ZOA CORPORATION FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥4.40B
• Operating Income: ¥240M
• Net Income: ¥164M
• EPS: ¥131.20

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment 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

ZOA (3375) reported FY2026 Q2 standalone results under JGAAP with revenue of ¥4,401 million, down 1.5% YoY, while delivering operating income of ¥240 million, up a notable 27.0% YoY. Gross profit was ¥1,140 million, implying a gross margin of 25.9%, which, in the context of declining sales, indicates improved merchandising mix and/or procurement efficiencies. Operating leverage was clearly positive: the operating margin expanded as operating costs were reduced or held flat relative to sales, driving the strong operating income growth. Ordinary income was ¥242 million and net income ¥164 million, up 24.1% YoY, highlighting disciplined SG&A control and low interest burden (interest expense only ¥2.1 million). The DuPont decomposition provided shows a net margin of 3.73%, asset turnover of 0.838x, and financial leverage of 1.74x, yielding an ROE of 5.42%. On the balance sheet, total assets were ¥5,251 million and total liabilities ¥2,490 million, with total equity at ¥3,024 million; this implies an equity ratio of roughly 57.6%, despite a reported equity ratio of 0.0% (likely undisclosed in XBRL). Liquidity looks solid on reported figures: current assets of ¥3,888 million versus current liabilities of ¥1,604 million yield a 242% current ratio and working capital of ¥2,284 million. However, inventories were not disclosed and cash and equivalents were not reported, so the true quick ratio and cash cushion cannot be confirmed. Cash flow statements (operating, investing, financing) were not disclosed, limiting assessment of earnings-to-cash conversion. Interest coverage is strong at about 116x, reflecting minimal financial risk from borrowing costs. The effective tax rate in the metrics is shown as 0.0%, but based on ordinary income and net income, the implied tax and related items suggest a roughly mid-20s to low-30s effective rate; the discrepancy likely stems from disclosure limitations. Dividend data show DPS and payout ratio as 0, which likely indicates non-disclosure rather than actual zero distributions; therefore, dividend policy visibility is low. Overall, ZOA exhibits resilient profitability despite mild top-line pressure, a conservative balance sheet, and ample interest coverage, but limited cash flow disclosure and missing inventory data constrain the depth of quality-of-earnings analysis. Near-term focus should be on the sustainability of margin gains, inventory health and turns, and confirmation of cash generation in the second half. Given the company’s likely retail/PC specialty exposure, seasonality and product cycle dynamics will be important for H2. With ROE at 5.4% and modest leverage, any further margin improvement or asset turnover gains could meaningfully lift returns.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 3.73%
• asset_turnover: 0.838x
• financial_leverage: 1.74x
• calculated_ROE: 5.42%
• interpretation: ROE is primarily driven by moderate asset turnover and low-to-moderate leverage; margin expansion in the period is the key incremental driver given the YoY decline in sales but increase in operating income. margin_quality: Gross margin at 25.9% suggests improved product mix and/or procurement discipline. Operating margin improved materially YoY as operating income rose 27% on a 1.5% sales decline, indicating effective SG&A control. Ordinary-to-operating income is nearly 1:1, with negligible non-operating distortion. Implied effective tax rate (based on ordinary vs. net) is in the ~25–33% range, though the reported metric shows 0% due to non-disclosure. operating_leverage: Positive operating leverage evidenced by -1.5% revenue vs. +27.0% operating income YoY. SG&A ratio likely decreased; further leverage potential depends on sustaining gross margin and managing store costs amid flat-to-soft sales.

Growth Assessment

revenue_sustainability: Revenue declined 1.5% YoY to ¥4,401 million, suggesting demand softness or competitive pressure in the core categories. As a specialty retailer, sales may be sensitive to product cycles and seasonality; H2 performance will be key for full-year trajectory. profit_quality: Operating income growth outpaced sales due to cost control and margin management; ordinary income closely tracks operating income, supporting quality. However, absence of OCF disclosure limits verification of earnings-to-cash conversion. outlook: Near-term growth hinges on maintaining gross margin resiliency, controlling SG&A, and stabilizing same-store sales. New product launches and holiday seasonality could support H2, while inventory discipline is critical to avoid markdown risk if demand remains tepid.

