| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1654.5B | ¥1563.5B | +5.8% |
| Operating Income / Operating Profit | ¥79.4B | ¥85.0B | -6.6% |
| Profit Before Tax | ¥78.6B | ¥76.6B | +2.6% |
| Net Income / Net Profit | ¥52.2B | ¥62.3B | -16.2% |
| ROE | 10.9% | 14.2% | - |
For the fiscal year ending February 2026, Revenue was ¥1,654.5B (YoY +¥91.0B +5.8%), achieving top-line growth, while Operating Income was ¥79.4B (YoY -¥5.6B -6.6%), Ordinary Income was ¥24.0B (YoY -¥7.2B -23.1%), and Net Income Attributable to Parent Company was ¥46.8B (YoY -¥9.1B -16.3%), resulting in a revenue-up, profit-down outcome. Revenue expanded steadily, but cost increases—primarily labor, rent, and utilities—compressed profitability, reducing the operating margin to 4.8% (YoY -0.7pt). Recognition of impairment losses of ¥13.4B further weighed on profitability. Meanwhile, Operating Cash Flow (OCF) was ¥230.0B, generating 4.9x the Net Income, and Free Cash Flow (FCF) was ¥171.8B, ample to cover dividends of ¥17.9B and capital expenditures of ¥46.9B.
【Revenue】 Revenue was ¥1,654.5B (YoY +5.8%), achieving growth. The Group operates a single segment of foodservice (restaurant operations), and the primary drivers of growth were recovery at existing stores and expansion of the operating store network. Price revisions implemented in the prior year and recovery in customer traffic increased average spend per customer and number of visits, supporting the top line. Gross profit was ¥1,167.6B (gross margin 70.6%), increasing from prior year 111,352百万円 (gross margin 71.2%), though the gross margin declined slightly by -0.6pt.
【Profitability】 Operating Income was ¥79.4B (YoY -6.6%), a decline. Selling, General and Administrative Expenses (SG&A) were ¥1,072.5B (SG&A ratio 64.8%), up from ¥1,011.3B (SG&A ratio 64.7%) in the prior year, a +6.1% increase that exceeded revenue growth (+5.8%), producing negative operating leverage. The main drivers were increases in labor costs, store rents, and utilities, with growing fixed costs compressing margins. Other operating income was ¥10.1B (prior ¥9.0B) and other operating expenses were ¥25.7B (prior ¥26.2B), which included subsidy income and store closure costs and impairment losses of ¥13.4B (prior ¥17.6B). Ordinary Income was ¥24.0B (YoY -23.1%), a significant decline. Financial income rose to ¥7.4B (prior ¥0.5B), but financial expenses remained a burden at ¥8.2B (prior ¥9.0B), resulting in net non-operating items of -¥0.8B. Profit Before Tax was ¥78.6B (YoY +2.6%), increasing despite operating profit decline, but corporate income tax expense of ¥26.4B (effective tax rate 33.6%) was heavy, leaving Net Income of ¥52.2B (YoY -16.2%) and Net Income Attributable to Parent Company of ¥46.8B (YoY -16.3%), both down double digits. In conclusion, the company recorded revenue growth but profit decline due to cost inflation and one-off impairments.
【Profitability】ROE was 11.1% (prior 14.7%), a decline. Net Income margin was 3.2% (prior 3.6%), slightly deteriorated, mainly due to SG&A increases. Operating margin was 4.8% (prior 5.4%), down -0.7pt, and EBITDA margin was approximately 14.7% (EBITDA ¥243.8B / Revenue ¥1,654.5B), solid, but depreciation & amortization of ¥164.3B weighed on operating income. 【Cash Quality】Operating Cash Flow was ¥230.0B, 4.4x Net Income ¥52.2B and 4.9x Net Income Attributable to Parent Company ¥46.8B, indicating very strong cash backing. OCF/EBITDA was 0.94x, high, and the accrual ratio was -13.1%, indicating a cash-driven earnings profile. 【Investment Efficiency】Total Asset Turnover was approximately 1.19x (Revenue ¥1,654.5B / Total Assets ¥1,396.7B), high, showing efficient operation of the store network. Capital expenditure was ¥46.9B, representing a ratio to depreciation of 0.29x (Depreciation ¥164.3B), a low level suggesting restrained renewal investment. 【Financial Soundness】Equity Ratio was 31.3% (Net Assets ¥478.9B / Total Assets ¥1,396.7B), at a reasonable level. Interest-bearing debt (short-term ¥58.4B + long-term ¥152.1B) totaled ¥210.5B, and Debt/EBITDA was 0.86x, healthy. Current Ratio was 0.76x (Current Assets ¥273.4B / Current Liabilities ¥361.3B), below 1.0, indicating short-term liquidity concerns, but strong Operating Cash Flow mitigates liquidity risk.
Operating Cash Flow was ¥230.0B (YoY -11.5%), down from the prior year but still robust. Starting from Profit Before Tax ¥78.6B, non-cash charges of Depreciation & Amortization ¥164.3B and impairment losses ¥13.4B were added back. Working capital changes included an increase in trade receivables of -¥10.2B, increase in inventories of -¥1.5B, and increase in trade payables of ¥0.5B, a net negative contribution, but the subtotal reached ¥255.1B. Payments for corporate taxes of -¥23.5B, interest paid of -¥2.6B, and lease payments of -¥138.9B were deducted, resulting in final Operating Cash Flow of ¥230.0B. Investing Cash Flow was -¥58.2B, mainly due to acquisition of tangible fixed assets of -¥46.9B, reflecting continued investment in openings and renovations. Financing Cash Flow was a large outflow of -¥213.4B, driven by repayment of lease liabilities -¥138.9B, repayment of long-term borrowings -¥75.0B, and dividend payments -¥17.9B. Meanwhile, proceeds from long-term borrowings of ¥32.0B were obtained, extending maturities and executing refinancing. Free Cash Flow was ¥171.8B (Operating CF ¥230.0B - Investing CF ¥58.2B), ample, sufficiently covering dividends ¥17.9B and capital expenditures ¥46.9B, allowing simultaneous accumulation of retained earnings and debt repayment. Cash and Cash Equivalents were ¥175.0B (prior ¥214.7B), a decrease of -¥39.7B, but liquidity on hand remains secured.
