| Metric | Current Period | Prior-Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥425.3B | ¥393.1B | +8.2% |
| Operating Income / Operating Profit | ¥37.7B | ¥27.9B | +35.2% |
| Ordinary Income | ¥38.5B | ¥28.5B | +34.9% |
| Net Income / Net Profit | ¥27.3B | ¥20.8B | +31.0% |
| ROE | 2.5% | 2.0% | - |
FY2026 Q1 (Mar–May 2026) results delivered revenue of ¥425.3B (YoY +¥32.1B +8.2%), Operating Income of ¥37.7B (YoY +¥9.8B +35.2%), Ordinary Income of ¥38.5B (YoY +¥10.0B +34.9%), and Net Income of ¥27.3B (YoY +¥6.5B +31.0%), achieving both top-line and bottom-line growth. Operating margin improved to 8.9%, up 1.8pt from 7.1% in the prior-year period, driven by a significant decline in SG&A ratio (50.1% vs 52.4% prior, -2.3pt). DOUTORGROUP led growth as the core business with Revenue of ¥264.9B (+11.7%) and Operating Income of ¥19.7B (+41.4%), while NICHIRESGROUP also performed steadily with Revenue of ¥150.2B (+3.1%) and Operating Income of ¥14.2B (+24.8%). Progress toward the full-year forecast is strong on profits, with Operating Income at 34.1% and Net Income at 36.1% of annual guidance, exceeding the Revenue progress rate of 25.5% by more than 10pt — a favorable start that suggests potential upward revision in profit outcomes.
[Revenue] Revenue was ¥425.3B (YoY +8.2%), driven by DOUTORGROUP. External revenue by segment: NICHIRESGROUP ¥145.8B (34.3%, +3.1%), DOUTORGROUP ¥263.2B (61.9%, +11.7%), Other ¥16.3B (3.8%, -2.1%). DOUTORGROUP expanded in both retail ¥111.1B (+6.7%) and wholesale ¥145.8B (+16.7%), with recovery in same-store traffic and expansion of franchise/wholesale channels being the main drivers of top-line growth. NICHIRESGROUP retail was stable at ¥143.9B (+2.8%). Gross margin was 59.0%, down 0.5pt from 59.5% prior, partially absorbing impacts from purchasing environment and mix changes.
[Profitability] Operating Income was ¥37.7B (YoY +35.2%), outperforming revenue growth. SG&A was ¥213.2B, with SG&A growth contained at +3.6% versus revenue growth of 8.2%, yielding operating leverage. Operating margin improved to 8.9% from 7.1% prior (+1.8pt). DOUTORGROUP margin rose to 7.4% (from 5.9%, +1.5pt) and NICHIRESGROUP to 9.4% (from 7.8%, +1.6pt), indicating improved profitability across segments. Ordinary Income was ¥38.5B (+34.9%). Non-operating income was ¥1.1B, including ¥0.5B foreign exchange gains. Extraordinary gains were ¥2.2B (including fixed-asset sale gains) and extraordinary losses ¥0.6B (impairment loss ¥0.3B, fixed-asset retirement loss ¥0.3B), so one-off impacts were limited. Pre-tax income of ¥40.1B less income taxes ¥12.8B resulted in Net Income ¥27.3B (+31.0%), and net margin improved to 6.4% (from 5.3%, +1.1pt), indicating qualitative improvement in profit. In conclusion, the company achieved revenue and profit growth, and operating leverage contributed to margin improvement.
NICHIRESGROUP (Restaurant Chain Business) reported Revenue ¥150.2B (YoY +3.1%), Operating Income ¥14.2B (YoY +24.8%), margin 9.4% (up +1.6pt from 7.8%). Margin improvement was supported by efficiencies in company-operated stores and SG&A discipline. DOUTORGROUP (Coffee Chain Business) reported Revenue ¥264.9B (YoY +11.7%), Operating Income ¥19.7B (YoY +41.4%), margin 7.4% (up +1.5pt from 5.9%). Growth was driven by both company-operated and franchise channels, with wholesale expansion (+16.7%) fueling revenue growth and scale benefits substantially raising operating income. Other segments reported Revenue ¥30.1B and Operating Income ¥3.8B; though small in scale, margin was high at 12.7%. Of the company-wide Operating Income ¥37.7B, DOUTORGROUP accounted for 52.3% and NICHIRESGROUP 37.7%, indicating the two core businesses are the main profit drivers.
