| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1591.5B | ¥1488.2B | +6.9% |
| Operating Income | ¥101.5B | ¥96.0B | +5.8% |
| Ordinary Income | ¥106.2B | ¥96.2B | +10.4% |
| Net Income | ¥72.7B | ¥69.2B | +5.1% |
| ROE | 6.9% | 6.6% | - |
For the fiscal year ended February 2026, Revenue was ¥1591.5B (YoY +¥103.3B, +6.9%), Operating Income was ¥101.5B (YoY +¥5.5B, +5.8%), Ordinary Income was ¥106.2B (YoY +¥10.0B, +10.4%), and Net Income attributable to owners of the parent was ¥72.3B (YoY +¥3.5B, +5.1%), resulting in year-over-year increases across profit measures. Revenue was driven by the core Doutor Coffee Group, which grew +9.0% with strong retail and wholesale performance, and the Japan Restaurant System Group, which expanded +4.8% due to recovery in company-operated restaurant customer traffic. Operating margin declined slightly to 6.4% from 6.5% a year earlier (-0.1pt); a gross margin of 58.9% (down 1.3pt from 60.2%) was offset by an SG&A ratio improvement to 52.5% (improved 1.3pt from 53.8%), limiting decline in operating profitability. At the ordinary income level, foreign exchange gains of ¥3.0B contributed to Ordinary Income growth of +10.4%, outpacing Operating Income. At the net income level, special losses of ¥9.7B including impairment losses of ¥6.97B weighed on results, slowing net income growth to +5.1%. Operating Cash Flow (OCF) was ¥70.2B (YoY -43.2%), substantially lower due to working capital deterioration from increases in accounts receivable and inventory and higher corporate tax payments; Free Cash Flow (FCF) was ¥-37.9B due to Investing Cash Flow of ¥-108.1B (capital expenditure ¥51.0B, increases in time deposits, etc.). Shareholder returns comprised dividends of ¥23.2B (Payout Ratio 31.9%) and share buybacks of ¥50.0B, bringing Total Return Ratio to about 101%, funded by drawing down retained cash.
[Revenue] Revenue totaled ¥1591.5B (+6.9%). By segment, the Doutor Coffee Group accounted for ¥971.4B (+9.0%), representing 61.0% of sales and leading group performance. That group comprised retail ¥421.6B (customer recovery and franchise expansion), wholesale ¥517.8B (strengthened external sales and BtoB coffee product initiatives), and other ¥24.0B, all above prior year. The Japan Restaurant System Group generated ¥579.2B (+4.8%), accounting for 36.4% of sales, supported by recovery in company-operated restaurant traffic. Other segments totaled ¥65.4B, slightly down YoY. Revenue mix remained retail-led with retail sales ¥1025.8B (64.5% of total), wholesale ¥540.3B (33.9%), and other ¥25.4B (1.6%).
[Profitability] Operating Income was ¥101.5B (+5.8%), with revenue growth offsetting a decline in gross margin. Cost of goods sold was ¥654.5B (cost ratio 41.1%), producing Gross Profit ¥937.0B (Gross Margin 58.9%), down 1.3pt from 60.2% the prior year. The main drivers were increases in raw material prices (coffee beans, dairy, wheat) and delayed pass-through of price revisions. SG&A was ¥835.4B (SG&A ratio 52.5%), with salaries and allowances ¥308.3B and rent ¥179.8B (11.3% of sales) as principal components. SG&A ratio improved 1.3pt from 53.8%, reflecting staffing efficiency and fixed-cost management progress. By segment, Operating Income was Doutor Group ¥47.5B (margin 4.9%, +10.2%) and Japan Restaurant System Group ¥44.6B (margin 7.7%, +3.1%), with NRS maintaining higher margins while Doutor contributed larger profit in absolute terms. Ordinary Income was ¥106.2B (+10.4%), with non-operating income ¥5.9B (foreign exchange gains ¥3.0B, dividend income ¥0.5B, etc.) exceeding non-operating expenses ¥1.3B (interest expense ¥0.3B, foreign exchange losses ¥0.5B, etc.), adding ¥4.7B above Operating Income. Profit before tax was ¥99.3B; special income ¥2.9B (gain on sale of fixed assets, etc.) less special losses ¥9.7B (impairment loss ¥7.0B, loss on retirement of fixed assets ¥1.2B) produced a net negative impact of ¥-6.9B on Ordinary Income. After corporate taxes of ¥26.6B, Net Income was ¥72.7B (Net Margin 4.6%), flat versus prior-year net margin of 4.6%. In summary, revenue and profit both increased, but gross margin decline and one-off impairment burden limited margin expansion.