Revenue ¥1,654.5B is composed of recurring foodservice sales, with limited one-off revenue. Other operating income ¥10.1B includes subsidy receipts but is minor at 0.6% of revenue. Other operating expenses ¥25.7B include impairment losses ¥13.4B, which appear to be one-time costs related to unprofitable stores or format conversions. Net non-operating items were a small deficit of -¥0.8B (financial income ¥7.4B vs. financial expenses ¥8.2B), with interest and dividend receipts and interest payments nearly offsetting. The gap between Ordinary Income ¥24.0B and Net Income ¥52.2B is mainly due to tax burden ¥26.4B, with an effective tax rate of 33.6%, relatively high. Operating Cash Flow ¥230.0B is 4.4x Net Income ¥52.2B, and the accrual is substantially negative (cash-driven). This reflects large non-cash depreciation & amortization of ¥164.3B and minimal working capital changes, indicating high quality of cash earnings. However, impairment losses ¥13.4B warrant attention to repeatability, and structural factors reflecting fixed cost pressure may be present.
For FY2027 (fiscal year ending February 2027), guidance plans Revenue ¥1,710.0B (YoY +3.4%), Operating Income ¥90.0B (YoY +13.3%), and Net Income Attributable to Parent Company ¥57.0B (YoY +21.9%), implying revenue and profit growth. Progress rates against full-year guidance are Revenue 96.8%, Operating Income 88.2%, and Net Income 82.1%, generally on track. Next fiscal year expects margin recovery through SG&A control, further pass-through of price increases, and optimization of unprofitable stores. Capital expenditure is assumed to remain restrained on a full-year basis, but selective openings and renovations of existing stores funded by FCF capacity are expected to drive growth.
Dividends are planned at an interim dividend of ¥4.50 and a year-end dividend of ¥2.25, totaling ¥6.75 per share (post 1:2 stock split effective September 1, 2025), with a payout ratio of 30.1% (total dividends / Net Income Attributable to Parent Company). Dividend payments amount to ¥17.9B, and the FCF coverage versus FCF ¥171.8B is approximately 9.6x, indicating very high sustainability of dividends. No share buybacks were conducted; returns are via dividends only. A 1:2 stock split was executed to improve liquidity and broaden the investor base. With Debt/EBITDA at 0.86x, financial capacity is ample, and continued stable dividends are expected.
Cost inflation risk: Rising labor, food ingredient, and utility costs have kept the SG&A ratio elevated at 64.8%. YoY SG&A increase (+6.1%) exceeded revenue growth (+5.8%), creating negative operating leverage. Future increases in minimum wages or energy price volatility could continue to compress margins.
Goodwill impairment risk: Goodwill of ¥257.6B represents 53.8% of Net Assets ¥478.9B, a relatively high level. Goodwill/EBITDA is 1.06x and within recoverable range, but deterioration in the performance of acquired businesses or market conditions could require impairment recognition. There was an impairment loss of ¥13.4B this period, so attention to potential additional impairments is warranted.
Liquidity risk: Current Ratio of 0.76x, below 1.0, with Current Assets ¥273.4B vs. Current Liabilities ¥361.3B, indicating short-term payment capacity issues. Lease liabilities (current ¥113.2B, non-current ¥326.7B) increase fixed-cost rigidity, and seasonality or sudden demand declines could manifest liquidity stress. Strong Operating CF is a mitigating factor, but monitoring of short-term borrowing lines and refinancing plans is important.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Return on Equity | 11.1% | 5.9% (2.6%–12.0%) | +5.2pt |
| Operating Margin | 4.8% | 4.6% (1.7%–8.2%) | +0.2pt |
| Net Margin | 3.2% | 3.3% (0.9%–5.8%) | -0.2pt |
The company’s ROE is 5.2pt above the industry median, placing it among the higher performers in the sector. Operating margin is around the median, while net margin is slightly below.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 5.8% | 4.3% (2.2%–13.0%) | +1.5pt |
Revenue growth exceeds the industry median by 1.5pt, indicating a faster top-line expansion pace than peers.
※Source: Company compilation
Strong operating cash generation: OCF is ¥230.0B, 4.9x Net Income, and FCF is ¥171.8B, ample to fund dividends and growth investment. OCF/EBITDA 0.94x and accrual ratio -13.1% confirm a cash-driven earnings profile supporting financial stability.
Margin recovery is the focus for next fiscal year: Operating margin fell to 4.8% (YoY -0.7pt), but guidance targets Operating Income +13.3% recovery. If price pass-through, improvements in labor productivity, and optimization of unprofitable stores progress, margin improvement and ROE recovery are expected. Capex/Depreciation 0.29x indicates continued restraint in investment; appropriate reopening of renovation investment will be necessary to maintain competitiveness of existing stores.
Management of liquidity and goodwill: Current Ratio 0.76x highlights short-term liquidity issues and lease liability rigidity. Goodwill / Net Assets 53.8% is in a caution zone, and monitoring KPIs of acquired businesses and impairment testing is important.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; consult professionals as necessary before making them.