The Monogatari Corporation FY2026 FY Earnings Report

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Executive Summary

The results showed both revenue and profit growth, accompanied by continued improvement in profit margins, resulting in favorable performance from both profitability and growth perspectives. Revenue was ¥151.69B (+22.4% YoY), Operating Income was ¥12.15B (+31.4%), Ordinary Income was ¥12.12B (+34.1%), and Net Income attributable to owners of the parent was ¥8.74B (+42.0%); in each case, the profit growth rate exceeded the revenue growth rate. The primary factor was the improvement in the Operating Income margin from 7.4% in the previous year to 8.0%, driven by fixed-cost absorption accompanying revenue growth and restraint in the SG&A expense ratio.

Factors Affecting Performance

【Revenue】Revenue was ¥151.69B, representing strong growth of +22.4% YoY. As the Company operates a single segment, the Food Service Business, growth in customer traffic and average spending per customer at existing stores, together with the effects of new store openings, appears to have contributed to revenue expansion.

【Profit and Loss】Cost of sales was ¥52.07B, corresponding to a cost ratio of 34.3%, securing a high gross margin of 65.7%. SG&A expenses were ¥87.47B, corresponding to an SG&A ratio of 57.7%; the growth rate of +22.5% remained almost in line with the revenue growth rate of +22.4%, resulting in a slight improvement in cost efficiency through economies of scale. Personnel expenses of ¥37.33B, or 24.6% of revenue, and rent expenses of ¥9.02B, or 5.9% of revenue, both increased, but were absorbed by revenue growth, improving the Operating Income margin by +0.6pt (7.4%→8.0%). Non-operating foreign exchange gains of ¥0.19B and interest expenses of ¥0.28B were almost offset, resulting in Ordinary Income of ¥12.12B (+34.1%). After absorbing ¥0.58B in extraordinary losses (¥0.37B in impairment losses and ¥0.16B in losses on disposal of fixed assets) as temporary factors, Net Income came to ¥8.74B (+42.0%). Overall, the results can be characterized as revenue and profit growth.

Segment Analysis

The Group operates a single segment, the Food Service Business, and does not disclose performance by segment.

Key Financial Indicators

【Profitability】The Operating Income margin was 8.0%, improving by +0.6pt from 7.4% in the previous year, indicating progress in strengthening the profit structure while maintaining a gross margin of 65.7%. The Net Income margin was 5.8% (87.4/1,516.9). 【Cash Flow Quality】Operating Cash Flow (OCF) was ¥16.03B, 1.83 times Net Income, indicating strong cash-generating capacity relative to earnings. 【Investment Efficiency】ROE was high at 18.4%, while EPS increased substantially to ¥227.23 (¥163.09 in the previous year, +39.3%). 【Financial Soundness】The Equity Ratio was 54.3% (almost unchanged from 54.1% in the previous year), and Net Assets of ¥47.21B against Total Assets of ¥87.00B indicate a stable capital base.

Cash Flow Analysis

Operating Cash Flow was ¥16.03B, increasing by +35.4% YoY and demonstrating cash-generation capacity significantly exceeding Net Income of ¥8.74B. Investing Cash Flow was -¥10.93B, including capital expenditures of ¥10.04B, which exceeded depreciation and amortization of ¥6.03B, indicating that active investment in new store openings and renovations is continuing. Financing Cash Flow was -¥0.49B, primarily reflecting share repurchases of ¥0.55B. As a result, Free Cash Flow was ¥5.11B (OCF + Investing Cash Flow), indicating a structure in which growth investments and shareholder returns can be largely financed with funds generated from operating activities.

Earnings Quality

Operating Income of ¥12.15B from the core business was the main driver of Ordinary Income and Net Income, and earnings quality was generally favorable. Of the ¥0.33B in non-operating income, the ¥0.19B foreign exchange gain was non-recurring in nature. Since the primary component of ¥0.35B in non-operating expenses was interest expenses of ¥0.28B, the net impact of non-operating items remained minor. Extraordinary items consisted of ¥0.15B in extraordinary income and ¥0.58B in extraordinary losses (including impairment losses of ¥0.37B and losses on disposal of fixed assets and other items of ¥0.16B), resulting in a temporary net negative impact of ¥0.43B. The difference between Ordinary Income of ¥12.12B and Net Income of ¥8.74B was primarily attributable to income taxes of ¥2.98B and the extraordinary losses described above, and consistency with Profit Before Tax of ¥11.69B can be confirmed. The fact that OCF reached 1.83 times Net Income indicates that accruals (accounting-estimate components) are limited and that earnings are solidly supported by cash generation.

