer Business Slowdown Risk: The Developer Business showed pronounced declines (Revenue -12.9%, Operating Income -14.2%) with project timing shifts and margin deterioration. If real estate market conditions worsen or project delays persist, it could materially drag on group profit growth. Improving margins and restructuring the project portfolio in this segment are required.
Revenue & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Return on Equity | 6.9% | 5.9% (2.6%–12.0%) | +1.0pt |
| Operating Margin | 11.0% | 4.6% (1.7%–8.2%) | +6.4pt |
| Net Margin | 3.3% | 3.3% (0.9%–5.8%) | -0.0pt |
ROE and Operating Margin exceed retail medians, but ROE remains below the industry upper quartile (IQR upper 12.0%), indicating room for improvement.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 0.7% | 4.3% (2.2%–13.0%) | -3.6pt |
Revenue growth lags the industry median by -3.6pt, leaving the company relatively low on growth within the sector.
※ Source: Company compilation
Gross Margin improved to 48.4% (+0.3pt), but SG&A ratio increased to 37.0% (+1.0pt), compressing Operating Margin to 11.0% (-2.2pt). Cost inflation (personnel, maintenance, renovation) is rising faster (+3.6%) than Revenue growth (+0.7%), and next year’s guidance also forecasts an operating profit decline (-4.1%). The effectiveness of SG&A control and progress in margin defense will be key.
OCF was ¥669.9B, about 2.4x Net Income attributable to owners of the parent, maintaining high quality, and Free Cash Flow ¥518.4B is sufficient to cover dividends ¥143.4B and buybacks ¥150.7B. However, OCF/EBITDA at 0.72x falls short of the ideal (≥0.9x), as tax payments ¥177.3B and lease payments ¥260.4B weigh on cash conversion. Capex/Depreciation is 0.32x, low and indicating scope to raise investment for maintenance and growth.
By segment, the SC Business (Operating Income ¥136.7B, +6.4%, margin 20.7%) is a high-margin driver, and the Department Store Business (Operating Income ¥298.6B, +0.6%, margin 11.2%) remains stable. The Developer Business recorded declines (Operating Income ¥70.2B, -14.2%), with profitability improvement needed. Next year’s guidance of revenue growth but operating profit decline makes balancing cost inflation and margin defense, enhancing SC value-add and increasing department store ticket size, and recovering Developer earnings the keys to medium-term profitability improvement.
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 company-compiled reference information based on public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.