[Profitability] Operating margin 8.9% (prior 7.1%, +1.8pt) and Net margin 6.4% (prior 5.3%, +1.1pt) both improved. Gross margin 59.0% decreased 0.5pt from 59.5% prior, but a large decline in SG&A ratio to 50.1% (prior 52.4%, -2.3pt) delivered operating leverage and expanded Operating margin. ROE was 2.5% (annualized; Net Income ¥27.3B ×4 ÷ Net Assets ¥1,070.9B) and remains low, with a conservative balance sheet leverage of 1.30x limiting capital efficiency upside. [Cash Quality] Non-operating income ¥1.1B and non-operating expenses ¥0.3B resulted in a net non-operating impact of +¥0.8B relative to Operating Income ¥37.7B — minor. Extraordinary net was +¥1.6B (Extraordinary gains ¥2.2B - Extraordinary losses ¥0.6B), roughly 4% of Operating Income and limited. [Investment Efficiency] ROA (Net Income / Total Assets) was 1.96% (annualized) against Total Assets ¥1,395.1B, low, and Asset Turnover 0.305x (quarterly sales ¥425.3B ×4 ÷ Total Assets ¥1,395.1B) indicating room to improve asset efficiency. [Financial Soundness] Equity Ratio 76.8% (prior 77.0%), interest-bearing debt ¥4.8B (short-term borrowings ¥4.2B + long-term borrowings ¥0.1B + excluding lease liabilities) — minimal — and Net Cash ¥283.5B (cash & deposits ¥288.2B - interest-bearing debt ¥4.8B), reflecting a strong financial position. Current ratio 242.2% and Quick ratio 224.6% indicate ample short-term liquidity.
Cash flow statement data is not disclosed, but balance sheet movements suggest cash trends: cash & deposits ¥288.2B (prior ¥294.2B, -¥6.0B) slightly decreased. Accounts receivable ¥110.5B (prior ¥94.4B, +¥16.0B) increased, suggesting longer collection cycles accompanying revenue growth. Inventories were ¥42.5B (prior ¥40.5B, +¥2.0B) slightly higher, with inventory levels broadly stable. Accounts payable ¥94.2B (prior ¥81.0B, +¥13.2B) rose, partly offsetting cash outflows from increased purchases by delaying payment timing. Other current liabilities increased materially to ¥118.7B (prior ¥97.0B, +¥21.7B), likely including increases in accrued expenses and advances received. Accrued income taxes were ¥16.4B (prior ¥27.3B, -¥10.9B), reflecting prior-period tax payments. While trade receivables and inventories expanded somewhat, the increase in accounts payable offsets this, and overall the quality of Operating Income appears sound. Contributions from non-operating and extraordinary items are limited, and most profit originates from core operations.
Against Operating Income ¥37.7B, non-operating income was ¥1.1B (dividends received ¥0.0B, foreign exchange gains ¥0.5B, other ¥0.2B) and non-operating expenses ¥0.3B (interest expense ¥0.1B, other ¥0.1B), yielding Ordinary Income ¥38.5B. Net non-operating impact of +¥0.8B is about 2% of Operating Income — small — indicating Ordinary Income is mainly from core operations. Extraordinary gains ¥2.2B (e.g., fixed-asset sale gains) and extraordinary losses ¥0.6B (impairment loss ¥0.3B, fixed-asset retirement loss ¥0.3B) produced net extraordinary +¥1.6B, a temporary factor. Net Income ¥27.3B results from Ordinary Income ¥38.5B less income taxes ¥12.8B, implying an effective tax rate of about 32%, which is standard. Comprehensive Income ¥28.2B slightly exceeds Net Income by ¥0.9B, with other comprehensive income items: valuation difference on available-for-sale securities -¥0.1B, deferred hedge gains/losses +¥1.1B, foreign currency translation adjustment -¥0.0B, retirement benefit adjustments -¥0.1B — small variance. Increases in accounts receivable and inventories suggest some accrual expansion, but this is offset by higher accounts payable, so there is no sign of excessive accrual growth. Overall, earnings based on Operating Income are high quality, with limited influence from ordinary or one-off items.
