| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1495.8B | ¥1389.7B | +7.6% |
| Operating Income / Operating Profit | ¥75.4B | ¥75.3B | +0.1% |
| Ordinary Income | ¥77.0B | ¥76.2B | +1.1% |
| Net Income / Net Profit | ¥38.6B | ¥43.2B | -10.7% |
| ROE | 8.0% | 9.5% | - |
For the nine-month cumulative period to Q3 of the fiscal year ending July 2026, Revenue was ¥1,495.8B (YoY +¥106.1B, +7.6%), Operating Income was ¥75.4B (YoY +¥0.1B, +0.1%), Ordinary Income was ¥77.0B (YoY +¥0.8B, +1.1%), and Net Income was ¥38.6B (YoY -¥4.6B, -10.7%). Revenue grew solidly by 7.6%, but gross margin declined to 28.1% (from 28.5% a year earlier, -0.4pt), SG&A ratio remained elevated at 23.1% (unchanged from prior year), and operating margin deteriorated to 5.0% (from 5.4%, -0.4pt). The significant decline in bottom-line profit was mainly due to an increase in the effective tax rate to 49.7% (from 43.3%) and recognition of special losses totaling ¥4.1B, including impairment losses of ¥2.7B. The core Supermarket Business posted Revenue of ¥1,460.2B (+7.7%) and Operating Income of ¥70.7B (-0.6%), showing a modest decline in profit despite higher sales.
[Revenue] Revenue of ¥1,495.8B (YoY +¥106.1B, +7.6%) was driven by the core Supermarket Business, which recorded ¥1,460.2B (+7.7%) and accounted for 97.6% of total sales. Other businesses (foodservice, events, outsourcing, facility management) totaled ¥57.8B (+4.9%). Intra-group sales including inter-segment transactions increased to ¥22.3B, suggesting deeper group collaboration. Top-line growth remained positive for the third consecutive quarter, likely supported by store network expansion and comparable-store sales growth.
[Profitability] Cost of sales was ¥1,074.7B (71.9% of Revenue), up ¥103.9B YoY, resulting in a gross margin of 28.1% (down 0.4pt from 28.5%). This likely reflects higher procurement prices and strengthened promotions. SG&A was ¥345.7B (23.1% of Revenue), up ¥25.1B YoY (+7.8%), slightly outpacing Revenue growth of +7.6%, driven by higher fixed costs such as personnel and utilities. Operating Income of ¥75.4B (YoY +0.1%) was essentially flat, with operating margin falling to 5.0% (from 5.4%, -0.4pt). Non-operating income was ¥2.1B (including interest income ¥0.4B), and non-operating expenses were ¥0.5B (interest expenses ¥0.5B), resulting in Ordinary Income of ¥77.0B (+1.1%). Special gains were ¥3.8B and special losses were ¥4.1B (including impairment losses ¥2.7B), yielding Pre-tax Income of ¥76.7B (+0.7%). Corporate taxes and related amounted to ¥38.1B (effective tax rate 49.7%), a significant increase from 43.3% a year earlier, which compressed Net Income to ¥38.6B (-10.7%). By segment, the Supermarket business had an operating margin of 4.8% while Other Businesses achieved 8.1% — high-margin but small-scale, limiting contribution to consolidated margins. In summary: higher sales but lower profits.
The Supermarket Business posted Revenue of ¥1,460.2B (YoY +7.7%) and Operating Income of ¥70.7B (YoY -0.6%), with an operating margin of 4.8% (down 0.4pt from 5.3%). Despite revenue growth, margin deterioration led to lower profit. Other Businesses recorded Revenue of ¥57.8B (+4.9%) and Operating Income of ¥4.7B (+5.6%), with an operating margin of 8.1% (unchanged from prior year). High-value-added operations such as foodservice and events performed steadily, but their share of consolidated operating profit remained limited at 6.2%. Holding company expenses of ¥8.5B (¥8.0B prior year) were allocated as corporate-level costs, resulting in consolidated Operating Income of ¥75.4B after segment adjustments.
