| Metric | Current Period | Prior Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2840.1B | ¥2256.6B | +25.9% |
| Operating Income / Operating Profit | ¥160.3B | ¥167.3B | -4.2% |
| Profit Before Tax | ¥142.0B | ¥154.4B | -8.0% |
| Net Income / Net Profit | ¥119.3B | ¥121.8B | -2.1% |
| ROE | 12.4% | 14.1% | - |
The FY2026 (IFRS) results show Revenue ¥2,840.1B (YoY +¥583.4B +25.9%), Operating Income ¥160.3B (YoY -¥7.0B -4.2%), Profit Before Tax ¥142.0B (YoY -8.0%), and Net Income attributable to owners of the parent ¥120.1B (YoY +¥9.7B +8.8%), indicating a revenue-increasing but profit-decreasing structure. Revenue accelerated ~26% year-over-year, driven by the Platform Business which grew +282%. Operating margin declined to 5.6% from 7.4% a year ago (-1.8pt), pressured by higher SG&A ratio (43.4%, prior 51.5%) and deterioration in equity-method investment results. Net income increased due to reduced tax burden (effective tax rate 16.0%), while the profit-before-tax level shows a decline. Basic EPS ¥171.36 improved from ¥158.61 (+8.0%), approaching double-digit growth, and shareholder return capacity remains intact.
Revenue ¥2,840.1B (+25.9%) breakdown: Platform Business ¥77,991 million (¥77,991 million, from ¥20,422 million prior, +281.9%) expanded 3.8x, Brand Business ¥193,927 million (+1.7%) was roughly flat, and Digital Business ¥11,858 million (-18.0%) declined. Platform ratio rose to 27.5%, indicating a significant shift in business mix. Gross profit was ¥1,396.7B (¥+63.4B) with a gross margin of 49.2%, down 9.9pt from 59.1% prior, driven by a surge in cost of sales ¥1,443.4B (prior ¥923.7B). SG&A was ¥1,232.7B (+¥116.4B +10.4%) with an SG&A ratio of 43.4% (YoY -7.1pt), relatively contained versus revenue growth. Operating Income ¥160.3B (-4.2%) and operating margin 5.6% (prior 7.4%) show margin compression. Equity-method losses were ¥-27.9B, worsening by ¥24.9B from ¥-3.0B prior; the Digital-side equity-method investment accounted for ¥-27.2B (prior ¥-3.4B) and materially contributed to the deterioration. Financial costs were ¥19.1B (prior ¥13.9B), +37.4%, yielding Profit Before Tax ¥142.0B (-8.0%). Income taxes were ¥22.7B (effective tax rate 16.0%), reduced from ¥32.6B (21.1% prior), supporting Net Income ¥119.3B (-2.1%). Net Income attributable to owners of the parent was ¥120.1B (+8.8%), up from ¥110.4B, with changes in non-controlling interests (prior +¥11.4B → current -¥0.8B) contributing positively. In summary, explosive Platform growth drove revenue gains, but business-mix shift and equity-method losses reduced profitability at the operating level, while lower tax burden supported net profit.
Brand Business: Revenue ¥193,927 million (+1.7%), Operating Income ¥8,854 million (-19.9%), margin 4.6% (prior 5.7%, -1.1pt). Despite being the core business, profitability is under pressure from increased SG&A and depreciation (¥12.14B, prior ¥11.35B). Digital Business: Revenue ¥11,858 million (-18.0%), Operating Income ¥2,277 million (-13.1%), margin 19.2% (prior 20.3%). Although revenue and operating income declined, high margins are maintained, but equity-method loss ¥-27.2B substantially weighs on consolidated net income. Platform Business: Revenue ¥77,991 million (+281.9%), Operating Income ¥4,171 million (+128.0%), margin 5.3% (prior 9.0%, -3.7pt). Revenue expanded 3.8x and is the growth engine, but margin contraction suggests scale benefits are only partially realized. Corporate/Other: Revenue ¥238 million, Operating Income ¥1,119 million (-24.6%), centered on management functions. By segment, revenue contribution is Brand 68.3%, Platform 27.5%, Digital 4.2% — Brand remains the primary dependency, while Platform shows notable earnings contribution growth.
Profitability: ROE 13.7% (prior 13.5%) remains stable. Net profit margin 4.2% (prior ~4.9%, -0.7pt) × total asset turnover 1.01x (prior 0.82x) × financial leverage 2.91x (prior 3.17x) decomposition indicates turnover improvement offsets net margin decline to support ROE. Operating margin 5.6% declined from 7.4% (-1.8pt), pressured by SG&A ratio and equity-method losses. Cash quality: Operating Cash Flow (OCF) ¥31.0B (¥309.8? Note: Operating CF reported as 309.8億円 elsewhere) equals 2.60x net income; OCF/EBITDA 0.89x (EBITDA approx ¥34.9B, depreciation ¥18.9B) with working capital drag (inventory +¥15.9B, accounts payable -¥9.1B equivalent) restraining cash conversion. Investment efficiency: total asset turnover 1.01x (prior 0.82x) improved significantly, aided by Platform expansion and reduction in tangible fixed assets (¥33.4B, prior ¥35.4B). Capex/depreciation ratio 0.24x is very low, indicating minimal maintenance/growth investment and potential mid-term competitiveness constraints. Financial soundness: Equity Ratio 33.8% (prior 29.7%, +4.1pt) improved; D/E ratio 0.85x (book basis, interest-bearing debt ¥81.8B / net assets ¥96.3B) places leverage within a reasonable range. Current ratio 0.92x (current assets ¥86.77B / current liabilities ¥94.57B) below 1.0 signals short-term liquidity concern; cash ¥18.11B versus short-term borrowings ¥37.8B gives cash/short-term borrowings 0.48x, thin and prioritizing refinancing/liquidity management.
