| Metric | Current Period | Prior Period | YoY |
|---|---|---|---|
| Revenue | ¥382.0B | ¥337.2B | +13.3% |
| Operating Income | ¥15.2B | ¥15.9B | -4.8% |
| Equity Method Investment Income (Loss) | - | - | - |
| Ordinary Income | ¥15.1B | ¥15.8B | -4.9% |
| Net Income | ¥9.9B | ¥10.7B | -7.5% |
| ROE | 11.4% | 13.6% | - |
FY2026 full-year results delivered revenue of ¥382.0B (YoY +¥44.8B +13.3%) achieving double-digit top-line growth, while operating income was ¥15.2B (YoY -¥0.7B -4.8%), ordinary income was ¥15.1B (YoY -¥0.7B -4.9%), and net income attributable to owners of the parent was ¥9.1B (YoY -¥1.1B -10.4%), resulting in a revenue-increase but profit-decline outcome. Revenue growth was not sufficient to offset a decline in gross margin to 24.2% (from 25.1%, -0.9pt) and a 20.2% increase in SG&A, compressing the operating margin to 4.0% (from 4.7%, -0.7pt). By segment, the core GoodsSales business remained solid with revenue of ¥312.2B (+12.5%) and operating income of ¥12.5B (+0.5%), while the StoreDesign business posted a large profit decline with operating income of ¥1.8B (-33.0%), and the OtherRelatedSolution business grew revenue strongly to ¥30.9B (+24.9%) but saw profitability decline to operating income of ¥3.1B (-3.7%). On cash flow, operating cash flow (OCF) plunged to ¥5.5B (from ¥14.2B, -61.1%), and together with investing cash flow of -¥19.0B including capital expenditures of ¥16.4B, free cash flow (FCF) was -¥13.5B. Financial position remains healthy with cash and deposits of ¥35.4B, interest-bearing debt of ¥22.4B, and net cash of ¥13.0B.
Revenue: Revenue of ¥382.0B (+13.3%) was supported by growth across all segments. GoodsSales revenue was ¥312.2B (+12.5%), driven by beauty equipment and supplies at ¥104.1B (prior ¥100.2B, +3.9%) and cosmetics etc. at ¥202.9B (prior ¥172.4B, +17.7%). High growth in cosmetics sales led the expansion, but a higher mix of lower-margin products contributed to the deterioration in gross margin. StoreDesign revenue was ¥39.2B (+9.9%), and OtherRelatedSolution revenue was ¥30.9B (+24.9%), aided by expansion in real estate brokerage and store-opening support services. Segment revenue composition was GoodsSales 81.7%, StoreDesign 10.3%, Solutions 8.1%, indicating the core merchandise business accounts for over 80% of the business mix.
Profitability: Gross margin declined to 24.2% (prior 25.1%, -0.9pt) with gross profit amounting to ¥92.5B (+9.4%). The margin decline is mainly attributed to a shift toward lower value-added mix from the surge in cosmetics sales and rising procurement costs. SG&A was ¥77.3B (+12.7%), below revenue growth of +13.3%, resulting in limited operating leverage; increases in fixed costs including goodwill amortization of ¥0.7B pressured profitability. Consequently, operating income fell to ¥15.2B (-4.8%) and operating margin contracted to 4.0% (prior 4.7%, -0.7pt). By segment, StoreDesign’s margin deteriorated to 4.7% (from 7.7%, -3.0pt) and OtherRelatedSolution to 10.2% (from 13.2%, -3.0pt), dragging consolidated profitability. Non-operating items were broadly neutral: non-operating income ¥0.6B (including ¥0.2B forex gains) and non-operating expenses ¥0.7B (including ¥0.3B interest expense, ¥0.1B forex losses), net -¥0.1B, yielding ordinary income of ¥15.1B (-4.9%). Extraordinary items were net -¥0.2B (extraordinary gains ¥0.2B from fixed asset disposals; extraordinary losses ¥0.4B including impairment loss ¥0.2B and investment securities valuation loss ¥0.0B). Pre-tax income declined to ¥14.8B (-6.5%). After income taxes of ¥5.0B (effective tax rate 33.5%), net income attributable to owners of the parent was ¥9.1B (-10.4%), with net margin 2.4% (prior 3.0%, -0.6pt), evidencing notable deterioration in profitability; in conclusion, revenue up but profits down.