The Japan Restaurant System Group posted Revenue ¥579.2B (+4.8%) and Operating Income ¥44.6B (+3.1%, margin 7.7%), benefitting from recovery in company-operated restaurant customer traffic. Margin declined slightly from 7.8% to 7.7% but remains high within the industry. The Doutor Coffee Group recorded Revenue ¥971.4B (+9.0%) and Operating Income ¥47.5B (+10.2%, margin 4.9%), with both retail and wholesale performing well and margin improving 0.1pt from 4.8% the prior year. Traffic recovery at company-operated coffee chain stores, franchise expansion, and strengthened external sales to convenience stores and similar channels drove profit growth. Other segments generated Revenue ¥65.4B and Operating Income ¥11.7B, remaining small but stable. Segment profit sum was ¥103.9B; after company-level adjustments of ¥2.4B, consolidated Operating Income was ¥101.5B.
[Profitability] Operating margin was 6.4% (down 0.1pt from 6.5% prior year); Gross Margin 58.9% (down 1.3pt from 60.2%) was offset by SG&A ratio 52.5% (improved 1.3pt from 53.8%). Net margin was 4.6%, maintained at prior-year level. ROE was 6.9% (up 0.1pt from 6.8%), supported by share buybacks compressing shareholders’ equity and profit growth. ROA on Ordinary Income basis was 7.8% (up 0.5pt from 7.3%), indicating improved asset efficiency. [Cash Quality] OCF/Net Income was 0.97x, generally acceptable, but OCF/EBITDA (Operating Income + Depreciation) was ¥70.2B / ¥150.2B = 0.47x, indicating low cash conversion efficiency. Main cause: increases in accounts receivable -¥27.1B and inventory -¥16.5B combined for roughly ¥43.6B cash outflow. FCF was ¥-37.9B; capex was ¥51.0B (depreciation ¥46.6B, capex/depreciation = 1.09x) and increases in time deposits weighed on cash. [Investment Efficiency] Total asset turnover was 1.17x (improved from 1.11x), with sales growth outpacing asset increase. Basic EPS was ¥170.71 (prior year ¥156.97, +8.8%), aided by share buybacks limiting dilution and higher profits. BPS was ¥2502.93 (prior year ¥2372.09, +5.5%), increasing with retained earnings accumulation. [Financial Soundness] Equity Ratio was 77.3% (down 0.2pt from 77.5%), remaining very high; interest-bearing debt was short-term 470 million yen + long-term 5 million yen = ¥4.75B, effectively near net-debt-free. Debt/EBITDA ratio was 0.03x, indicating minimal leverage. Current ratio was 247.7% and Quick ratio 229.8%, indicating ample liquidity; Cash and Deposits ¥294.2B covered short-term liabilities ¥225.8B by 1.3x.
OCF was ¥70.2B (prior year ¥123.5B, -43.2%), a substantial decline. Profit before tax ¥99.3B plus depreciation ¥46.6B and impairment ¥7.0B and other non-cash items produced an OCF subtotal of ¥102.4B, but working capital deterioration weighed on cash. Increase in trade receivables -¥27.1B was driven by expanded external sales and wholesale and higher period-end sales recognition; inventory increase -¥16.5B reflected inventory buildup under rising raw material prices. Increase in trade payables +¥9.1B partially offset these outflows, but higher corporate tax payments -¥33.7B (prior year -¥21.7B) contributed to an overall OCF decline of about ¥53B YoY. Investing Cash Flow was ¥-108.1B (prior year ¥-62.3B), primarily acquisition of tangible fixed assets -¥51.0B (new store openings and existing store renovations) and net increase in time deposits -¥46.0B. Capex exceeded depreciation, reflecting ongoing investment to optimize the store portfolio. Financing Cash Flow was ¥-84.2B (prior year ¥-29.3B), with share buybacks -¥50.0B and dividend payments -¥23.2B as main items. FCF was ¥-37.9B (prior year +¥61.2B), turning significantly negative due to working capital deterioration and increased investing outflows. Cash and cash equivalents decreased by ¥121.7B from ¥389.9B at the beginning of the period to ¥268.2B at the end, reflecting the drawdown of internal funds for shareholder returns and investments.