[Profitability] Operating margin 5.0% (from 5.4%, -0.4pt), Net margin 2.6% (from 3.1%, -0.5pt) — profitability deteriorated. ROE 8.0% remains low relative to the company’s historical levels, mainly due to the higher effective tax rate. [Cash Quality] Interest coverage 142.2x (Operating Income ¥75.4B ÷ interest expense ¥0.5B) indicates minimal interest burden. Cash and deposits ¥212.4B equal 3.6x short-term interest-bearing debt of ¥58.4B (short-term borrowings ¥51.5B + long-term borrowings due within 1 year ¥6.9B), indicating ample liquidity. [Investment Efficiency] Total asset turnover 1.91x (Revenue ¥1,495.8B ÷ Total assets ¥781.3B) is high. Inventory turnover days 28.0 days (Inventory ¥114.9B ÷ daily sales ¥4.1B) remains at an adequate level. [Financial Soundness] Equity Ratio 61.6% (from 62.3%, -0.7pt), D/E ratio 0.17x (interest-bearing debt ¥79.7B ÷ Net assets ¥481.2B) — conservative. Current ratio 169.8% (Current assets ¥401.0B ÷ Current liabilities ¥236.1B) indicates sufficient short-term payment capacity.
Operating Income ¥75.4B versus Net Income ¥38.6B — the ¥37B difference is explained by the high effective tax burden of 49.7% and net special losses of -¥0.3B. On working capital, Inventory rose to ¥114.9B (from ¥98.4B, +¥16.5B), reflecting inventory build-up accompanying sales expansion. Accounts receivable increased to ¥45.6B (from ¥42.2B, +¥3.4B), partially offset by accounts payable rising to ¥100.2B (from ¥90.1B, +¥10.0B), implying overall modest working capital cash outflow. Cash and deposits increased to ¥212.4B (from ¥183.1B, +¥29.3B), and short-term borrowings rose to ¥51.5B (from ¥35.5B, +¥16.0B), together strengthening liquidity. Tangible fixed assets increased to ¥276.0B (from ¥267.1B, +¥8.9B), indicating continued capital expenditure on store facilities.
Operating Income ¥75.4B is recurring core earnings; non-operating income ¥2.1B (including interest income ¥0.4B and fee income ¥0.1B) is small. Non-operating expenses ¥0.5B (interest expense ¥0.5B) are minimal, so most of Ordinary Income ¥77.0B is derived from core operations. Special gains ¥3.8B are one-off factors; special losses ¥4.1B (impairment losses ¥2.7B, other ¥1.4B) are one-time expenses related to store closures, creating non-recurring noise. Pre-tax Income ¥76.7B and corporate taxes ¥38.1B (effective tax rate 49.7%) substantially exceed the standard statutory effective tax rate in the 30% range, suggesting valuation allowances on deferred tax assets or permanent differences. Comprehensive income ¥40.0B exceeded Net Income ¥38.6B by ¥1.4B, contributed by an increase in unrealized gains on securities of ¥1.5B. The divergence between comprehensive income and net income is small, indicating limited valuation impact.
Full Year / FY forecast: Revenue ¥1,960.0B (YoY +5.3%), Operating Income ¥109.0B (+8.5%), Ordinary Income ¥110.0B (+8.4%), Net Income ¥70.0B (year-over-year not disclosed). Progress against FY forecast at the Q3 cumulative point: Revenue 76.3%, Operating Income 69.2%, Ordinary Income 70.0%, Net Income 55.1%. Revenue progress is on track, while Operating and Ordinary Income are slightly behind, and Net Income is substantially behind. The lag is mainly due to the Q3 cumulative effective tax rate of 49.7% and the special losses of ¥4.1B; the FY forecast assumes tax burden normalization in Q4 (return to a standard effective tax rate in the 30s) and no further special losses. The company has kept guidance unchanged; achieving the full year target depends on Q4 margin improvement and cost optimization.
