| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1715.1B | ¥1739.0B | -1.4% |
| Operating Income / Operating Profit | ¥198.8B | ¥32.9B | +504.5% |
| Ordinary Income | ¥196.5B | ¥56.8B | +246.0% |
| Net Income | ¥129.4B | ¥70.2B | +84.4% |
| ROE | 6.1% | 3.6% | - |
For the fiscal year ended March 2026, Wacoal Holdings' consolidated results showed Revenue of ¥1715.1B (YoY -¥23.9B, -1.4%), a slight decline, while Operating Income improved to ¥198.8B (YoY +¥165.9B, +504.5%), Ordinary Income ¥32.6B (YoY -¥56.6B, -63.5%), and Net Income attributable to owners of the parent ¥131.2B (YoY +¥59.0B, +81.8%). Operating-stage profitability realized a substantial increase. Operating margin improved from 1.9% in the prior year to 11.6% (+9.7pt), and net margin expanded from 4.1% to 7.7% (+3.6pt). The primary drivers of the profit increase were a recovery in profitability in the domestic Wacoal business and higher other income (¥240.8B, doubled from ¥112.1B), with one-off gains such as gains on disposal of fixed assets significantly boosting profits. Ordinary Income declined sharply from Operating Income due to a ¥20.5B impairment loss on equity-method investments, but reduced tax burden led to a final profit increase of +84.4% YoY. ROE improved to 6.5% (prior 3.6%), and EPS doubled to 261.65円 (prior 133.90円).
[Revenue] Revenue was ¥1715.1B (YoY -1.4%), a slight decline. External sales by segment: Wacoal Business (Japan) ¥877.2B (YoY -0.1%), Wacoal Business (Overseas) ¥684.7B (YoY +1.8%), Peach John Business ¥111.4B (YoY +6.4%), Other ¥41.8B (YoY -50.1%). Revenue by region: Japan ¥1019.5B (YoY -3.4%), Europe & Americas ¥519.7B (YoY +7.6%), Asia & Oceania ¥175.9B (YoY -12.3%), with domestic and Asia declines partially offset by growth in Europe & Americas. Cost of sales ratio improved from 44.0% to 42.7% (-1.3pt), raising gross profit margin to 56.0%. Selling, general and administrative expenses were controlled at ¥986.9B (57.5% of sales, improved 0.5pt from 58.0%).
[Profitability] Operating Income recovered sharply to ¥198.8B (YoY +504.5%), and operating margin improved materially to 11.6%. Drivers included lower cost of sales ratio and improved SG&A ratio, plus other income doubling to ¥240.8B (prior ¥112.1B). The bulk of other income was gains on disposal of fixed assets of ¥193B, indicating a large contribution from one-off items. Net financial income was ¥12.9B (financial income ¥20.8B less financial expense ¥7.9B), and equity-method investment returns contributed ¥5.4B. However, an impairment loss on equity-method investments of ¥20.5B was recorded, causing Ordinary Income to decline to ¥32.6B (YoY -63.5%). Profit before tax (Ordinary Income) was ¥196.5B (YoY +246.0%), but corporate income tax expense was -¥67.1B (prior +¥13.4B), indicating a tax reversal and a negative effective tax rate. As a result, Net Income attributable to owners of the parent increased substantially to ¥131.2B (YoY +81.8%). Extraordinary items were limited aside from the equity-method impairment; increased non-operating income and tax effects drove the final profit. In summary, despite lower revenue, one-off other income from asset disposals and tax effects created the appearance of year-over-year revenue and profit growth, but sustainability is a concern.
Wacoal Business (Japan) achieved Operating Income of ¥187.9B (prior ¥29.7B), expanding 6.3x, with margin improving to 21.3%. Recovery in profitability of the domestic core business and one-off gains such as fixed asset disposals contributed. Wacoal Business (Overseas) had Operating Income of ¥4.9B (prior ¥4.2B, +16.7%), a slight increase, with a low margin of 0.6%. Peach John Business turned profitable with Operating Income of ¥1.5B (prior -¥2.7B), margin 1.3%. Other segments posted Operating Income of ¥4.5B (prior ¥1.7B, +172.1%), margin 10.8%. Domestic Wacoal generated roughly 95% of consolidated Operating Income; overseas and Peach John remain low-margin. Regionally, Asia’s revenue decline was pronounced and Europe & Americas growth provided only limited offset.
