| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥432.8B | ¥418.1B | +3.5% |
| Operating Income / Operating Profit | ¥33.8B | ¥30.5B | +10.8% |
| Profit Before Tax (税引前利益) | ¥32.2B | ¥29.9B | +7.7% |
| Net Income / Net Profit | ¥23.6B | ¥22.6B | +4.2% |
| ROE | 4.8% | 4.7% | - |
For Q1 of FY ending February 2027, Revenue was ¥432.8B (YoY +¥14.6B +3.5%), Operating Income was ¥33.8B (YoY +¥3.3B +10.8%), Ordinary Income (Profit Before Tax for the quarter) was ¥32.2B (YoY +¥2.3B +7.7%), and Quarterly Net Income attributable to owners of the parent was ¥22.2B (YoY +¥1.3B +6.2%). Operating margin improved to 7.8% from 7.3% in the prior-year period (+0.5pt), indicating a solid start with revenue and profit growth. Progress against the full year forecast (Revenue ¥1710.0B, Operating Income ¥90.0B, Net Income ¥60.0B) stands at Revenue 25.3%, Operating Income 37.5%, and Net Income 39.0%, substantially ahead of the standard 25% pace on the profit side. Operating Cash Flow (OCF) generated ¥69.8B, about 3.0x quarterly net income, indicating good earnings quality. However, accounts receivable increased YoY +32.1% and DSO extended to approximately 75 days, and the current ratio is 0.80x below 1.0x, so short-term liquidity requires attention.
[Revenue] Revenue was ¥432.8B (YoY +¥14.6B +3.5%). As a single-segment foodservice company, stable store network operations and resilience in customer traffic and average spend supported the revenue increase. While like-for-like store level details are not disclosed, overall recovery in dining-out demand and menu price adjustments are presumed to have contributed. No breakdown by region disclosed.
[Profitability] Cost of sales was ¥127.2B (YoY +¥4.6B +3.7%), growing slightly faster than revenue (+3.5%). Gross profit was ¥305.6B (YoY +¥10.1B +3.4%), with a gross margin of 70.6%, a slight -0.1pt decline from 70.7% in the prior-year period, essentially flat. SG&A was ¥273.2B (YoY +¥11.2B +4.3%), rising faster than revenue, with an SG&A ratio of 63.1% (prior 62.7%, +0.4pt). Inflationary pressures on fixed costs such as labor, rent, and energy are presumed drivers of SG&A ratio expansion. Meanwhile, other operating income expanded to ¥5.0B (prior ¥1.8B, +¥3.2B) and other operating expenses were contained at ¥3.7B (prior ¥4.9B, -¥1.2B), resulting in Operating Income of ¥33.8B (YoY +¥3.3B +10.8%) and an Operating margin of 7.8% (+0.5pt). Financial income was ¥0.7B (prior ¥2.4B, -¥1.7B) and financial expenses were ¥2.2B (prior ¥2.9B, -¥0.7B), reducing net interest burden. Profit Before Tax was ¥32.2B (YoY +¥2.3B +7.7%); after income taxes of ¥8.6B (effective tax rate 26.8%), Quarterly Net Income was ¥23.6B (YoY +¥1.0B +4.2%), with Net Income attributable to owners of the parent ¥22.2B (YoY +¥1.3B +6.2%). In conclusion, revenue and profit increased. The rise in SG&A ratio was offset by maintained gross margin and increased other operating income, demonstrating operating leverage.
[Profitability] Operating margin 7.8% (prior 7.3%, +0.5pt), gross margin 70.6% (prior 70.7%, -0.1pt), SG&A ratio 63.1% (prior 62.7%, +0.4pt). Gross margin remained broadly stable while SG&A ratio rose slightly; increases in other operating income supported Operating margin improvement. Net margin 5.5% (prior 5.4%, +0.1pt) also improved marginally. EBITDA (Operating Income ¥33.8B + Depreciation & Amortization ¥41.8B) is approximately ¥75.6B with an EBITDA margin of about 17.5%. Interest coverage is healthy at approximately 15.4x (EBIT ¥33.8B ÷ Financial expense ¥2.2B).
[Cash Quality] OCF ¥69.8B is about 3.0x Net Income ¥23.6B, and OCF/EBITDA is about 0.92x, indicating good cash conversion. Accounts receivable stood at ¥89.1B (prior ¥67.5B, +32.1%), pushing DSO to about 75 days (¥89.1B ÷ quarterly Revenue ¥432.8B × 365 ÷ 4 ≒ ~75 days), showing lengthening collection terms.