GoodsSales recorded revenue ¥312.2B (+12.5%), operating income ¥12.5B (+0.5%), and margin 4.0% (from 4.5%, -0.5pt). Sales expansion of beauty equipment and cosmetics pushed revenue, but margin declined due to the cosmetics mix shift and price competition. StoreDesign recorded revenue ¥39.2B (+9.9%), operating income ¥1.8B (-33.0%), and margin 4.7% (from 7.7%, -3.0pt), with worsening profitability mainly due to deteriorating margins on interior construction projects. OtherRelatedSolution reported revenue ¥30.9B (+24.9%), operating income ¥3.1B (-3.7%), and margin 10.2% (from 13.2%, -3.0pt); high growth in real estate brokerage and IT support was achieved, but profitability was compressed by upfront costs associated with service expansion. After company-wide adjustments of -¥2.3B (including corporate expenses -¥2.8B), consolidated operating income was ¥15.2B.
Profitability: Operating margin of 4.0% worsened by 0.7pt from 4.7%, with margin compression from both gross margin 24.2% (-0.9pt) and SG&A ratio 20.2% (+0.1pt). ROE was 11.4% (prior 14.0%), mainly due to the drop in net profit margin to 2.4% (-0.6pt). EBITDA was ¥18.6B (operating income ¥15.2B + depreciation ¥3.5B), with an EBITDA margin of 4.9%, below prior 5.8%. Cash quality: OCF / Net Income was 0.61x (prior 1.33x), and OCF / EBITDA was 0.30x (prior 0.73x), both substantially down, indicating weaker cash conversion of earnings. The accrual ratio (Net Income - OCF) / Total Assets was 2.4%, suggesting a large temporary effect from working capital build-up. Investment efficiency: total asset turnover was 2.06x, indicating continued efficient asset use. CapEx of ¥16.4B was 4.7x depreciation of ¥3.5B, consistent with a growth investment phase. Tangible fixed assets increased significantly to ¥19.9B (prior ¥4.8B, +¥15.1B, +314.7%), reflecting investments to strengthen logistics sites and equipment. Financial soundness: equity ratio 46.9% (prior 48.4%), current ratio 194.4% (prior 204.3%), quick ratio 140.6% (prior 148.8%), showing solid short-term liquidity. With cash and deposits ¥35.4B vs. interest-bearing debt (long-term borrowings ¥22.4B + short-term borrowings ¥0.0B), net cash was ¥13.0B. Debt/EBITDA was 1.20x, and interest coverage (EBITDA / interest expense) was 60.2x, both at comfortable levels.
OCF sharply declined to ¥5.5B (from ¥14.2B, -61.1%). Starting from pre-tax income of ¥14.8B, adding back non-cash expenses including depreciation ¥3.5B and goodwill amortization ¥0.7B resulted in a subtotal for operating cash flow of ¥14.8B. Working capital movements included inventory increase -¥6.4B (stock build-up), accounts receivable increase -¥2.4B (delayed collections due to sales expansion), and accounts payable increase +¥2.4B (partial offset), yielding a net working capital outflow of about -¥9.2B. Together with tax payments of -¥9.2B, these factors compressed OCF. Investing cash flow was -¥19.0B (prior -¥6.4B), driven by capital expenditures -¥16.4B (logistics site and equipment expansion), intangible asset acquisitions -¥0.8B, and investment securities purchases -¥1.1B, partially offset by proceeds from sale of fixed assets +¥0.4B and proceeds from subsidiary acquisition +¥1.2B. Free cash flow was -¥13.5B (prior +¥7.8B), turning materially negative. Financing cash flow was +¥4.3B, with long-term borrowings raised +¥16.6B and repayments of long-term borrowings -¥9.9B resulting in net borrowings +¥6.7B; dividend payments -¥2.0B and share repurchases -¥1.7B were executed. Cash and cash equivalents decreased by -¥9.2B from the opening balance of ¥44.4B to the closing balance of ¥35.3B, pressured by weak OCF and large-scale investments.
The ¥0.1B difference between operating income ¥15.2B and ordinary income ¥15.1B indicates no major distortion in recurring earnings structure. Non-operating income of ¥0.6B comprised ¥0.2B forex gains and ¥0.1B commission income, exhibiting low transience, while non-operating expenses ¥0.7B centered on interest expense ¥0.3B were also recurring. Extraordinary items were minor at net -¥0.2B, with ¥0.2B gain on disposal of fixed assets (one-off positive) offset by ¥0.2B impairment loss (impairment of merchandise business fixed assets). Comprehensive income of ¥10.0B was slightly above net income of ¥9.9B due to valuation differences on securities +¥0.1B and foreign currency translation adjustments +¥0.0B, indicating minimal divergence from net income. However, OCF of ¥5.5B fell well short of net income ¥9.9B, driven primarily by working capital build-up (inventory +¥6.4B, accounts receivable +¥2.4B), temporarily reducing earnings quality. If inventory turnover and receivables collection improve, cash quality is expected to normalize.
