| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥259.1B | ¥229.1B | +13.1% |
| Operating Income | ¥29.9B | ¥23.3B | +28.6% |
| Ordinary Income | ¥32.8B | ¥25.6B | +28.4% |
| Net Income | ¥20.3B | ¥17.6B | +15.2% |
| ROE | 15.2% | 15.3% | - |
FY2026 results achieved revenue of ¥259.1B (YoY +¥30.0B +13.1%), Operating Income of ¥29.9B (YoY +¥6.6B +28.6%), Ordinary Income of ¥32.8B (YoY +¥7.2B +28.4%), and Net Income of ¥20.3B (YoY +¥2.7B +15.2%), representing growth in both top line and profits. Operating margin improved to 11.6% from 10.2% a year earlier, a 1.4pt improvement, driven by positive operating leverage as SG&A growth (+10.4%) lagged sales growth (+13.1%). Gross margin was maintained at 67.0%, and EBITDA expanded to ¥34.6B (EBITDA margin 13.3%, +1.3pt YoY), confirming improved cash generation. Although a special loss of impairment amounting to ¥2.5B was recorded, Operating Cash Flow (OCF) was ¥31.7B (YoY +262.7%) and Free Cash Flow was ¥17.9B, providing strong cash backing for profits. Financially, cash and deposits stood at ¥115.8B and Equity Ratio was 77.1%, indicating a solid balance sheet, while the Payout Ratio remained conservative at 16.3%.
[Revenue] Revenue was ¥259.1B, up +13.1% YoY. The reported segment is solely the Food Service Business, which accounts for over 90% of net sales in a single business model. The increase was mainly driven by steady performance at existing stores and effects from new openings and renovations. In investing activities, ¥49.9百万円 was spent on business acquisitions, suggesting small-scale M&A may have supported growth. Cost of goods sold was ¥85.5B (+10.7%), keeping gross margin stable at 67.0% (prior year 67.0%), indicating the company absorbed inflationary pressures on food and labor costs.
[Profitability] Operating Income rose sharply to ¥29.9B (+28.6%). SG&A amounted to ¥143.7B (+10.4%), which lagged sales growth (+13.1%) by 2.7pt, diluting fixed costs. Operating margin improved by 1.4pt to 11.6%, demonstrating clear operating leverage. Non-operating income was ¥2.9B (small, 1.1% of sales) and non-operating expenses were ¥0.1B (negligible), resulting in Ordinary Income of ¥32.8B (+28.4%), largely mirroring Operating Income growth. A special loss of impairment of ¥2.5B (mainly fixed asset impairments) was recorded, but this is considered a temporary write-down of loss-making assets. Income taxes were ¥10.1B (effective tax rate 33.2%), yielding Net Income of ¥20.3B (+15.2%). Excluding impairment, underlying Net Income margin is estimated at approximately 8.5%, indicating solid core profitability. In conclusion, the company delivered revenue and profit growth, with strong Operating Income driving the bottom line.
[Profitability] Operating margin was 11.6% (up 1.4pt from 10.2%), and Net Income margin was 7.8% (up 0.1pt from 7.7%). Gross margin remained at 67.0%, and SG&A ratio declined 1.4pt to 55.4%, with fixed-cost efficiency contributing to improved profitability. ROE was 15.2%, slightly down from 16.5% a year ago; DuPont decomposition shows Net Income margin 7.8%, Total Asset Turnover 1.51x, and Financial Leverage 1.30x, with leverage restraint being a primary factor. [Cash Quality] OCF/Net Income was 1.57x and OCF/EBITDA was 0.92x, indicating high-quality cash conversion. Accrual ratio was -6.7%, within a normal range, supporting high earnings quality. [Investment Efficiency] Capital expenditure was ¥7.8B, 1.7x depreciation of ¥4.6B, indicating continued growth investment mode. Total Asset Turnover was 1.51x, a slight decline from 1.54x, as asset accumulation marginally reduced turnover but no material efficiency deterioration observed. [Financial Soundness] Equity Ratio was 77.1% (up 0.3pt from 76.8%), Debt-to-Equity ratio was 0.30x, reflecting very high financial safety. Current ratio and Quick ratio were both 402%, ensuring ample liquidity; cash and deposits of ¥115.8B equate to 3.6x current liabilities of ¥31.9B. Interest coverage is extremely high, with Operating Income of ¥29.9B versus non-operating expenses of ¥0.1B, indicating minimal interest burden.
OCF was ¥31.7B, a significant increase from ¥8.7B (YoY +262.7%), achieving high-quality cash generation at 1.57x Net Income of ¥20.3B. OCF subtotal (before working capital changes) was ¥39.4B, from which ¥7.8B in corporate tax payments were made to arrive at final OCF. In working capital, accounts receivable -¥0.9B and inventories -¥0.4B acted negatively, while accounts payable +¥0.4B and accrued taxes +¥1.4B contributed positively. Investing Cash Flow was -¥13.8B, primarily due to acquisition of tangible fixed assets ¥7.8B and an increase in time deposits of ¥50.0B. While pursuing safe management of surplus funds, the company selectively invested in business acquisitions totaling ¥0.5B. Financing Cash Flow was -¥2.9B, mainly dividend payments of ¥2.9B, with debt repayments at ¥0.1B being minor. Free Cash Flow was ¥17.9B (OCF + Investing CF), sufficient to cover dividends of ¥2.9B (FCF coverage 6.2x). Cash balance increased to ¥80.8B, maintaining a strong liquidity position.