Quality of earnings is generally sound but warrants attention to one-off items and working capital movements. Recurring earnings comprised Operating Income ¥101.5B plus non-operating income ¥5.9B (foreign exchange gains ¥3.0B, dividend income ¥0.5B, etc.) totaling Ordinary Income ¥106.2B; non-operating income represented 0.4% of Revenue and was small. One-off items included special income ¥2.9B (gain on sale of fixed assets, etc.) and special losses ¥9.7B (impairment loss ¥7.0B, loss on retirement of fixed assets ¥1.2B, etc.), netting to ¥-6.9B and depressing Net Income. Impairment losses relate to rationalization of low-performing stores and are positioned as restructuring costs toward future earnings improvement. From an accrual perspective, OCF ¥70.2B / Net Income ¥72.7B = 0.97x shows reasonable alignment, but OCF/EBITDA = 0.47x indicates low cash conversion efficiency. Main causes were increases in accounts receivable -¥27.1B and inventory -¥16.5B, suggesting accumulation beyond normal ranges given sales growth. Comprehensive income was ¥84.3B, ¥11.6B above Net Income ¥72.7B, driven by Other Comprehensive Income ¥11.7B (deferred hedge gains/losses +¥10.0B, foreign currency translation adjustment -¥3.5B, valuation gains on securities +¥3.1B, retirement benefit adjustments +¥2.0B). The increase in deferred hedge gains reflects progress in FX risk management, and valuation-related items pushed comprehensive income above net income.
Full-year guidance is Revenue ¥1665.0B (+4.6%), Operating Income ¥110.4B (+8.8%), Ordinary Income ¥112.7B (+6.2%), EPS ¥178.30, Dividend ¥30.00. Progress against the guidance this period is Revenue 95.6% (1591.5/1665.0), Operating Income 91.9% (101.5/110.4), Ordinary Income 94.2% (106.2/112.7), indicating slight shortfall at the operating level versus plan. Operating shortfall appears driven by lower gross margin and higher fixed costs, reflecting delayed pass-through of raw material price increases and slower SG&A efficiency gains. At the ordinary income level, non-operating income such as foreign exchange gains partly offset the shortfall, but the operating base gap remains. The forecast dividend ¥30.00 is consistent with the current fiscal year dividend of ¥57 (interim ¥27 + year-end forecast ¥30), with Payout Ratio based on forecast EPS ¥178.30 roughly 16.8%, indicating a conservative stance. Key monitoring points going forward are the degree of price revision pass-through, normalization of working capital, and continuation of same-store sales growth; achieving these will increase the likelihood of meeting full-year guidance.
Dividends are interim ¥27 and year-end forecast ¥30 for an annual total of ¥57, with Payout Ratio 31.9% (based on Net Income ¥72.7B), a sustainable level. Total dividend payout is approximately ¥24.2B (based on weighted average shares outstanding 42,377 thousand), or about 34% of OCF ¥70.2B. Share buybacks of ¥50.0B (financing cash flow) were executed, resulting in a Total Return Ratio of (dividends ¥24.2B + share buybacks ¥50.0B) / Net Income ¥72.7B = approx. 102%, representing returns exceeding current-period earnings. High-level returns while FCF is ¥-37.9B were funded by drawing down cash balances of ¥294.2B and low borrowings. Sustainability of dividends depends on normalization of OCF and stabilization of capex; share buybacks should be executed flexibly based on cash availability and valuation. Policy remains to maintain stable dividends, and sustaining high Total Return Ratios will require working capital management and improvement in OCF.