Full-year forecast: Revenue ¥1,665.0B (YoY +4.6%), Operating Income ¥110.4B (+8.8%), Ordinary Income ¥112.7B (+6.2%), Net Income ¥75.6B (EPS forecast ¥179.80). Q1 progress vs full-year forecast: Revenue 25.5% (around standard 25%), Operating Income 34.1% (standard 25% +9.1pt), Ordinary Income 34.2% (+9.2pt), Net Income 36.1% (+11.1pt) — profit progress is ahead of schedule. The outperformance on profit progress is likely due to stronger-than-expected SG&A containment and operating leverage. No revision to the full-year forecast was made at this quarter; however, depending on progress from Q2 onward, there is potential for upward revision. Dividend forecast remains annual ¥30 per share, unchanged, implying a Payout Ratio of about 16.7% against EPS forecast ¥179.80, a conservative level.
Full-year dividend forecast is ¥30 per share (¥15 interim / ¥15 year-end), up ¥3 from prior-year ¥27. The Payout Ratio versus EPS forecast ¥179.80 is about 16.7%, conservative, supported by strong balance sheet: Net Assets ¥1,070.9B and cash & deposits ¥288.2B, indicating high dividend sustainability. No share buyback disclosure; shareholder returns are dividend-focused. Dividend increase of +11.1% is smaller than profit growth of +31.0%, indicating retention of part of earnings as internal reserves to prioritize growth investment and maintaining the financial base. Low payout ratio appears intended to preserve capacity for future investments and resilience against external shocks.
Risk of deterioration in working capital efficiency: Accounts receivable increased to ¥110.5B (YoY +¥16.0B), extending DSO to approximately 95 days on a quarterly sales basis. Inventories rose by ¥2.0B, and an elongating cash conversion cycle could pressure Operating Cash Flow. If collection terms extend or inventory builds continue alongside franchise/wholesale expansion, working capital burden could rise, temporarily reducing cash generation capacity.
Downward pressure on gross margin: Gross margin is 59.0%, down 0.5pt from 59.5% prior. Rising costs for coffee beans and food raw materials and an expanding wholesale mix are likely compressing gross margin. While SG&A restraint has improved operating margin, continued gross margin deterioration could hit the limits of operating leverage and slow margin improvement. Price adjustments and product-mix optimization are necessary offsets.
Realization risk of asset retirement obligations: Asset retirement obligations are ¥24.0B, representing 7.4% of total liabilities ¥324.2B, and will generate cash outflows on store closures or renovations. While maintaining and improving existing-store profitability is the premise, increased unprofitable stores due to intensified competition or deteriorating locations could raise closure/renovation costs beyond expectations, temporarily squeezing cash flows and margins.
Profitability & Returns
| Metric | Our Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.9% | 3.4% (0.8%–7.7%) | +5.5pt |
| Net Margin | 6.4% | 2.2% (0.5%–6.2%) | +4.2pt |
Both Operating and Net Margins are well above medians within the retail sector, placing the company in the upper tier for profitability.
Growth & Capital Efficiency
| Metric | Our Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 8.2% | 7.7% (0.8%–14.6%) | +0.5pt |
Revenue growth is in line with the median, maintaining a stable growth pace.
※ Source: Company aggregation
Gradual improvement trend in Operating Margin: Operating Margin rose to 8.9% from 7.1% prior (+1.8pt), primarily due to a lower SG&A ratio. SG&A growth of +3.6% vs Revenue growth of +8.2% indicates continued operating leverage, with room for progressive margin improvement through the full year. DOUTORGROUP’s wholesale expansion and franchise rollout should support profitability gains via scale effects.
Profit progress is ahead of schedule with potential for upward revision to full-year guidance: Operating Income progress of 34.1% vs a standard 25% and Net Income progress of 36.1% both point to front-loaded profits. If SG&A containment and operating leverage continue to outperform expectations into H2, upward revision of full-year guidance is possible. No revision was made at present, but strong H1 performance could produce positive profit surprises.
Balancing financial soundness and improving capital efficiency: Net Cash ¥283.5B and Equity Ratio 76.8% show a very robust financial base, but ROE 2.5% and ROA 1.96% indicate low capital efficiency. Improving working capital efficiency (shorter AR collection, faster inventory turns) and raising asset utilization (higher total asset turnover) could boost ROE/ROA while maintaining financial soundness. Accelerating growth investments and expanding shareholder returns are potential options for enhancing capital efficiency.
This report is an AI-generated earnings analysis document produced by analyzing XBRL earnings release data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are compiled by our firm based on public earnings data for reference only. Investment decisions should be made at your own responsibility; consult professionals as necessary before acting.