| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥362.6B | ¥341.7B | +6.1% |
| Operating Income / Operating Profit | ¥23.2B | ¥28.1B | -17.3% |
| Ordinary Income | ¥25.8B | ¥28.4B | -9.1% |
| Net Income / Net Profit | ¥7.1B | ¥12.7B | -44.2% |
| ROE | 5.9% | 11.9% | - |
For the fiscal year ended March 2026, Revenue was ¥362.6B (YoY +¥20.9B +6.1%), Operating Income was ¥23.2B (YoY -¥4.8B -17.3%), Ordinary Income was ¥25.8B (YoY -¥2.5B -9.1%), and Net Income was ¥7.1B (YoY -¥5.6B -44.2%). The company recorded revenue growth with profit decline; Operating Margin deteriorated to 6.4% from 8.2% in the prior year (-1.8pt). Domestic Store Operations drove growth with Revenue +12.0% but Operating Income was sluggish at -6.5%. Overseas Store Operations faced headwinds with Revenue -1.8% and profit -22.6%. Merchandise Sales maintained high profitability with Revenue +12.7% and profit +9.6%. SG&A ratio rose to 63.1% from 60.1% (+3.0pt), and company-level cost increase (from -¥3.7B to -¥5.5B) reversed operating leverage. Extraordinary items showed a net increase as Fixed Asset Sale Gain ¥3.7B exceeded Impairment Losses ¥2.1B, but Net Income declined substantially YoY. Operating Cash Flow was ¥27.8B (-9.9%) and Free Cash Flow was secured at ¥15.5B.
Revenue: Revenue was ¥362.6B (+6.1%). By segment, Domestic Store Operations was the largest growth driver at ¥174.2B (+12.0%), accounting for 48.0% of total Revenue. Merchandise Sales also posted double-digit growth at ¥44.2B (+12.7%), representing 12.2% of sales with strong growth. Conversely, Overseas Store Operations declined to ¥144.3B (-1.8%), offsetting company-wide revenue growth despite its 39.8% weight. Gross margin fell to 69.5% from 70.2% (-0.7pt), suggesting cost pressures and mix effects.
Profitability: Operating Income was ¥23.2B (-17.3%). This was driven by an increase in SG&A to ¥228.8B (+7.9%), raising the SG&A ratio to 63.1% from 60.1% (+3.0pt). By segment, Domestic Store Operations Operating Income was ¥14.5B (-6.5%) with margin deteriorating to 8.3% from 9.9%. Overseas Store Operations Operating Income plunged to ¥8.7B (-22.6%) with margin down to 6.0% from 7.7%, while company-level costs expanded to -¥5.5B from -¥3.7B. Merchandise Sales alone increased Operating Income to ¥5.6B (+9.6%) maintaining a high 12.7% margin. Ordinary Income was ¥25.8B (-9.1%), supported by non-operating income ¥4.1B (forex gains ¥1.6B, interest income ¥0.4B, etc.). Extraordinary items were net positive (extraordinary gains ¥3.8B − losses ¥3.2B), resulting in Pre-tax Income of ¥26.4B (+0.7%). After taxes of ¥8.1B, Net Income was ¥7.1B (-44.2%). This divergence is materially different from Parent Net Income Attributable of ¥18.3B (+4.0%), likely influenced by non-controlling interests and comprehensive income adjustments. In conclusion, the company delivered revenue growth but profit decline, supported by Domestic Stores and Merchandise Sales.
Domestic Store Operations: Revenue ¥174.2B (+12.0%), Operating Income ¥14.5B (-6.5%), Margin 8.3% (down -1.6pt from 9.9%). Despite revenue growth, SG&A increases led to earnings decline and deteriorating profitability.
Overseas Store Operations: Revenue ¥144.3B (-1.8%), Operating Income ¥8.7B (-22.6%), Margin 6.0% (down -1.7pt from 7.7%). Revenue and profit both declined, with margins compressed by forex, labor, and rent increases.
Merchandise Sales: Revenue ¥44.2B (+12.7%), Operating Income ¥5.6B (+9.6%), Margin 12.7% (down -0.4pt from 13.1%). This segment sustained revenue and profit growth and remains the group’s most profitable.
Company-level costs widened to -¥5.5B from -¥3.7B (increase of -¥1.8B), likely reflecting head office strengthening and growth investments. While the domestic store business is the main contributor to Operating Income, weak overseas profitability is pressuring consolidated margins.