Structural Gross Margin Downside Risk: Gross Margin declined to 58.9% from 60.2% prior year (-1.3pt). The main causes are increases in raw material prices (coffee beans, dairy, wheat) and delayed price revision pass-through compressing margins. High fixed-cost ratios—rent ¥179.8B (11.3% of sales) and salaries and allowances ¥308.3B (19.4%)—mean that persistent gross margin declines could invert operating leverage and magnify profit volatility. Dependence on international commodity markets and FX exposes profitability to market fluctuations.
Working Capital Management Deterioration Risk: Accounts receivable rose to ¥94.4B (prior year ¥67.3B, +40.3%) and inventory to ¥40.5B (prior year ¥36.4B, +11.0%), increases far exceeding revenue growth of +6.9%. Accounts receivable turnover period is approximately 21.6 days (¥94.4B ÷ ¥1591.5B × 365), extended from about 16.5 days prior year; inventory turnover period is about 22.6 days (¥40.5B ÷ ¥654.5B × 365), slightly up from about 22.5 days. OCF/EBITDA = 0.47x is low, and worsening working capital management impairs cash generation. Continued delays in receivables collection or inventory buildup could lead to persistent negative FCF and reduced shareholder return capacity.
Fixed Cost Rigidity Risk: Rent ¥179.8B (11.3% of sales) is high within the industry, and upward pressure on labor costs from minimum wage increases adds structural cost pressure. Short-term debt ratio is 98.9% (current liabilities ¥225.8B / total liabilities ¥309.6B) and asset retirement obligations ¥24.0B (7.8% of liabilities) may result in inflexible future cash outflows for store exits and restoration obligations. If same-store sales slow, fixed-cost rigidity could rapidly deteriorate operating margins. The impairment loss ¥7.0B reflects costs of low-performing store rationalization and there remains potential for one-off losses during store portfolio optimization.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.4% | 4.6% (1.7%–8.2%) | +1.8pt |
| Net Margin | 4.6% | 3.3% (0.9%–5.8%) | +1.2pt |
Company operating margin 6.4% exceeds industry median 4.6% by 1.8pt, and net margin 4.6% exceeds median 3.3% by 1.2pt. Profitability sits in the mid-to-upper range within the sector, maintaining margins despite high fixed-cost ratios.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 6.9% | 4.3% (2.2%–13.0%) | +2.6pt |
Company Revenue growth 6.9% outperformed the sector median 4.3% by 2.6pt, sustaining a stable growth trajectory. The company is near the upper 50% within the industry, though not in the very top tier (>13.0%).
※ Source: Company compilation
Operating margin remains mid-to-upper within the industry, but the trend of declining gross margin continues. Current gross margin 58.9% is down 1.3pt from 60.2%, mainly due to raw material price increases and delayed price revision pass-through. SG&A ratio improvements offset some pressure, but high fixed-cost ratios—rent ¥179.8B (11.3% of sales) and personnel costs ¥308.3B (19.4%)—mean that slow same-store sales growth could trigger a rapid reversal of operating leverage. Accelerating price revision pass-through and optimizing product mix are key to gross margin recovery.
Cash conversion efficiency deterioration is pronounced, with OCF/EBITDA = 0.47x below historical levels. Accounts receivable +40.3% and inventory +11.0% increased far more than revenue growth of +6.9%, and accounts receivable turnover period extended to ~21.6 days (from ~16.5 days). FCF of ¥-37.9B and Total Return Ratio ≈102% (including share buybacks ¥50.0B) rely on drawing down retained cash. Normalization of working capital and recovery of OCF are critical to sustain shareholder returns.
Financial soundness is very high—Equity Ratio 77.3%, Debt/EBITDA 0.03x, Cash ¥294.2B—providing resilience. Impairment loss ¥7.0B is a structural reform cost associated with low-performing store rationalization and is positioned as investment toward medium- to long-term earnings improvement. Doutor Group (61.0% of sales, Operating Income ¥47.5B) remains the profit engine, while Japan Restaurant System Group supports margins with a 7.7% profit margin. If same-store sales growth is sustained, price revision pass-through accelerates, and working capital normalizes, margin expansion and recovery in cash generation are expected.
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 the Company based on publicly disclosed financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.