Quick View
| Metric | Current Period | Same Period Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥1226.6B | ¥991.4B | +23.7% |
| Operating Income | ¥134.6B | ¥95.8B | +40.5% |
| Profit Before Tax | ¥132.1B | ¥93.4B | +41.5% |
| Net Income | ¥90.7B | ¥65.2B | +39.0% |
| ROE | 8.4% | 6.5% | - |
Executive Summary
Operating income increased 40.5%, exceeding the 23.7% increase in revenue, indicating that operating leverage associated with higher revenue directly contributed to margin improvement. Revenue was ¥1,226.6B (¥991.4B in the previous year, +23.7%), operating income was ¥134.6B (¥95.8B in the previous year, +40.5%), profit before tax was ¥132.1B (¥93.4B in the previous year, +41.5%), and net income was ¥90.7B (¥65.2B in the previous year, +39.0%; of which ¥85.5B was attributable to owners of the parent, +39.4%). The operating margin improved to 11.0% from approximately 9.7% in the previous year, as the Company absorbed the increase in SG&A expenses while maintaining a gross margin of 57.2%.
Factors Affecting Financial Results
【Revenue】Revenue was ¥1,226.6B, representing a year-on-year increase of +23.7%. Expansion of existing businesses was the primary driver. Although detailed segment disclosures are not available, the high growth rate suggests that both existing stores and new openings contributed.
【Profit and Loss】Operating income was ¥134.6B (+40.5%), and the operating margin improved to 11.0% from approximately 9.7% in the previous year. The cost-of-sales ratio was contained at 42.8%, securing a gross margin of 57.2%, while the SG&A ratio rose slightly to 46.3%. However, the revenue increase absorbed fixed costs and expanded the increase in operating income. Profit before tax was ¥132.1B (+41.5%), and net income was ¥90.7B (+39.0%). The impact of non-operating income and expenses was limited (net financial expenses were △¥2.5B), and the divergence from ordinary income through to net income was attributable to income taxes and other taxes of ¥41.4B (an effective tax rate of approximately 31.4%). In conclusion, the Company achieved higher revenue and higher profit.
Key Financial Indicators
【Profitability】The operating margin was 11.0%, improving from approximately 9.7% in the previous year, while the consolidated net margin was 7.4%. ROE was 8.4%. 【Cash Flow Quality】Operating cash flow (OCF) was ¥166.6B, approximately 1.84 times net income of ¥90.7B, indicating strong cash backing for earnings. EBITDA, after taking into account depreciation and amortization of ¥101.5B, was ¥236.1B, and the EBITDA margin was 19.2%, demonstrating high cash-generating capability even among store- and equipment-intensive businesses. 【Investment Efficiency】Capital expenditures were ¥81.1B, remaining within depreciation and amortization of ¥101.5B, and positive free cash flow of ¥68.8B was secured. 【Financial Soundness】The equity ratio was 24.8%, slightly improving from 24.0% in the previous year; however, interest-bearing debt, including lease liabilities, accounts for a significant proportion, and financial leverage remains high.
Cash Flow Analysis
Operating cash flow was ¥166.6B, a substantial year-on-year increase of +65.7%, and exceeded net income of ¥90.7B. Even after deducting income taxes and other taxes paid of ¥40.2B, interest paid of ¥7.7B, and lease payments of ¥58.3B from the subtotal of operating cash flow of ¥213.3B, ¥166.6B was secured. Depreciation and amortization, a non-cash expense, of ¥101.5B and an increase in accounts payable of ¥31.8B were contributing factors, while an increase in accounts receivable, which increased working capital, slightly restrained cash generation. Investing cash flow was an outflow of ¥97.8B, of which capital expenditures accounted for ¥81.1B, remaining within the level of depreciation and amortization. Financing cash flow was an outflow of ¥106.3B, reflecting payments including dividend payments of ¥39.0B and repayments of lease liabilities. Free cash flow was positive at ¥68.8B, indicating a structure in which part of investments and shareholder returns can be funded by cash generated from operating activities.
Earnings Quality
Current-period profit resulted from an improvement in recurring earnings power derived from operating activities, while the contribution of temporary factors such as extraordinary gains and losses was limited. Non-operating items included financial income of ¥4.5B versus financial expenses of ¥7.0B, resulting in a net burden; however, their impact on profit before tax of ¥132.1B was small. Operating cash flow of ¥166.6B substantially exceeded net income of ¥90.7B, indicating a small divergence, or accrual, between accounting profit and cash flow. Earnings quality can therefore be assessed as strong. Comprehensive income was ¥112.4B (of which ¥104.7B was attributable to owners of the parent), and the difference from net income of ¥90.7B was primarily attributable to other comprehensive income items such as foreign currency translation adjustments. The divergence from net income was limited.