Profitability: Operating Margin 6.4% worsened -1.8pt from 8.2%, primarily due to SG&A ratio rising to 63.1% (+3.0pt from 60.1%). Gross margin 69.5% declined -0.7pt from 70.2%. ROE 5.9% declined from 9.2%, driven by weaker Net Income margin.
Cash Quality: Operating Cash Flow / Net Income ratio is 3.91x (OCF ¥27.8B / Net Income ¥7.1B), indicating strong accrual quality. OCF/EBITDA (OCF ¥27.8B / EBITDA approx. ¥32.7B) is about 0.85x, slightly below the 0.9x benchmark; inventory increase -¥1.2B and AR increase -¥0.5B pressured cash conversion.
Investment Efficiency: Total Asset Turnover 1.81x (Revenue ¥362.6B / Average Total Assets ¥200.6B). Capex / Depreciation ratio 1.53x (Capex ¥14.4B / Depreciation ¥9.4B), indicating continued growth investment.
Financial Soundness: Equity Ratio 60.3% improved from 57.5%. D/E ratio 0.08x (Interest-bearing debt ¥10.2B / Net Assets ¥121.1B). Net Cash ¥65.7B (Cash ¥75.9B − Interest-bearing debt ¥10.2B) denotes very strong financial resilience. Current Ratio 195.6%, Interest Coverage 101.5x (Operating Income ¥23.2B / Interest ¥0.2B) are also healthy.
Operating Cash Flow was ¥27.8B (YoY -9.9%), maintaining high cash generation at 3.91x Net Income ¥7.1B. Depreciation was ¥9.4B, and Operating CF subtotal (before working capital changes) was ¥32.4B. After inventory increase -¥1.2B, AR increase -¥0.5B, AP increase ¥0.7B, and corporate tax payments -¥4.9B, ¥27.8B was secured. Investing CF was -¥12.3B, centered on Capex -¥14.4B, partially offset by Fixed Asset Sales inflow ¥5.5B. Financing CF was -¥11.2B, net outflow from long-term loan repayments -¥11.5B and long-term borrowings of ¥6.0B, dividends -¥5.7B, and share buybacks -¥0.7B. FCF was ¥15.5B (OCF ¥27.8B + Investing CF -¥12.3B), sufficient to cover dividends and buybacks totaling ¥6.4B. Cash rose to ¥75.9B from ¥71.5B, preserving high financial flexibility. OCF/EBITDA 0.85x and working capital buildup indicate room for improvement in cash conversion.
Core recurring earnings center on Operating Income ¥23.2B, structured as Segment Profit ¥28.8B less Company-level costs -¥5.5B. Of Non-operating Income ¥4.1B, forex gains ¥1.6B (0.4% of Revenue) and interest income ¥0.4B contributed, exceeding Non-operating Expenses ¥1.5B (interest expense ¥0.2B, forex loss ¥0.5B, etc.). One-off items comprised Extraordinary Gains ¥3.8B (mainly Fixed Asset Sale Gains ¥3.7B) exceeding Extraordinary Losses ¥3.2B (Impairment Losses ¥2.1B, Fixed Asset Disposal Loss ¥1.0B), adding a net ¥0.6B to Pre-tax Income ¥26.4B. This one-off gain represents about 2.3% of Pre-tax Income and poses a risk of negative reversal next fiscal year. Accrual quality is solid with OCF/Net Income 3.91x and OCF/EBITDA 0.85x, indicating strong cash conversion. Comprehensive Income was ¥20.0B, well above Net Income ¥7.1B, supported by Foreign Currency Translation Adjustments ¥1.6B and the gap with Parent Net Income Attributable ¥18.3B boosting comprehensive income. Overall, core operating profitability declined, but non-operating and extraordinary items supported bottom-line results, while cash quality remained healthy.
The company’s plan expects Full Year Revenue ¥401.2B (YoY +10.7%), Operating Income ¥25.9B (+11.6%), and Ordinary Income ¥26.4B (+2.2%). Operating Margin is projected to slightly improve to about 6.5%, assuming normalization of overseas segment profitability and restraint in company-level cost growth. Year-end dividend guidance is ¥12.0 per share (annual ¥20 attributable to the second half), implying a Payout Ratio of 30.8%, considered sustainable. Progress rates are Revenue 90.4% (¥362.6B / ¥401.2B), Operating Income 89.6% (¥23.2B / ¥25.9B), Ordinary Income 97.8% (¥25.8B / ¥26.4B), indicating the company is broadly on track at fiscal year-end. The high progress in Ordinary Income is supported by non-operating income (forex gains etc.); operational improvements remain critical to meeting full-year targets. If same-store sales in domestic stores remain steady, overseas cost controls are effective, and Merchandise Sales channel expansion proceeds as planned, return to profit growth is feasible.