An interim dividend of ¥12 has been paid (total dividend amount approximately ¥0.61B). The projected year-end dividend is ¥12, resulting in a full-year dividend of ¥24. A 2-for-1 stock split was implemented on November 1, 2024, so on a post-split basis the annual dividend is ¥24 (equivalent to ¥48 on a pre-split basis). The payout ratio against the FY Net Income forecast of ¥70.0B is approximately 17.4% (¥24 × 50,958 thousand shares ÷ ¥70.0B), which is low, indicating ample capacity for dividends. Annual dividend burden of approximately ¥1.22B against cash and deposits of ¥212.4B is minimal. There is no announced share buyback; shareholder returns are concentrated on dividends. Although historical trend data is not provided, the low payout ratio and strong financial position suggest significant potential for future dividend increases.
Declining gross margin risk: Gross margin declined to 28.1% (from 28.5%, -0.4pt). This is likely due to higher procurement costs and stronger promotions; if price pass-through lags or promotional expenses persist, the operating margin of 5.0% could deteriorate further. Absolute gross profit growth (+6.4%) lagged Revenue growth (+7.6%), indicating scale benefits are not being realized.
Continued high effective tax rate risk: The Q3 cumulative effective tax rate of 49.7% (from 43.3%) significantly exceeds the standard statutory effective tax rate in the 30% range. While this may reflect valuation allowances on deferred tax assets or permanent differences, if the cause is not temporary, achieving the FY Net Income forecast of ¥70.0B would be difficult. The forecast assumes tax rate normalization in Q4, but uncertainty remains.
Short-term debt concentration risk: Short-term borrowings rose sharply to ¥51.5B (from ¥35.5B, +45.0%), so 73.3% of interest-bearing debt ¥79.7B is short-term. Current ratio 169.8% and cash and deposits ¥212.4B indicate ample liquidity, but in a rising interest rate environment refinancing costs could increase. Management of short-term debt rollover totaling ¥58.4B (including long-term borrowings due within 1 year ¥6.9B) is a challenge.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.0% | 3.9% (1.2%–8.9%) | +1.1pt |
| Net Margin | 2.6% | 2.2% (0.2%–5.7%) | +0.4pt |
Operating margin exceeds the industry median by 1.1pt, placing the company in the mid-to-upper tier within retail.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 7.6% | 3.0% (-0.1%–9.2%) | +4.5pt |
Revenue growth of 7.6% surpasses the industry median of 3.0% by 4.5pt, categorizing the company among higher-growth retailers.
※ Source: Company compilation
Revenue growth is solid but margins are trending down. Operating margin 5.0% (from 5.4%, -0.4pt) and Net margin 2.6% (from 3.1%, -0.5pt) reflect pressure from a 0.4pt decline in gross margin and higher SG&A. Gross margin improvement measures in Q4 (price pass-through, product-mix optimization) and cost containment (personnel and utilities management) are key to achieving FY targets.
Progress toward FY Net Income forecast of ¥70.0B is lagging at 55.1%. The main factors are the high effective tax rate of 49.7% and special losses of ¥4.1B. The FY view assumes tax rate normalization to the 30s and no further special losses in Q4; failure to realize these assumptions would elevate downside risk to the FY forecast.
Financial safety and dividend capacity are ample. Equity Ratio 61.6%, cash and deposits ¥212.4B, and payout ratio 17.4% are conservative, indicating scope to increase dividends or strengthen shareholder returns. The rise in short-term borrowings (+45.0%) warrants monitoring, but ample liquidity reduces near-term concern.
This report is an AI-generated financial analysis document produced by analyzing XBRL financial statement data. It is not a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by the company based on publicly available financial statements. Investment decisions are your responsibility; please consult advisors as necessary before making investment decisions.
These are mechanically computed values based on a residual income model. They are not a forecast of market prices or a recommendation of any investment action, and do not predict or guarantee future share prices. Historical values are computed retrospectively using current guidance-achievement statistics.