[Investment Efficiency] ROE is 4.8% (annualized equivalent 19.2%), decomposed as Net margin 5.5% × Total asset turnover 0.30 (quarterly Revenue ¥432.8B ÷ Total assets ¥1446.3B × 4 ≒ 1.20 turns/year) × Financial leverage 2.92x. Total asset turnover is typical for the foodservice industry, but ROE remains low, indicating room to improve capital efficiency.
[Financial Soundness] Equity Ratio is 31.4% (prior 31.3%). Current ratio is approximately 0.80x (Current assets ¥300.4B ÷ Current liabilities ¥373.1B), below 1.0x. D/E (interest-bearing debt ÷ Equity) is about 0.90x (short-term borrowings ¥61.6B + long-term borrowings ¥163.9B = ¥225.5B ÷ Equity ¥495.8B), a manageable level. Lease liabilities are high at Current ¥108.1B + Non-current ¥330.8B = ¥438.9B, indicating significant fixed-cost obligations. Goodwill is ¥262.1B, representing 52.9% of equity, warranting attention to apparent fragility of equity and impairment risk.
OCF was ¥69.8B: starting from Profit Before Tax ¥32.2B, adding back non-cash Depreciation & Amortization ¥41.8B, reflecting increases in trade receivables -¥21.1B, increases in trade payables +¥8.5B, decrease in inventories +¥0.5B, decrease in provisions -¥4.7B, and other adjustments +¥21.5B, and paying income taxes -¥11.3B (after interest receipt/payment adjustments), resulting in ¥69.8B. The large increase in accounts receivable worsened working capital but was offset by depreciation and increases in advances/other payables. Investing Cash Flow was -¥17.2B (purchase of tangible fixed assets -¥13.3B, net outflow for security deposits -¥0.7B, acquisition of subsidiary shares -¥1.6B, etc.), indicating disciplined capex. Financing Cash Flow was -¥37.9B (lease principal repayments -¥41.2B, long-term borrowings +¥32.0B, repayment of long-term borrowings -¥18.1B, dividend payments -¥9.4B, dividends to non-controlling interests -¥1.3B), with lease repayments the main funding requirement. Free Cash Flow (OCF - Investing CF) is approximately ¥52.6B positive, providing room for both dividends and growth investment. Cash and cash equivalents were ¥190.0B (opening balance ¥175.0B, +¥15.0B). OCF to EBITDA ratio is about 0.92x, indicating good cash conversion. However, if accounts receivable DSO expansion continues, working capital could strain cash generation, so stronger receivables management is needed.
With Operating Income ¥33.8B and Profit Before Tax ¥32.2B, the impact at the ordinary income stage was minor, net financial cost -¥1.6B (Financial income ¥0.7B - Financial expense ¥2.2B), indicating earnings driven by core operations. Other operating income ¥5.0B (prior ¥1.8B) represented about 14.8% of Operating Income, and other operating expenses ¥3.7B (prior ¥4.9B) resulted in a net contribution of +¥1.3B. Details of other operating income are not disclosed but may include gains on sale of fixed assets or specific one-off items, so sustainability needs monitoring. Recurring operating profit excluding other operating income is estimated at about ¥31.2B. Comprehensive income was ¥26.0B (Owners of the parent ¥24.6B, Non-controlling interests ¥1.4B), which is ¥2.4B above Quarterly Net Income ¥23.6B due to foreign operations translation differences +¥2.4B (prior -¥3.3B). Favorable FX movements boosted comprehensive income but are unrealized valuation gains without cash. OCF is about 3.0x Net Income, exceeding profit significantly, indicating low accruals and good conversion driven mainly by non-cash depreciation ¥41.8B. Overall, core operations are solid, but the increase in other operating income may include transient items, so confirming trend persistence is important.
Full Year guidance: Revenue ¥1710.0B (YoY not disclosed), Operating Income ¥90.0B (YoY +13.3%), Net Income ¥60.0B (YoY +21.9%). Q1 progress rates are Revenue 25.3%, Operating Income 37.5%, Net Income attributable to owners 39.0% (¥22.2B ÷ full year forecast Net Income attributable to owners ¥57.0B), representing ~12–14pt acceleration vs. standard 25% progress on profits. Even accounting for seasonality, profit progress is strong, aided by initial operating leverage improvement and higher other operating income. EPS: full year forecast ¥13.54 vs Q1 result ¥5.27, ~38.9% progress. Dividend forecast for the year is ¥2.5 per share (prior year actual ¥4.5, but following the 1:2 stock split in Sep 2025, prior year adjusted equivalent is ¥4.5; current year is based on post-split basis at ¥2.5), with a payout ratio of approximately 18.5% versus full-year EPS forecast ¥13.54, a healthy level. There is no revision to the earnings forecast this time; the initial plan remains. Given Q1's profit acceleration, the probability of achieving the full-year plan is high and upside revisions are possible. Key future drivers are sustainability of like-for-like sales, SG&A cost control, and improvement in accounts receivable collection.
Full year dividend forecast is ¥2.5 (no interim dividend, year-end forecast ¥2.5), implying a payout ratio of about 18.5% against full-year EPS forecast ¥13.54. The prior year dividend ¥4.5 was pre-1:2 stock split (Sep 2025) basis; on a split-adjusted basis prior year equivalent is ¥4.5. This year’s post-split dividend of ¥2.5 therefore effectively maintains dividend level. Outstanding shares approximately 421 million (after treasury shares) imply total dividend payout of about ¥1.05B, and against forecast Net Income attributable to owners ¥57.0B equates to a payout ratio around 18.5%, sustainably manageable. Q1 Free Cash Flow about ¥52.6B comfortably covers Q1 dividend payments ¥9.4B, indicating good cash coverage. However, due to a current ratio of 0.80x and short-term liquidity constraints, any material dividend increase should await improvement in working capital and confirmation of full-year progress. No share buyback disclosure; shareholder returns are concentrated on dividends. Total Return Ratio equals the payout ratio at about 18.5%. Capital policy prioritizes growth investment (capex & M&A) while maintaining stable dividends.
Short-term liquidity risk: Current ratio 0.80x, below 1.0x, with Current liabilities ¥373.1B vs Current assets ¥300.4B, leaving a gap of about ¥72.7B. Current liabilities include lease liabilities ¥108.1B and short-term borrowings ¥61.6B; ongoing OCF generation and refinancing are prerequisites. Rapid accounts receivable growth (DSO ~75 days) stiffens working capital; any collection delays could tighten short-term liquidity.
Goodwill & impairment risk: Goodwill ¥262.1B represents 52.9% of equity, accumulated through M&A. If existing goodwill fails to generate expected cash flows, impairment losses could occur, eroding equity and depressing profits. Sensitivity to downturns or performance deterioration is high, posing concerns over capital quality.
Fixed-cost inflation & SG&A ratio increase risk: SG&A ratio rose to 63.1% (+0.4pt YoY), with SG&A growth +4.3% outpacing revenue growth +3.5%. Continued inflation in labor, rent, and energy could outpace price recovery and operational efficiency gains, pressuring operating margin. Wage rises in tight labor markets and rent increases on contract renewals are particular concerns.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 7.8% | 3.4% (0.8%–7.7%) | +4.4pt |
| Net Margin | 5.5% | 2.2% (0.5%–6.2%) | +3.2pt |
Profitability ranks high within the retail sector, with Operating and Net margins well above the median.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 3.5% | 7.7% (0.8%–14.6%) | -4.2pt |
Revenue growth lags the sector median, indicating relatively lower growth within peers, consistent with a mature strategy emphasizing stable store operations.
※Source: Company aggregation
Q1 shows profit progress approximately 12–14pt ahead of the full-year plan, with Operating margin +0.5pt improvement and operating leverage evident. OCF is about 3.0x Net Income and OCF/EBITDA about 0.92x, reflecting strong cash generation. The probability of achieving the full-year plan (Operating Income ¥90.0B, Net Income ¥60.0B) is high at present, and upside revisions are possible.
Short-term liquidity constraint (current ratio 0.80x) and rapid accounts receivable increase (DSO ~75 days, YoY +32.1%) are key bottlenecks. Prolonged collection periods will pressure working capital and reduce flexibility for growth investment and shareholder returns. Strengthening receivables management and reviewing trading terms are top priorities.
Goodwill ¥262.1B (52.9% of equity) and lease liabilities ¥438.9B (30.3% of total assets) are financial structure risk factors. Monitor goodwill impairment sensitivity and fixed-cost burden in downturns. Realizing M&A synergies and maintaining store profitability are critical to goodwill health.
This report is a financial analysis document automatically generated by AI based on XBRL financial statement data. It is not intended to recommend investment in any particular security. Industry benchmarks are reference information compiled by our firm from public financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.