Earnings Forecasts and Guidance
The full-year forecast is revenue of ¥4,850.0B, operating income of ¥405.0B (+12.2% year on year), EPS of ¥211.91, and dividends of ¥35.00. Q1 progress rates were 25.3% for revenue and 33.2% for operating income, both exceeding simple quarterly linear progress of 25%. Operating income is particularly ahead of schedule, suggesting that the full-year plan may be conservative and assume a slowdown in the second half. The Q1 earnings growth rate (+40.5%) substantially exceeded the full-year plan’s earnings growth rate (+12.2%), suggesting that the plan incorporates a slowdown in earnings growth in subsequent quarters.
Shareholder Returns
The full-year dividend forecast is ¥35.00 per share. Dividend payments during Q1 were ¥39.0B, and the expected payout ratio calculated from the full-year forecast EPS of ¥211.91 and dividend of ¥35.00 is only approximately 16.5%. Free cash flow of ¥68.8B exceeded dividend payments for the quarter, and dividends are sufficiently supported by cash flow from operating activities. There has been no disclosure regarding share repurchases, and the shareholder return policy currently appears to center on dividends.
Risk Factors
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Financial leverage: The equity ratio remains at 24.8%, while the Company has lease liabilities (current ¥236.2B, non-current ¥1,211.0B, total ¥1,447.2B) and total bonds and borrowings of ¥794.7B. Fixed payment obligations associated with store leases are substantial, and if existing-store profitability deteriorates, leverage could amplify fluctuations in financial performance.
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Increase in working capital: Accounts receivable and notes receivable were ¥203.8B, an increase from the previous year, while inventories also increased slightly to ¥109.8B. Although the increase in accounts payable of ¥31.8B provided some offset, continued monitoring is necessary to determine whether increases in trade receivables and inventories relative to the pace of growth will pressure operating cash flow.
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Impairment risk related to goodwill and intangible assets: The Company recorded goodwill of ¥303.7B and intangible assets of ¥569.0B, with the total accounting for 21.0% of total assets. As goodwill is not amortized periodically under IFRS, deterioration in profitability could result in impairment losses.
Industry Benchmark (For Reference; Prepared by the Company)
Industry Benchmark (retail)
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.0% | – | – |
| Net Margin | 7.4% | – | – |
Although median data indicating the Company’s relative ranking within the industry has not been obtained, the Company’s operating margin of 11.0% and net margin of 7.4% both represent levels securing a certain degree of profitability.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (Year on Year) | 23.7% | – | – |
The revenue growth rate of 23.7% is considered high even compared with the general growth pace of the retail industry.
※Source: Prepared by the Company
Key Points from the Earnings Results
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Operating income increased 40.5%, exceeding the 23.7% increase in revenue. A key feature was the operation of operating leverage, whereby higher revenue directly contributed to margin improvement, with the operating margin rising to 11.0% from approximately 9.7% in the previous year.
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Operating cash flow was ¥166.6B, approximately 1.84 times net income, and positive free cash flow of ¥68.8B was secured, indicating strong cash backing for earnings.
-
On the other hand, the equity ratio was 24.8%, and total interest-bearing debt, including lease liabilities, reached ¥2,241.9B, with the high level of financial leverage remaining a structural feature.
Theoretical Share Price (Reference Value)
| Scenario | Theoretical Share Price |
|---|---|
| bear | ¥1,240 |
| base | ¥1,425 |
| bull | ¥1,434 |
| Calculation Assumption | Value |
|---|---|
| Book Value per Share (BPS) | ¥921 |
| Adjusted Forecast EPS | ¥233.1 |
| Cost of Equity r | 9.27% (10-year government bond 2.77% + equity risk premium 6.00% + size premium 0.50%) |
| Persistence Coefficient of Residual Income ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 16.5% |
| Forecast EPS Confidence Adjustment | ×1.100 (based on progress ahead of the full-year forecast) |
| implied PBR / PER | 1.55x / 6.1x |
Sensitivity: ¥1,382–¥1,469 at ±1% in the cost of equity, and ¥1,410–¥1,447 at ±0.1 in ω.