Earnings Forecast and Guidance

The forecast for the next fiscal year calls for Revenue of ¥173.08B (+14.1% YoY), Operating Income of ¥13.86B (+14.1%), Ordinary Income of ¥13.62B (+12.3%), and Net Income of ¥8.12B (-4.2%). The assumed Operating Income margin is approximately 8.0% (138.6/1,730.8), premised on maintaining the current-period level, while Net Income is planned to decline despite revenue growth. This may reflect conservative assumptions regarding the normalization of extraordinary items and the tax burden. The EPS forecast is ¥228.02, and the dividend forecast is ¥46.00, indicating a planned dividend increase.

Shareholder Returns

The Payout Ratio for the current period was 18.9%, indicating a limited dividend burden relative to Net Income. Share repurchases of ¥0.55B were conducted based on cash flow, and total shareholder returns, consisting of dividends and share repurchases, remain at a level that can be sufficiently absorbed by OCF of ¥16.03B and Free Cash Flow of ¥5.11B. For the next fiscal year, an increase in the dividend to the forecast ¥46.00 is planned, indicating that the policy of increasing dividends is expected to continue from the current-period annual dividend of ¥43 (¥20 interim and ¥23 year-end).

Risk Factors

1. Margin pressure from fixed-cost inflation: Personnel expenses account for 24.6% of revenue (¥3.733B), while rent expenses account for 5.9% (¥0.902B), and both continue to increase amid revenue growth. If inflation accelerates going forward, cost pressures exceeding the absorption capacity provided by revenue growth could affect the Operating Income margin.

2. Recurring extraordinary losses: The Company recorded ¥0.58B in extraordinary losses during the current period, including impairment losses of ¥0.37B and losses on disposal of fixed assets of ¥0.16B. Under a business model that actively expands and renovates stores, temporary losses associated with store closures and replacements may continue to occur.

3. Impact of foreign exchange and interest-rate fluctuations: The Company recorded a foreign exchange gain of ¥0.19B during the current period, but the reproducibility of foreign exchange impacts in non-operating income and expenses is uncertain. In addition, interest expenses of ¥0.28B were recorded, and long-term borrowings increased by +25.3% YoY, suggesting that changes in the interest-rate environment could affect financial expenses.

Industry Benchmark (Reference; Company Analysis)

Industry Benchmark (retail)

Profitability and Returns

The Company’s Operating Income margin and Net Income margin both exceed the industry median, placing its profitability at a relatively high level within the industry.

Growth and Capital Efficiency

The Revenue growth rate significantly exceeds the industry median, indicating a high growth pace within the industry.

※Source: Company analysis

Key Points from the Financial Results

1. As shown by Operating Income growth of +31.4%, exceeding the revenue growth rate of +22.4%, fixed-cost absorption accompanying scale expansion has progressed, improving the Operating Income margin from 7.4% in the previous year to 8.0%. Whether this margin improvement trend can be sustained going forward will be a key focus in evaluating the quality of the earnings structure.

2. OCF reached 1.83 times Net Income, securing cash-generation capacity exceeding capital expenditures of ¥10.04B. The ability to pursue growth investments and shareholder returns simultaneously using funds generated from operating activities is a factor indicating financial sustainability.

3. The next-period plan calls for revenue growth and higher Operating Income, while Net Income is planned to decline by -4.2% YoY. The assumptions regarding extraordinary items and the tax burden may be conservative, making it important to monitor whether actual progress aligns with the plan.

Theoretical Share Price (Reference Value)

Sensitivity: ¥1,554–¥1,649 at a ±1% change in the cost of equity, and ¥1,591–¥1,615 at a ±0.1 change in ω.

Note:

• Goodwill amortization of ¥4.0 per share has been added back to earnings (for non-cash expense treatment and comparability with IFRS companies).

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest-rate reference month: 2026-07 / Mechanically calculated using only publicly disclosed data; this is not a forecast of market prices or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is an automatically generated earnings analysis document produced by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting with a professional as necessary.

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