[Profitability] Operating margin was 11.6% (prior 1.9%), improving 9.7pt; net margin was 7.7% (prior 4.1%), up 3.6pt. ROE rose to 6.5% (prior 3.6%), though long-term trend is unclear with less than three years of data. ROA on an Ordinary Income basis declined to 1.2% (prior 3.3%) due to the equity-method impairment. The improvement drivers were higher gross margin, SG&A restraint, and increased other income (gains on disposal of fixed assets), with a large contribution from one-off items. [Cash Quality] Operating Cash Flow (OCF) was ¥83.5B versus Net Income ¥129.4B, a conversion ratio of 0.65x, indicating weak cash conversion. OCF to Operating Income ratio was 0.42x, and OCF to EBITDA ratio about 0.27x (EBITDA ≒ Operating Income ¥198.8B + depreciation etc. ¥111.7B), both low. Free Cash Flow (FCF) was ¥444.4B positive but dependent on asset sale proceeds of ¥274.2B, limiting sustainability. [Investment Efficiency] Total asset turnover declined to 0.59x (prior 0.64x). Inventory turnover was 3.4x (prior 3.5x), largely stable. Days sales outstanding ~37 days, inventory days ~109 days, indicating no material change in asset efficiency. Capital expenditures were ¥33.2B (tangible) and ¥8.1B (intangible), total ¥41.3B, well below depreciation of ¥111.7B, indicating continued investment restraint. [Financial Soundness] Equity Ratio was 71.7% (prior 70.4%), robust. Interest-bearing debt was reduced to ¥122.6B (prior ¥144.7B), Debt/Capital ratio 5.5%, Debt/EBITDA 0.4x, extremely conservative. Cash and cash equivalents of ¥441.7B imply net cash position, and current ratio was 265%. Interest coverage on an operating income basis exceeds 25x, providing ample headroom.
OCF was ¥83.5B (prior ¥49.7B, +68.1%), improved but low at 0.65x of Net Income ¥129.4B, indicating weak cash conversion. OCF subtotal (before working capital changes) was ¥103.3B; inventory decrease +¥12.8B was a cash inflow, while decrease in trade payables -¥29.3B and changes in retirement benefit assets/liabilities -¥42.3B were cash outflows. Corporate taxes paid -¥54.5B and lease payments -¥55.9B further accelerated cash outflows. Investing Cash Flow was +¥361.0B, a large positive driven by fixed asset sale proceeds ¥274.2B, sales of other financial assets ¥131.6B, and net withdrawals of time deposits -¥2.1B, far exceeding capital expenditures of ¥33.2B and intangible asset acquisitions of ¥8.1B. Reported FCF was ¥444.4B, but reliant on one-off asset sale proceeds. Financing Cash Flow was -¥261.4B, with share buybacks -¥124.7B, dividend payments -¥50.7B, and debt repayments -¥64.8B as cash outflows. Cash and cash equivalents increased from ¥234.2B to ¥441.7B (+¥207.5B), with foreign exchange translation effects contributing +¥11.6B. After deducting core capital expenditures (tangible + intangible) of ¥41.3B, real FCF was about ¥42B, which is far below total shareholder returns of ¥175.4B, indicating supplementation by asset sale proceeds and existing cash.
Of Operating Income ¥198.8B, Other Income ¥240.8B (14.0% of sales) was a major contributor, centered on gains on disposal of fixed assets ¥193B — a one-off factor that inflated profits. The ¥20.5B impairment loss on equity-method investments pressured Ordinary Income, producing a large gap between Ordinary Income ¥32.6B and Operating Income. For Profit before tax (Ordinary Income) ¥196.5B, corporate income tax expense was -¥67.1B (tax reversal), yielding a negative effective tax rate. Consequently, Net Income ¥129.4B narrowed its gap with Operating Income. Non-operating income comprised financial income ¥20.8B (including dividend income ¥18.2B) and foreign exchange gains, while non-operating expense was limited to financial expense ¥7.9B (including interest expense ¥7.5B). Comprehensive income was ¥349.9B (Net Income ¥129.4B + Other Comprehensive Income ¥220.4B), with OCI driven by fair value gains on other financial assets ¥125.9B, remeasurement of defined benefit plans ¥24.5B, and translation differences of foreign operations ¥61.3B. OCF being well below Net Income (0.65x) and a positive accrual ratio indicate earnings are stable but weak cash generation is a concern. Recurring earning power should be assessed excluding one-off other income; excluding Other Income, operating activities would show roughly a ¥-42B operating loss, raising questions on sustainability of structural improvements.
Full year guidance projects Revenue ¥1876.0B, Operating Income ¥15.0B (YoY -92.5%), Net Income attributable to owners of the parent ¥18.0B (YoY -86.3%), EPS 36.41円, Dividend 50円. A significant profit decline is expected due to the reversal of this year’s one-off gains such as fixed asset sale proceeds. Operating margin is projected to fall to 0.8% and net margin to 1.0%. The large decline reflects an assumption that Other Income ¥240.8B this year will normalize (substantially decline) next year, and a conservative stance on inventory and cost environment. Progress rates versus guidance are Revenue 91.4%, Operating Income 1,325%, indicating this year’s results significantly exceeded guidance. Next year is expected to be impacted by the reversal of one-off items and cautious external conditions (demand slowdown, FX and cost pressures), and structural recovery in earning power may take time. Maintaining Dividend at 50円 is evaluated as continuation of a stable dividend policy supported by accumulated capital and conservative debt policy.