Company guidance projects full-year revenue ¥431.5B (+13.0%), operating income ¥22.2B (+46.0%), ordinary income ¥22.0B (+46.0%), and net income attributable to owners of the parent ¥13.5B, forecasting a return to profit growth. The plan assumes an operating margin improvement to 5.1% (from 4.0%, +1.1pt), dependent on gross margin recovery and margin corrections in StoreDesign and Solutions businesses. Progress rates are revenue 88.5% and operating income 68.5%, indicating substantial profitability improvement in H2 is required to meet operating income targets. Dividend guidance is annual ¥9 (down from actual ¥16), implying a payout ratio of approximately 8%. Forecast EPS of ¥107.71 versus actual ¥72.80 assumes significant profit accumulation in H2.
Actual dividend was interim ¥8 and year-end ¥8, annual ¥16, corresponding to a payout ratio of 22.3% (on net income), a conservative level relative to earnings. However, with FCF at -¥13.5B, dividend payments ¥2.0B and share buybacks ¥1.7B totaling ¥3.7B were not covered by cash from operations, resulting in an FCF coverage of -6.62x. Considering dividends and buybacks as total return, total return ratio is 41% on a net income basis and -27% on an FCF basis (negative = reliant on external financing), indicating short-term dependency on increased borrowings and cash drawdown. Net cash of ¥13.0B provides financial flexibility, but sustained shareholder returns require OCF recovery. Next fiscal year dividend guidance of ¥9 (payout ratio ~8%) is a dividend cut from actuals, reflecting a cautious stance in light of cash constraints.
Risk of prolonged profitability decline: With gross margin at 24.2% (-0.9pt) and operating margin at 4.0% (-0.7pt), ongoing shifts in the cosmetics mix, procurement cost increases, and deterioration in StoreDesign and Solutions project margins could impede achievement of the target 5.1% operating margin. Delays in passing on costs or inadequate project selection could lead to further reductions in ROE and dividend capacity.
Deterioration in cash flow quality: OCF/Net Income 0.61x and OCF/EBITDA 0.30x indicate materially weakened cash conversion. Working capital increases—inventory +¥6.4B and accounts receivable +¥2.4B—are the main drivers; if inventory turnover improvement is delayed, risks of obsolescence and higher financing costs may rise, and continued negative FCF would constrain financial flexibility.
Recovery risk on large-scale investments: CapEx ¥16.4B (4.7x depreciation ¥3.5B) drove a +314.7% surge in tangible fixed assets. If logistics site and equipment enhancements do not deliver the planned revenue and efficiency improvements, higher fixed costs and depreciation could further pressure margins and raise the risk of impairment losses. Delays in investment recovery would reduce mid-term capital efficiency.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.0% | 3.4% (1.4%–5.0%) | +0.6pt |
| Net Margin | 2.6% | 2.3% (1.0%–4.6%) | +0.3pt |
The company's operating margin of 4.0% exceeds the industry median of 3.4%, maintaining standard profitability among specialty trading and distribution firms.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 13.3% | 5.9% (0.4%–10.7%) | +7.5pt |
Revenue growth of 13.3% significantly outpaces the industry median 5.9%, indicating high growth relative to peers.
※ Source: Company compilation
Feasibility of margin recovery: The plan to improve operating margin from 4.0% to 5.1% assumes recovery in gross margin (through price pass-through and procurement optimization) and margin correction in StoreDesign and Solutions. The rapid expansion of cosmetics created a low-margin mix; increasing the proportion of higher value-added products and improving procurement conditions are key to margin expansion. Monitor achievement of significant profitability improvements in H2.
Improvement in working capital efficiency and cash quality: OCF/Net Income 0.61x and OCF/EBITDA 0.30x show weak cash conversion driven by inventory +¥6.4B and accounts receivable +¥2.4B. Improvements in inventory turnover days and collection normalization should support a recovery in OCF and a return to positive FCF next year. Progress in working capital management is a precondition for dividend capacity and continued growth investment.
Investment recovery and financial flexibility: CapEx ¥16.4B led to a +314.7% surge in tangible fixed assets as logistics and equipment enhancements were completed. In the short term, FCF -¥13.5B represents significant cash outflow, but net cash ¥13.0B and Debt/EBITDA 1.2x indicate available financial flexibility. If investments contribute to revenue growth and efficiency gains as planned, mid-term capital efficiency and dividend capacity should recover. Continued monitoring of investment payback progress and the impact of depreciation on margins is required.
This report is an AI-generated earnings analysis document created from XBRL earnings release 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 to be made at your own responsibility; consult advisors as necessary.
These are mechanically computed values based on a residual income model. They are not a forecast of market prices or a recommendation of any investment action, and do not predict or guarantee future share prices. Historical values are computed retrospectively using current guidance-achievement statistics.