Notes:
- As net income progress against the full-year forecast (36%) exceeds the standard level (25%), forecast EPS has been adjusted upward within a range of +10% at the upper limit (because companies whose progress is ahead of schedule tend to exceed forecasts. The adjustment may be excessive for businesses with strong seasonality).
- Net assets as of the quarter-end are used (there is a timing difference relative to the full-year forecast).
(Calculation model: Residual income model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / This is a mechanically calculated value based solely on publicly disclosed data and is not a forecast of the market share price or a recommendation of any specific investment action, nor does it predict or guarantee future share prices.)
This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with professionals as necessary.
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AI Financial Analysis
Executive Summary
FY2026 Q1 was a strong start, with sales growth translating into faster operating and attributable-profit growth. Revenue rose 23.7% YoY to ¥122.66bn. Operating income increased 40.5% YoY to ¥13.46bn. Profit attributable to owners increased 39.4% YoY to ¥8.55bn. The operating margin expanded by approximately 134bp to 11.0% from 9.7% a year earlier. Net profit margin improved by approximately 80bp to 7.0% from 6.2%. Gross margin was broadly resilient at 57.2%, albeit around 48bp below the prior-year level. The main source of margin expansion was therefore SG&A leverage rather than gross-margin expansion. SG&A as a percentage of revenue declined by approximately 177bp to 46.3%, despite continued investment in the restaurant and store platform. EBITDA rose to ¥23.61bn and the EBITDA margin reached 19.2%, supporting the view that earnings growth was accompanied by solid underlying cash earnings. Operating cash flow of ¥16.66bn was 1.95x attributable profit, indicating strong conversion of reported earnings into cash. Free cash flow was positive at ¥6.88bn after ¥8.11bn of capital expenditure, and covered the ¥3.90bn cash dividend paid during the quarter. Receivables increased 33.3% YoY to ¥20.38bn and absorbed ¥5.05bn of operating cash flow, which warrants monitoring even though payables provided a ¥3.18bn cash offset. Q1 progress against full-year company forecasts is ahead of a linear seasonal run rate, particularly for operating profit and attributable profit. Revenue progress reached 25.3% of the ¥485.0bn full-year forecast, close to the standard 25% Q1 benchmark. Operating-income progress was 33.2% of the ¥40.5bn forecast, 8.2 percentage points ahead of the standard pace. Attributable-profit progress was 35.6% of the ¥24.0bn forecast, 10.6 percentage points ahead of the standard pace. The key forward issue is whether current SG&A efficiency and sales momentum can be maintained while funding expansion within a highly leveraged, lease-intensive balance-sheet structure.
Profitability Analysis
Annualized DuPont ROE was 31.5%, comprising a 7.0% net profit margin, 1.183x asset turnover and 3.82x financial leverage. This is an excellent reported ROE outcome, but the decomposition shows that leverage is a meaningful contributor alongside strong operating profitability and asset utilization. The most visible quarterly improvement was in operating leverage: sales increased 23.7% while SG&A increased more slowly at 19.2%, reducing the SG&A ratio to 46.3% from 48.0%. Operating income consequently grew 40.5%, materially faster than revenue. Gross profit increased 22.7% to ¥70.12bn, but the gross margin eased to 57.2% from 57.7%; therefore, product and food-cost economics did not drive the margin gain. The 11.0% operating margin is within the stated 8-15% good benchmark range and is strong for a service-intensive restaurant operator. EBITDA margin was 19.2%, supported by ¥10.15bn of depreciation and amortization. Finance costs of ¥0.70bn were modest relative to EBIT, with an interest burden of 0.981, indicating limited current-period erosion of operating profit by financing expense. The tax burden was 0.647, reflecting an effective tax rate of 31.4%, which constrained conversion from pre-tax profit to net income. The sustainability of profit expansion will depend on continued sales productivity, food-cost discipline and labor/store-cost containment, as gross margin itself was slightly lower YoY.