Financial Health

liquidity: Current assets ¥3,888m vs. current liabilities ¥1,604m yields a current ratio of 242% and working capital of ¥2,284m. Inventories were not disclosed; thus, the reported quick ratio equals the current ratio and likely overstates true liquidity. Cash and equivalents were not disclosed. solvency: Total liabilities ¥2,490m against equity ¥3,024m implies a debt-to-equity of ~0.82x and an equity ratio of ~57.6% (computed from provided totals). Interest expense is low at ¥2.1m with interest coverage ~116x, indicating very limited financial strain. capital_structure: Leverage is moderate and predominantly equity-financed. With low interest burden and solid equity base, the company has capacity to withstand short-term volatility without balance sheet stress.

Cash Flow Quality

earnings_quality: Non-operating items are minimal (ordinary ≈ operating), supporting the quality of earnings. However, due to non-disclosure of operating cash flow, we cannot corroborate accruals or working-capital intensity. FCF_analysis: Free cash flow is not reported. Capex and D&A are undisclosed (D&A shown as 0), preventing assessment of maintenance vs. growth investment needs. working_capital: Inventories not disclosed and receivables/payables details unavailable; given retail exposure, inventory management and turns are likely core drivers of cash conversion. The large working capital base (¥2,284m) suggests sensitivity of cash flow to inventory and payables timing.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio are shown as 0, indicating non-disclosure rather than confirmed zero. With net income of ¥164m and moderate leverage, capacity exists, but absence of OCF/FCF data prevents a robust payout assessment. FCF_coverage: FCF coverage is unassessable due to lack of OCF and capex data; reported 0.00x should be treated as not disclosed. policy_outlook: Dividend policy visibility is low. If the company prioritizes balance sheet strength and inventory investment in a soft sales environment, distributions may remain conservative until cash flow visibility improves.

Risk Assessment

Business Risks:

• Demand volatility tied to consumer electronics/PC product cycles and seasonality
• Price competition and margin pressure from larger retailers and e-commerce
• Inventory obsolescence risk requiring markdowns in rapid product cycles
• Supplier concentration or allocation risks for new product launches
• Store traffic fluctuations and regional exposure

Financial Risks:

• Limited visibility on cash generation due to non-disclosed cash flow statements
• Working capital swings tied to inventory purchases and payable timing
• Potential margin compression if sales softness persists
• Tax and non-operating items variability not fully observable from current disclosures

Key Concerns:

• Sustainability of margin gains amid declining revenue
• Absence of inventory and cash data, constraining liquidity and cash conversion analysis
• Execution risk on cost control if sales trend worsens in H2

Investment Implications

Key Takeaways:

• Revenue softened 1.5% YoY, but operating income rose 27% YoY on margin/SG&A improvements
• Gross margin at 25.9% and minimal interest burden underpin earnings quality
• ROE at 5.42% reflects moderate margins and asset turnover with low leverage
• Balance sheet strength implied: equity ratio ~57.6% and interest coverage ~116x
• Cash flow and inventory data are not disclosed, limiting assessment of cash conversion and true liquidity

Metrics to Watch:

• Same-store sales growth and ticket/traffic trends
• Gross margin trajectory and markdown rates
• SG&A as a percentage of sales for sustained operating leverage
• Inventory levels and turns once disclosed
• Operating cash flow and capex/FCF in H2
• Working capital days (DIO/DSO/DPO) when available

Relative Positioning: Compared to larger domestic electronics retailers, ZOA appears smaller with moderate ROE and a conservative balance sheet; profitability improved despite softer sales, but disclosure gaps (cash flow and inventory) limit relative cash conversion assessment.

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