Tea Life Co.,Ltd. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥2.40B
• Operating Income: ¥22M
• Net Income: ¥34M
• EPS: ¥2.98

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

For FY2026 Q1, T-Life Co., Ltd. (ティーライフ, 31720) reported revenue of ¥2.396bn, down 10.7% YoY, while operating income rose 42.7% YoY to ¥22m, indicating improved cost discipline or mix despite a softer top line. Gross profit of ¥962m implies a robust gross margin of 40.2%, supporting the view that the company maintained pricing/mix or procurement efficiency. Operating margin remains thin at 0.9%, highlighting a still-heavy SG&A burden relative to sales. Ordinary income was ¥30m and net income ¥12m (EPS ¥2.98), translating to a net margin of 0.5%. DuPont shows ROE of 0.19% for the quarter, driven by low net margin (0.50%), modest asset turnover (0.271x for the period), and a conservative equity multiplier (1.39x). Liquidity appears strong with a current ratio of 453% and quick ratio of 370%, supported by working capital of ¥3.873bn and inventory of ¥913m. Leverage is conservative with debt-to-equity at 0.37x and interest expense minimal at ¥1m, yielding an interest coverage of roughly 22x. The balance sheet suggests ample capacity to absorb short-term shocks; however, profitability needs to scale for sustainable returns. Cash flow data are not disclosed (zeros indicate unreported), limiting assessment of earnings-to-cash conversion and free cash flow. Reported tax expense of ¥26m is difficult to reconcile with the profit line items, and the reported effective tax rate metric of 0.0% should not be relied upon. Some statement line items contain internal inconsistencies (e.g., cost of sales versus gross profit, and the balance sheet not perfectly balancing), so conclusions focus on provided non-zero metrics. Despite revenue contraction, the YoY uplift in operating income implies positive operating leverage effects, possibly from cost control and/or favorable mix. Dividend information is not disclosed (DPS and payout shown as zero likely reflect non-disclosure), so dividend capacity must be inferred from earnings resilience and balance sheet strength rather than cash distribution history. Overall, Q1 indicates resilient gross margin and improved operating profit on a lower revenue base, but earnings remain modest, and the lack of cash flow disclosure constrains analysis of earnings quality. Monitoring revenue recovery, SG&A intensity, and working capital turns will be key to assessing trajectory over the remainder of FY2026.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 0.50%
• asset_turnover: 0.271x (quarterly)
• financial_leverage: 1.39x (Assets/Equity)
• calculated_ROE: 0.19% (quarterly basis)
• comments: ROE is constrained primarily by very low net margin; leverage is conservative and asset turnover modest for the quarter. margin_quality:
• gross_margin: 40.2%
• operating_margin: 0.9%
• ordinary_margin: 1.3%
• net_margin: 0.5%
• assessment: High gross margin suggests healthy pricing/mix or procurement, but SG&A intensity compresses operating margin. The gap from gross to operating profit indicates room for efficiency gains in marketing, logistics, and overhead. operating_leverage: Revenue declined 10.7% YoY while operating income grew 42.7% YoY, implying favorable operating leverage driven by cost control and/or product mix; however, the absolute operating income base is small, so percentage changes are sensitive to small yen movements.

Growth Assessment

revenue_sustainability: Top line contracted 10.7% YoY to ¥2.396bn, signaling demand softness or deliberate pullback in low-margin sales. Sustained gross margin suggests no material pricing erosion this quarter. profit_quality: Operating income improved to ¥22m despite lower sales, indicating initial success in expense discipline. Net income at ¥12m (0.5% margin) remains modest; tax line items show inconsistencies, so bottom-line quality is harder to assess without cash flows. outlook: Key to near-term growth will be stabilization of revenue, maintaining elevated gross margins, and continued SG&A optimization. If mix/pricing can be preserved and marketing efficiency improves, incremental operating margin expansion is plausible, but visibility is limited absent disclosure on customer metrics or advertising efficiency.

Financial Health

liquidity:

• current_ratio: 453.1%
• quick_ratio: 369.8%
• working_capital: ¥3,873m
• assessment: Very strong short-term liquidity with substantial buffer over current liabilities. solvency_capital_structure:
• debt_to_equity: 0.37x (based on total liabilities/equity proxy)
• interest_coverage: 22.0x (Operating income/Interest expense)
• equity_ratio: Not disclosed (reported 0.0% indicates non-disclosure)
• assessment: Conservative leverage and ample interest coverage support solvency. Minor balance sheet inconsistencies noted but overall indicates a strong equity base.

Cash Flow Quality

earnings_quality: Operating cash flow is not disclosed; therefore, OCF/Net Income and FCF-based assessments cannot be made. The reported OCF/NI ratio of 0.00 should be treated as non-disclosed rather than zero. free_cash_flow: Not assessable this quarter due to lack of OCF and capex disclosure; EBITDA is also undisclosed. working_capital: Inventory of ¥913m and high working capital suggest potential cash tied in inventory and receivables; without turnover metrics or OCF, cash conversion cycle assessment is limited.

Dividend Sustainability

payout_ratio_assessment: Dividend information (DPS and payout) appears undisclosed despite showing 0.00; EPS is ¥2.98 for Q1, but without policy commentary or cash flows, payout capacity cannot be robustly assessed. FCF_coverage: Not determinable due to lack of OCF and capex data. policy_outlook: Given conservative leverage and strong liquidity, balance sheet could support distributions in principle, but sustainability hinges on consistent earnings and cash generation, which are not verifiable this quarter.

Risk Assessment

Business Risks:

• Revenue contraction of 10.7% YoY indicates demand or competitive pressures.
• Dependence on maintaining high gross margins; adverse mix or pricing could compress margins.
• High SG&A intensity leaves little room for error at current scale.
• Potential seasonality and marketing-spend timing could drive earnings volatility.
• Supply chain and logistics cost fluctuations impacting gross margin.

Financial Risks:

• Lack of cash flow disclosure impedes assessment of earnings-to-cash conversion.
• Inventory levels may pose working-capital risk if demand weakens further.
• Data inconsistencies (e.g., cost of sales vs. gross profit, tax vs. net) reduce visibility on true underlying profitability.
• Limited interest expense today, but potential refinancing or rate changes could affect coverage if debt increases.

Key Concerns:

• Sustaining gross margin while stabilizing revenue.
• Reducing SG&A-to-sales ratio to lift operating margin above 1%.
• Clarifying cash flow generation and capital allocation to assess dividend capacity.

Investment Implications

Key Takeaways:

• Top line declined, but operating income improved materially YoY, indicating early cost/mix benefits.
• Gross margin remains strong at 40.2%, a key support for future operating leverage.
• Liquidity and leverage positions are healthy, providing resilience.
• Net profitability remains thin; scaling margins requires SG&A efficiency.
• Lack of cash flow and dividend disclosures limits assessment of earnings quality and capital returns.

Metrics to Watch:

• Revenue growth trajectory and average selling price/mix indicators.
• SG&A as a percentage of sales, particularly advertising and fulfillment costs.
• Gross margin sustainability amid input and logistics costs.
• Inventory turns and days sales outstanding to gauge cash conversion.
• Operating cash flow and free cash flow once disclosed.
• Ordinary income vs. operating income gap (non-operating income/expenses) and effective tax rate normalization.

Relative Positioning: Within consumer/retail peers, the company exhibits stronger liquidity and conservative leverage but weaker operating margin scale; success hinges on sustaining high gross margins while improving SG&A efficiency to convert revenue into durable earnings and cash.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis