| Indicator | Current Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥884.3B | ¥709.0B | +24.7% |
| Operating Income / Operating Profit | ¥51.5B | ¥36.4B | +41.3% |
| Ordinary Income | ¥50.6B | ¥38.4B | +31.8% |
| Net Income | ¥16.5B | ¥21.2B | -22.3% |
| ROE | 5.2% | 6.9% | - |
For the fiscal year ended March 2026, Revenue was ¥884.3B (YoY +¥175.4B, +24.7%), Operating Income was ¥51.5B (YoY +¥15.1B, +41.3%), Ordinary Income was ¥50.6B (YoY +¥12.2B, +31.8%), and Net Income attributable to owners of parent was ¥16.5B (YoY -¥4.7B, -22.3%). Strong revenue growth was driven by M&A effects in the Restaurant Business and robust performance at existing stores, improving the operating margin by 0.7 points to 5.8% (prior year 5.1%). Ordinary Income increased 31.8% reflecting higher operating profit; however, Net Income declined 22.3% year-on-year due to special losses of ¥4.5B (impairment losses ¥3.0B, loss on retirement of fixed assets ¥1.2B) and an effective tax rate of 42.7%, marking a transition from operating/ordinary-level profit growth to final-stage profit decline.
[Revenue] Revenue was ¥884.3B, up 24.7% YoY. Breakdown: company-operated store sales ¥865.0B, royalty income ¥2.9B, franchise-related and other sales ¥16.4B. By segment, the Restaurant Business led growth with ¥599.7B (+35.9%), while the Café Business achieved stable growth at ¥284.6B (+6.3%). Restaurant Business revenue expansion was driven primarily by scope expansion from M&A conducted in the prior year (acquisitions such as Gyukatsu Motomura) and recovery in customer traffic at existing formats. The Café Business saw resilient performance at existing stores such as Saint Marc Cafe, supporting both average spend and traffic.
[Profitability] Cost of sales was contained at ¥237.0B (cost ratio 26.8%), resulting in Gross Profit of ¥647.3B (gross margin 73.2%) at a high level. Selling, General and Administrative Expenses (SG&A) totaled ¥595.8B (SG&A ratio 67.4%), with major items including rent ¥108.3B (12.2% of Sales), utilities ¥37.9B (4.3% of Sales), and advertising expenses ¥14.3B. SG&A includes goodwill amortization ¥17.3B and depreciation ¥46.9B. Operating Income was ¥51.5B (operating margin 5.8%), a substantial increase of 41.3% YoY. Non-operating income was ¥3.9B (interest and dividend income ¥0.1B, rental income from real estate ¥1.7B, etc.), and non-operating expenses were ¥4.8B (including interest expense ¥2.5B), yielding Ordinary Income of ¥50.6B (+31.8%). Special income of ¥1.2B (gain on sales of fixed assets, etc.) and special losses of ¥4.5B (impairment losses ¥3.0B, loss on retirement of fixed assets ¥1.2B) were recorded, resulting in Profit Before Income Taxes of ¥47.3B (+61.2%). After deducting income taxes of ¥20.2B (effective tax rate 42.7%), Net Income attributable to owners of parent was ¥16.5B (-22.3%). In summary, while revenue and operating/ordinary profits rose, special losses and a high tax burden led to a decline in Net Income.
The Restaurant Business posted Revenue of ¥599.7B (+35.9%), Operating Income of ¥44.7B (+17.3%), and an operating margin of 7.5%. Revenue was boosted by scope expansion through M&A and increased customer traffic at existing formats such as bakery restaurants Saint Marc and Kamakura Pasta; however, profit margins were roughly flat year-on-year due to start-up costs for newly consolidated stores and higher rent and labor costs. The Café Business reported Revenue of ¥284.6B (+6.3%), Operating Income of ¥30.3B (+35.3%), and an operating margin of 10.6%, maintaining high margins driven by efficiency improvements at existing stores and optimized product mix. After deducting corporate expenses of ¥23.5B, consolidated Operating Income was ¥51.5B, with the Café Business’s high profitability being the main driver of company-wide margin improvement.
[Profitability] Operating margin improved by 0.7 points to 5.8% (prior year 5.1%), maintaining a high gross margin of 73.2%. ROE was 5.2%, down from 8.3% the prior year, primarily due to the decline in Net Income (-22.3%). ROA improved to 7.1% (prior year 6.4%). EBITDA (Operating Income + Depreciation + Goodwill Amortization) was approximately ¥115.4B, with an EBITDA margin of 13.1%, securing a solid level. [Cash Quality] Operating Cash Flow (OCF) was ¥85.8B, 5.2x Net Income ¥16.5B, indicating high quality; Free Cash Flow (FCF) was ¥53.5B (OCF ¥85.8B - Investing CF ¥32.3B), maintaining abundant cash generation capability. [Investment Efficiency] Capital expenditures were ¥26.7B, only 0.57x depreciation ¥46.9B, indicating continued restraint in investment. [Financial Soundness] Equity Ratio improved to 44.7% (prior year 43.2%); current ratio 163%; interest-bearing debt (short-term borrowings ¥10.0B + long-term borrowings ¥174.5B) totaled ¥184.5B, with a D/E ratio of 58.6% and Debt/EBITDA of 1.6x at healthy levels. Cash and deposits of ¥148.7B far exceed short-term borrowings and long-term borrowings due within one year of ¥31.0B, ensuring ample liquidity.
Operating Cash Flow was ¥85.8B (YoY +49.2%), significantly increasing. Starting from Profit Before Income Taxes ¥47.3B, adding back non-cash expenses such as Depreciation ¥46.9B, Goodwill Amortization ¥17.3B, and impairment losses ¥3.0B, working capital movements (Accounts receivable -¥4.6B, Inventory -¥0.6B, Accounts payable +¥2.8B, Others +¥4.3B) were almost neutral. After deducting income taxes paid of ¥18.0B, OCF settled at the reported level. Investing CF was -¥32.3B, primarily Capital Expenditures -¥26.7B (mainly store equipment) and intangible asset investments -¥1.3B. Financing CF was -¥47.6B, with major items including net decrease in short-term borrowings ¥50.0B, long-term borrowings raised ¥35.0B and repayments -¥19.5B, dividends paid -¥11.3B, and share buybacks -¥11.8B. FCF was ¥53.5B, ample enough to cover total shareholder returns of ¥23.1B (dividends and share buybacks), indicating high financial flexibility. Ending cash and deposits were ¥148.7B, up ¥6.3B YoY, reinforcing liquidity alongside reduced reliance on short-term borrowings.
Of Ordinary Income ¥50.6B, Operating Income ¥51.5B is the core, with non-operating income ¥3.9B (recurring elements centered on real estate rental income ¥1.7B, etc.) and non-operating expenses ¥4.8B (interest expense ¥2.5B) being relatively small. Special income ¥1.2B (gain on sales of fixed assets, etc.) and special losses ¥4.5B (impairment losses ¥3.0B, loss on retirement of fixed assets ¥1.2B) were temporary factors associated with store scrap-and-build activities, compressing the bridge from Ordinary Income to Net Income by ¥3.3B. Comprehensive income was ¥28.6B, ¥12.1B higher than Net Income ¥16.5B, reflecting valuation differences on available-for-sale securities ¥0.5B, actuarial adjustments related to retirement benefits ¥1.1B, and carryforward effects from the prior year. OCF being 5.2x Net Income indicates strong cash backing for earnings, with an accruals gap (Net Income - OCF) substantially negative, demonstrating cash-supported earnings. The effective tax rate of 42.7% is relatively high and suppresses net profit margins.
Full Year guidance assumes Revenue ¥930.0B (YoY +5.2%), Operating Income ¥53.0B (YoY +2.9%), Ordinary Income ¥51.0B (YoY +0.8%), and Net Income attributable to owners of parent ¥29.0B. Actual results were Revenue ¥884.3B (achievement rate 95.1%), Operating Income ¥51.5B (97.1%), Ordinary Income ¥50.6B (99.2%), and Net Income ¥16.5B (56.9%). While operating and ordinary-level targets were broadly achieved, Net Income fell short of initial expectations due to larger-than-expected special losses and tax burden. The shortfall in Net Income versus full-year guidance is likely attributable to the scale of impairment and retirement losses and the higher-than-expected effective tax rate. Actual EPS was ¥125.23 versus forecast EPS ¥135.28, and the dividend forecast of ¥27 (payout ratio about 20%) is deemed maintainable.