Earnings were driven by core operations, with non-operating income ¥2.9B (1.1% of sales) and non-operating expenses ¥0.1B being limited, resulting in small divergence between Ordinary Income and Operating Income. The special loss of ¥2.6B was primarily due to an impairment of ¥2.5B, a temporary factor related to disposal of loss-making assets. OCF/Net Income of 1.57x and OCF/EBITDA of 0.92x indicate solid cash backing for profits. Accrual ratio was -6.7% (OCF - Net Income / Total Assets), within a normal range, showing no major gap between accounting profit and actual cash generation. Increases in accounts receivable and inventory are within natural increases accompanying growth, with no signs of abnormal working capital manipulation. Comprehensive income was ¥20.3B, nearly identical to Net Income, with Other Comprehensive Income (market valuation difference on securities ¥0.1B) being immaterial. Excluding impairments, underlying Net Income margin is estimated at about 8.5%, suggesting stable core earning power.
Full Year guidance projects Revenue ¥285.5B (+10.2%), Operating Income ¥31.3B (+4.4%), Ordinary Income ¥34.5B (+4.9%), and Net Income ¥23.6B (EPS ¥230.10). The plan assumes an Operating margin of 10.96%, about 0.6pt lower than the current period 11.6%, reflecting conservative assumptions that incorporate increases in labor, food, and store opening-related costs. Conversely, Net Income margin is expected to rise to 8.26%, supported by stable non-operating income/expenses and tax rates underpinning the bottom line. With double-digit sales growth targeted but conservative profit assumptions, there is upside potential to the plan.
Dividends are interim ¥14 and year-end ¥16, totaling ¥30 per share, with a Payout Ratio of 16.3%, a conservative level. Against Free Cash Flow of ¥17.9B, total dividends amount to ¥2.9B, resulting in an FCF coverage of 6.2x, indicating very high dividend sustainability. Given cash and deposits of ¥115.8B and Equity Ratio of 77.1%, there is ample room for future dividend increases. Share buybacks were negligible on a cash flow basis at -¥0.0B, with dividends being the primary method of shareholder returns. Capital allocation funds CapEx ¥7.8B and dividends ¥2.9B within Free Cash Flow, demonstrating a healthy balance between growth investment and returns.
Cost Inflation Risk: Increases in labor and food costs may pressure gross and operating margins. The next fiscal guidance already incorporates an approximate 0.6pt decline in operating margin; the balance between cost increases and price pass-through is critical to margin preservation. Although SG&A ratio improved to 55.4% (1.4pt improvement year-on-year), future wage hikes and energy price surges could pose headwinds.
Loss-making Asset Disposal Risk: The company recorded an impairment of ¥2.5B this period, a large increase from ¥0.8B in the prior year. Impairments and exit costs associated with network restructuring (scrap & build) may continue intermittently, posing temporary profit pressure. Timely identification and early exit decisions for unprofitable stores are key to minimizing this risk.
Demand Volatility Risk: As a single-business company dependent on domestic demand, performance is sensitive to consumer trends, weather, and events. Volatility in customer traffic and average spend at existing stores could amplify performance swings. Intensifying competition in food service and retail may result in discounting pressure and higher marketing/promotional costs, adversely affecting margins.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.6% | 4.6% (1.7%–8.2%) | +7.0pt |
| Net Income Margin | 7.8% | 3.3% (0.9%–5.8%) | +4.5pt |
Profitability ranks in the upper tier of the industry, with both Operating and Net Income margins materially above the median.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 13.1% | 4.3% (2.2%–13.0%) | +8.8pt |
Revenue growth outpaces the median by 8.8pt, indicating high growth among retailers.
※ Source: Company compilation
Operating margin improved to 11.6% (+1.4pt) and OCF/Net Income is 1.57x, indicating very strong cash backing for profits. Positive operating leverage is evident as SG&A growth (+10.4%) lagged sales growth (+13.1%), confirming scale benefits. Ongoing cost control and margin maintenance are key going forward.
With cash and deposits of ¥115.8B, Equity Ratio 77.1%, and Debt-to-Equity 0.30x, financial safety is very high, providing ample capacity for strategic investments such as openings, renovations, and DX. CapEx of ¥7.8B is 1.7x depreciation of ¥4.6B, indicating continued growth investment mode; including dividends of ¥2.9B, these are covered by Free Cash Flow of ¥17.9B, reflecting prudent capital allocation.
The impairment of ¥2.5B indicates ongoing network restructuring and disposal of loss-making assets. Next year’s guidance assumes a slight decline in Operating margin (10.96%), reflecting conservative assumptions around cost increases and upfront investments; however, stable core profitability and strong cash generation support maintenance of the mid-term growth trajectory.
This report is an AI-generated earnings analysis document produced from 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 public financial statements. Investment decisions are your responsibility; consult a professional advisor as needed.