Annual dividend is ¥100 per share (interim ¥50, year-end ¥50), unchanged from prior year. Payout Ratio is 38.2% (dividend ¥100 against EPS 261.65円), at an appropriate level. Total dividend amount was ¥50.7B, equivalent to 60.7% of OCF and 38.6% of Net Income. Share buybacks of ¥124.7B were executed, making total shareholder return ¥175.4B (dividends ¥50.7B + repurchases ¥124.7B). Total Return Ratio was 133.7% (Total Return ¥175.4B ÷ Net Income attributable to owners of the parent ¥131.2B), exceeding Net Income. Treasury stock of ¥160.1B was retired during the period, leaving shares outstanding at year-end 52.50 million shares (after deducting treasury stock 3.063 million shares, 49.437 million shares), and average shares outstanding 50.159 million shares. Real FCF after core capital expenditures was about ¥42B, well below total shareholder return ¥175.4B, with asset sale proceeds and existing cash filling the gap. Planned dividend of ¥50 next year versus forecast Net Income ¥18.0B and EPS 36.41円 implies a payout ratio of 137.3%, high, and is supported by Equity Ratio 71.7% and a net cash position; this indicates a stable dividend orientation reliant on financial capacity. Sustainability depends on recovery in OCF and progress in cost control.
Dependence on one-off income: Of this year’s Operating Income ¥198.8B, Other Income ¥240.8B (centered on gains on disposal of fixed assets ¥193B) substantially boosted profits. Excluding this income, the operating business shows an approximate operating loss of ¥-42B, indicating structural fragility of earning power. The guidance for next year (Operating Income ¥15.0B, -92.5%) anticipates the reversal of one-off items. Sustainable growth requires gross margin improvement in core business and SG&A efficiency; reliance on asset disposals for profits has low reproducibility.
Weak cash generation: OCF ¥83.5B is 0.65x of Net Income ¥129.4B, and OCF/EBITDA 0.27x, both low, reflecting poor cash conversion of profits. Decrease in trade payables -¥29.3B, retirement benefit-related -¥42.3B, and tax/lease payments accelerated cash outflows. Investing CF benefited from asset sales +¥361.0B, but real FCF after core capex remained about ¥42B, well below total shareholder returns ¥175.4B. Continued dividends and buybacks require recovery in OCF and improved working capital management.
Equity-method investment & portfolio risk: An impairment loss on equity-method investments of ¥20.5B was recorded, compressing Ordinary Income to ¥32.6B. Impairment risk due to investee performance and market deterioration has emerged. Asia sales dropped -12.3% markedly, widening revenue disparities by region and business. Domestic Wacoal generates about 95% of profit, creating concentration risk; overseas and Peach John remain low-margin. Portfolio concentration and the need for enhanced monitoring of investees are key issues.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 6.5% | 5.9% (2.6%–12.0%) | +0.6pt |
| Operating Margin | 11.6% | 4.6% (1.7%–8.2%) | +7.0pt |
| Net Margin | 7.5% | 3.3% (0.9%–5.8%) | +4.2pt |
Profitability metrics exceed industry medians, with Operating and Net margins ranking high. However, note large contribution from one-off income and divergence from structural earning power.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -1.4% | 4.3% (2.2%–13.0%) | -5.7pt |
Revenue growth lags industry median by 5.7pt, indicating lower growth. Stagnation in domestic and Asian markets is a headwind.
※ Source: Company compilation
Improvement to Operating Margin 11.6% this year was primarily driven by one-off other income of ¥240.8B (gains on disposal of fixed assets, etc.), and excluding other income the company would be operating at a loss. Next year’s guidance (Operating Income ¥15.0B, -92.5%) incorporates the reversal of one-off items, reflecting structural vulnerability in profitability. Progress in core gross margin improvement and SG&A efficiency is critical for medium-term profit stabilization.
OCF ¥83.5B is 0.65x of Net Income ¥129.4B and OCF/EBITDA 0.27x, both low, indicating weak cash conversion. Investing CF appears plentiful due to asset sales +¥361.0B, but core FCF is ~¥42B and falls well short of total shareholder returns ¥175.4B. Continuation of dividends and buybacks depends on OCF recovery and working capital improvements. With Equity Ratio 71.7% and a net cash position, financial resilience is high and short-term capital allocation flexibility is preserved; however, strengthening cash generation from core operations is essential in the medium to long term.
Domestic Wacoal produces roughly 95% of Operating Income, while overseas and Peach John are low-margin. Asia sales -12.3% vs Europe & Americas +7.6% show widening regional disparities. The ¥20.5B impairment on equity-method investments signals risk from investee performance volatility. Given portfolio concentration and weak cash generation, mid-term sustainability of growth and returns requires structural reforms (SG&A cuts, monetization of overseas & e-commerce, improvement in asset efficiency).
This report is a financial analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm from public financial statements. Investment decisions are your own responsibility; please consult a professional advisor as needed.