Growth Assessment
Growth quality was favorable in Q1 because operating profit and attributable profit both grew materially faster than revenue. The revenue increase of ¥23.52bn generated an additional ¥3.67bn of operating income, implying strong incremental operating leverage. EBITDA increased alongside EBIT, suggesting that earnings growth was not solely a result of lower depreciation or accounting presentation. The company forecast calls for FY2026 revenue of ¥485.0bn, operating income of ¥40.5bn and attributable profit of ¥24.0bn, implying full-year YoY growth of 12.2% in operating income and 4.6% in attributable profit. Q1 revenue has achieved 25.3% of forecast, broadly in line with the normal 25% seasonal benchmark. Q1 operating income has achieved 33.2% of forecast, ahead of the benchmark by 8.2 percentage points. Q1 attributable profit has achieved 35.6% of forecast, ahead of the benchmark by 10.6 percentage points and therefore exceeding the 10-point deviation threshold. This front-loaded profit progress provides a cushion against normal cost inflation, consumer-demand volatility and investment needs over the remainder of the year. However, the full-year guidance implies a substantially lower profit growth rate than Q1, so later-quarter margin normalization or planned cost investment appears embedded in management's outlook. In a restaurant format, maintaining traffic and ticket growth while managing food ingredients, labor and occupancy costs remains central to sustaining the current pace.
Financial Health
The balance sheet is asset-intensive, with property, plant and equipment of ¥213.92bn representing 51.6% of total assets. Current assets were ¥93.06bn against estimated current liabilities of ¥89.32bn, producing an estimated current ratio of 1.04x. This is above the 1.0x warning threshold but leaves only a modest short-term liquidity buffer. Cash and cash equivalents of ¥56.35bn provide meaningful immediate liquidity. The estimated quick ratio was 0.92x after excluding ¥10.98bn of inventories, below the 1.0x healthy benchmark and reinforcing the need to preserve cash generation. The capital structure is aggressive, as highlighted by the 2.82x debt-to-equity ratio, which exceeds the 2.0x high-leverage threshold. This leverage largely reflects ¥144.72bn of current and non-current lease liabilities, together with ¥79.47bn of bonds and borrowings. Lease liabilities alone materially exceed equity of ¥108.41bn, making the company sensitive to store-level cash-flow performance and lease commitments. Non-current liabilities were ¥216.80bn, while current lease liabilities were ¥23.62bn and current borrowings were ¥4.01bn; near-term maturity pressure is moderated by cash but remains relevant given the narrow current-ratio cushion. Equity improved to ¥108.41bn from ¥100.90bn in the prior-year quarter, and the equity ratio improved to 24.8% from 24.0%. Goodwill was ¥30.37bn, equal to 28.0% of equity and 1.29x EBITDA, both within the stated healthy ranges. Intangible assets represented 13.7% of assets, below the 20% concentration benchmark. The receivables balance rose ¥5.10bn, or 33.3% YoY, to ¥20.38bn; this is the principal notable balance-sheet movement and should be assessed against settlement timing and sales-channel mix.
Notable B/S Changes
Accounts receivable: +¥5.10bn (+33.3% YoY) to ¥20.38bn - the increase absorbed ¥5.05bn of Q1 operating cash flow; monitor settlement timing, sales-channel mix and collection efficiency. Property, plant and equipment: ¥213.92bn (51.6% of total assets) - the large physical asset base underscores exposure to store productivity, maintenance needs and capital-allocation discipline. Lease liabilities: ¥144.72bn in aggregate, including ¥23.62bn current and ¥121.10bn non-current - recurring lease commitments are the main driver of the aggressive leverage profile and require sustained operating cash flow.
Cash Flow Quality
Cash-flow quality was strong in Q1. Operating cash flow was ¥16.66bn, equivalent to 1.95x profit attributable to owners of ¥8.55bn and well above the 0.8x quality-warning threshold. The accruals ratio was negative 2.0%, which is consistent with favorable cash realization rather than earnings being driven by non-cash accruals. EBITDA cash conversion was 0.71x, below the 0.9x excellent benchmark but above the 0.7x concern threshold. Operating cash flow included a ¥5.05bn outflow from receivables and a ¥0.65bn inventory outflow, partly offset by a ¥3.18bn inflow from payables and ¥1.67bn of other working-capital inflows. The receivable outflow is notable because it was substantially larger than the ¥1.55bn outflow in the prior-year quarter, and it coincides with the 33.3% YoY increase in receivables. There is no indication of inventory liquidation supporting cash flow, as inventories also consumed cash during the period. Lease payments of ¥5.83bn were a significant recurring call on operating cash flow and should be considered alongside reported operating cash generation. Capital expenditure was ¥8.11bn, equal to 0.80x depreciation and amortization of ¥10.15bn. This ratio indicates that investment was below the depreciation charge in Q1, but remained substantial in absolute terms. Free cash flow was positive at ¥6.88bn, demonstrating that operations funded both maintenance and development investment during the quarter. Investing cash flow of ¥9.78bn was mainly attributable to capital expenditure, with only limited other investing outflows. Financing cash flow was negative ¥10.63bn, reflecting lease payments, debt repayment and shareholder distributions rather than reliance on incremental external financing in the quarter.