Annual dividend is ¥20 (interim ¥10 + year-end ¥10) with a Payout Ratio of 30.8% (Total Dividends ¥6.0B / Parent Net Income Attributable ¥18.3B), at a sustainable level. FCF coverage is 2.55x (FCF ¥15.5B / Total Dividends ¥6.0B), and ample Net Cash ¥65.7B supports dividend sustainability. Share buybacks of ¥0.7B were executed, and combined with dividends, Total Return Ratio is approximately 36.8% (Total Returns ¥6.7B / Parent Net Income Attributable ¥18.3B). Both Payout Ratio and Total Return Ratio are at appropriate levels, balancing growth investment and shareholder returns. Next fiscal year dividend guidance is ¥12 (annual), presumed to indicate only the second-half amount; if this implies a full-year dividend cut, priority may be given to growth investment and financial flexibility. Given cash generation and Net Cash position, scope remains to maintain or increase dividends.
Overseas Store Operations profitability deterioration risk: Overseas segment recorded Revenue -1.8% and Operating Income -22.6%, with margin falling to 6.0%. Forex, labor, and rent increases overlapped, and despite representing about 37% of consolidated Operating Income, margins lag substantially behind domestic operations. Continued geopolitical risk, exchange rate volatility, and local cost inflation could persistently pressure consolidated profitability given overseas sales near 40% of total.
SG&A ratio rise and reversal of operating leverage risk: SG&A ratio rose to 63.1% from 60.1% (+3.0pt), and company-level costs expanded from -¥3.7B to -¥5.5B. SG&A growth +7.9% outpaced Revenue growth +6.1%, reversing operating leverage. If labor costs, fixed head office costs, and growth investment burdens persist, improvement in Operating Margin may be delayed and achieving the plan (OPM 6.5%) could be at risk.
Asset retirement obligation (ARO) realization risk: ARO stands at ¥12.4B, accounting for 15.6% of liabilities, up +10.5% YoY. Increased restoration obligations from store network expansion mean that future store closures or renovations could trigger simultaneous impairment, disposal losses, and cash outflows. The company booked Impairment ¥2.1B and Disposal Loss ¥1.0B this period; accelerated restructuring could materially pressure earnings and cash flow temporarily.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.4% | 4.6% (1.7%–8.2%) | +1.8pt |
| Net Profit Margin | 2.0% | 3.3% (0.9%–5.8%) | -1.4pt |
Operating Margin exceeds the industry median by +1.8pt, while Net Profit Margin trails by -1.4pt, indicating a significant burden from non-operating and extraordinary items.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 6.1% | 4.3% (2.2%–13.0%) | +1.8pt |
Revenue growth outperforms the industry median by +1.8pt, placing the company toward the upper range within the sector.
※ Source: Company aggregation
Strong growth in Domestic Store Operations and Merchandise Sales supported revenue expansion; Operating CF / Net Income 3.91x indicates strong cash generation and very high financial safety. Net Cash ¥65.7B, D/E 0.08x, and Equity Ratio 60.3% form a conservative financial structure that underpins sustainable growth investment and shareholder returns.
However, Operating Margin worsened to 6.4% (-1.8pt). Overseas segment margin 6.0% (-1.7pt) and expanded company-level costs (from -¥3.7B to -¥5.5B) reversed operating leverage. SG&A growth +7.9% outpacing Revenue growth +6.1% implies that achieving next fiscal year’s margin improvement (6.4% → 6.5%) will be challenging if the structure persists. Normalization of overseas profitability, improved head office productivity, and maintenance of high margins in Merchandise Sales are key to returning to profit growth.
Accumulation of ARO at ¥12.4B (15.6% of liabilities) and increased reliance on Extraordinary Gains ¥3.8B (mainly Fixed Asset Sale Gains) suggest portfolio realignment. Accelerated store exits or renovations in future periods could trigger impairments, disposal losses, and cash outflows simultaneously; monitoring core operating profit recovery excluding one-offs is necessary.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.