Annual dividend was ¥52 (interim ¥26, year-end ¥26), with a payout ratio of 42.1%. This maintains the prior year dividend of ¥26 (annualized ¥52), indicating a focus on dividend stability. Share buybacks totaled ¥11.8B, and combined with dividends of ¥11.0B, total shareholder returns amounted to ¥22.8B. The Total Return Ratio was 138%, within the FCF of ¥53.5B, and at a sustainable level that does not impair financial soundness. Maintaining dividends and continuing share buybacks despite a YoY decline in Net Income demonstrates commitment to shareholder returns. Given the full-year dividend forecast of ¥27, the second-half dividend is expected to be slightly above the interim dividend of ¥26.
Rent, labor and utilities inflation risk: High fixed cost structure with rent ¥108.3B (12.2% of Sales), utilities ¥37.9B (4.3% of Sales), and retirement benefit costs ¥2.2B. If existing-store sales fall short of expectations, operating leverage may work in reverse and margins could decline sharply. The high rent ratio may also constrain store location strategy.
Goodwill amortization burden and intangible asset dependency: Carrying goodwill of ¥151.6B (48.1% of net assets), with annual amortization of ¥17.3B (about 15% of EBITDA) that continuously pressures JGAAP earnings. Intangible assets of ¥193.2B (27.4% of total assets) indicate high dependence on intangibles, and deterioration in the profitability of M&A targets or market environment changes could crystallize impairment risk.
Risk of mid-term growth slowdown due to investment restraint: Capital expenditures of ¥26.7B are only 0.57x depreciation ¥46.9B, which is conservative and contributes to short-term FCF generation, but may lead to mid-term risks such as aging store network, delayed investment in digital/logistics infrastructure, and weakened brand competitiveness, impairing mid-term growth potential.
Profitability & Returns
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.8% | 4.6% (1.7%–8.2%) | +1.2pt |
| Net Margin | 1.9% | 3.3% (0.9%–5.8%) | -1.5pt |
Operating margin exceeds the industry median by 1.2 points, indicating relatively favorable profitability, while Net Margin falls 1.5 points below the median due to special losses and high tax burden.
Growth & Capital Efficiency
| Indicator | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 24.7% | 4.3% (2.2%–13.0%) | +20.4pt |
Revenue growth rate significantly outpaces the industry median, showing top-tier growth within the retail & foodservice sector driven by M&A effects and strong existing-store performance.
※Source: Company compilation
Improvement in operating profitability and strengthened cash generation: Operating margin improved to 5.8% (YoY +0.7pt), EBITDA margin 13.1%, and strong cash generation with OCF ¥85.8B and FCF ¥53.5B. Scale expansion of the Restaurant Business and high-margin Café Business (10.6%) have fortified the company’s revenue base. Going forward, the ability to absorb rent and labor inflation and sustain existing-store growth will be key.
Structural responses needed to address Net Income compression factors: Special losses ¥4.5B (impairment & retirement) and effective tax rate 42.7% led to a significant YoY Net Income decline of -22.3% and ROE falling to 5.2%. Measures such as optimizing the store portfolio to limit impairments, refining tax strategies, and reducing goodwill amortization burden (including consideration of IFRS adoption) are key to medium- to long-term improvement in margins and ROE.
Re-deploying investment capacity and re-accelerating growth investment: With CapEx/Depreciation at 0.57x and continued investment restraint contributing to short-term FCF and shareholder returns, there remains a need to allocate resources for maintaining store competitiveness, strengthening digital infrastructure, and developing new formats. Strategic resumption of investment, leveraging financial soundness (D/E 58.6%, current ratio 163%), is a prerequisite for sustaining growth above the industry average and expanding market share.
This report was auto-generated by AI based on XBRL financial statement data and is an earnings analysis document. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company from public financial statements. Investment decisions should be made at your own discretion and, if necessary, after consulting a professional advisor.