Dividend Sustainability
Cash dividends paid were ¥3.90bn in Q1. Free cash flow of ¥6.88bn covered cash dividends by approximately 1.8x during the quarter. Operating cash flow covered dividends by approximately 4.3x, indicating ample near-term operating cash support. The full-year dividend forecast is ¥35.00 per share, compared with forecast EPS of ¥211.91. This implies a forecast dividend payout ratio of approximately 16.5%, comfortably below the 60% sustainability benchmark. The low forecast payout ratio provides room to retain earnings, support capital expenditure and manage the lease-heavy capital structure. No share buyback was reported for the quarter, so the relevant distribution measure is the dividend payout ratio rather than total return ratio. Dividend sustainability appears supported by positive free cash flow, modest forecast payout and retained earnings of ¥89.94bn. The principal constraint is not current earnings coverage but maintaining free cash flow after recurring lease payments and store investment requirements.
Risk Assessment
Business risks include Restaurant demand risk: discretionary consumer spending, customer traffic and ticket size can be affected by inflation and changes in household confidence., Food-cost and labor-cost inflation risk: the slight YoY gross-margin decline to 57.2% shows that procurement and product-mix pressures can offset sales-driven operating leverage., Competitive risk: value-oriented dining, conveyor-belt sushi peers, convenience food and delivery channels can pressure pricing, customer traffic and store-level productivity., Store-network execution risk: a large fixed asset base of ¥213.92bn and substantial lease commitments require sustained sales productivity at individual locations..
Financial risks include High leverage is a material concern: D/E of 2.82x exceeds the 2.0x aggressive-capital-structure threshold, increasing sensitivity to any downturn in store cash flows., Lease-obligation risk is significant, with lease liabilities totaling ¥144.72bn, including ¥23.62bn classified as current., Liquidity headroom is modest: the estimated current ratio is 1.04x and estimated quick ratio is 0.92x, despite substantial cash of ¥56.35bn., Working-capital risk has increased, as receivables rose 33.3% YoY and consumed ¥5.05bn of operating cash flow..
Key concerns include Highest priority: preserving sales growth and SG&A leverage sufficiently to service a lease-heavy capital structure through varying consumer-demand conditions., High priority: monitoring whether the receivables increase is temporary settlement timing or becomes a persistent drag on cash conversion., Medium priority: gross-margin defense against food input, wage and promotion pressures, since Q1 margin expansion relied primarily on SG&A leverage., Medium priority: monitoring execution against full-year guidance, as Q1 attributable-profit progress of 35.6% is materially ahead of the normal 25% seasonal pace., Medium priority: goodwill retention risk is presently contained, as goodwill/equity of 28.0% and goodwill/EBITDA of 1.29x remain within healthy thresholds..
Investment Implications
Key takeaways include Q1 delivered strong top-line momentum, with 23.7% revenue growth and 40.5% operating-income growth., Operating-margin expansion to 11.0% was driven by SG&A efficiency, while gross margin declined modestly., Reported earnings are supported by cash generation: OCF/attributable profit was 1.95x and free cash flow was ¥6.88bn., Q1 operating-income and attributable-profit progress were ahead of the normal full-year forecast run rate., The main balance-sheet consideration is the 2.82x D/E ratio and the ¥144.72bn lease-liability base..
Metrics to watch include Revenue growth and restaurant traffic/ticket trends, Gross margin and SG&A ratio, Operating-margin sustainability versus the 11.0% Q1 level, Receivables growth and operating-cash-flow conversion, Lease payments, cash balances and current-ratio headroom, Capital expenditure relative to depreciation and free cash flow, Progress toward FY2026 revenue, operating-income and attributable-profit forecasts.
Regarding relative positioning, The company combines above-benchmark profitability for a service-intensive retail/restaurant format with strong cash realization and a modest forecast dividend payout. Its 19.2% EBITDA margin and annualized 31.5% ROE are notable strengths, although the ROE profile is materially supported by 3.82x financial leverage. Relative financial resilience is therefore more dependent on stable store-level cash generation than for lower-leverage consumer peers.