Operating CF was ¥30.98B (prior ¥32.00B, -3.2%), 2.60x net income ¥11.93B, maintaining high quality, arriving after deducting tax payments ¥2.49B from sub-total ¥33.48B. Working capital effects comprised inventory increase ¥15.9B (drag), accounts receivable decrease ¥57.76B (support), and accounts payable decrease ¥9.07B (drag), with inventory increase and payable decrease partially offsetting. Lease payments ¥14.58B materially pressured OCF, leading to OCF/EBITDA 0.89x below benchmark. Investing CF was ¥-4.13B (prior ¥-10.26B), consisting of capex ¥4.45B, intangible asset investment ¥2.46B, and proceeds from disposals ¥1.71B; absence of prior-year large M&A (¥-5.26B) reduced investment burden. Free Cash Flow was ¥26.85B (OCF + Investing CF), ample and well above dividend payments ¥3.14B and capex, indicating high capital allocation capacity. Financing CF was ¥-30.94B, driven by short-term debt repayments ¥10.29B, long-term debt repayments ¥8.68B, lease repayments ¥14.58B, with borrowings ¥9.23B netting to net repayments. Including dividends ¥3.14B, financing flows were directed toward cash return and debt reduction. Cash and equivalents at period-end ¥18.11B decreased ¥3.64B from prior ¥21.75B, with FX effects +¥0.45B, indicating net outflow.
Earnings quality is strong: Operating Income ¥16.03B vs. OCF ¥30.98B (1.93x), meaning accrual-based profits are backed by cash. Operating revenue is mainly driven by retail and platform activities; Other income ¥0.504B (~1.8% of sales) includes gains on disposal of fixed assets ¥1.996B and step-acquisition gains ¥1.842B, which are highly one-off. Equity-method loss ¥-2.79B is a persistent drag, with Digital-side ¥-2.72B compressing profitability. Financial income ¥0.09B vs. financial costs ¥1.91B yields net financial expense ¥-1.82B as a structural cost. Excluding non-operating items, core operating profit is healthier, but the worsening trend in equity-method results raises concerns over earnings quality. Income taxes ¥2.27B (effective tax rate 16.0%) are low, down 5.1pt from 21.1% prior, supporting net income, though sustainability of the lower rate is uncertain. OCF/Net Income 2.60x is in a healthy range, indicating stable cash generation.
Company guidance for the full year: Revenue ¥3000B (vs. current period +5.6%), Operating Income ¥175B (+9.1%), Net Income attributable to owners of the parent ¥126B (+4.9%), EPS ¥173.10, projecting revenue and profit growth. Operating margin is assumed to improve slightly to 5.8% (current 5.6%, +0.2pt) on the premise of SG&A efficiency gains and Platform scale benefits. Progress rates stand at Revenue 94.7% (current ¥2,840B / plan ¥3,000B), Operating Income 91.6% (¥160B/¥175B), Net Income 94.8% (¥120B/¥126B), indicating achievements generally above 90% and plan attainment within reach. Dividend forecast is ¥31 per share (post-split basis); with year-end ¥60 × split ratio 2 the effective amount is ¥30, implying a slight reduction from current-year actual ¥109 (post-split equivalent ¥54.5) but a conservative payout. Payout Ratio 17.9% (plan basis) is restrained and sustainable.
Annual dividend was ¥109 (interim ¥49, year-end ¥60). Against Net Income attributable to owners of the parent ¥120.1B, total dividends amounted to ¥3.14B, for a Payout Ratio of 26.1%, stable over the past three years. Free Cash Flow ¥26.85B vs. dividends ¥3.14B gives FCF coverage ~8.5x, indicating high sustainability. Share buybacks were minimal at ¥0.04B, so total return is dividend-focused. A stock split (1→2 shares, effective 1 Mar 2026) was implemented; the planned dividend ¥31 post-split maintains an apparent dividend-increasing posture. Cash ¥18.11B and current ratio 0.92x mean liquidity buffers are tight, but strong FCF generation ensures dividend capacity. Payout Ratio 26.1% is close to sector median 27%, reflecting a standard return policy.
Industry positioning (reference — company analysis): comparison with domestic retail 2025 median. Revenue growth +25.9% far exceeds industry median +4.3%, ranking in the upper tier, driven by Platform expansion. Operating margin 5.6% slightly exceeds median 4.6% but has declined from 7.4%, potentially lowering sector ranking to mid-tier. Net margin 4.2% outperforms median 3.3%. ROE 13.7% far exceeds median 5.9%, ranking in the top 20 percentile, supported by high turnover and appropriate leverage. Equity Ratio 33.8% is below median 50.2%, and financial leverage 2.91x exceeds median 1.88x, indicating an aggressive capital structure. Current ratio 0.92x is well below median 1.84x, placing the company among the weakest on short-term liquidity. Inventory days 80 exceed median 66, underperforming on inventory efficiency. Capex/depreciation 0.24x is far below median 1.16x, highlighting constrained investment and potential medium-term impacts on store/digital competitiveness. Payout Ratio 26.1% aligns with median 27%. Overall, growth and ROE are industry-leading, margins are mid-tier, and liquidity and inventory efficiency lag.
Three key highlights from the results: First, clarify causes of the revenue-up, profit-down structure. Platform grew +282% and drove revenue, but business-mix shift and equity-method loss ¥-27.9B reduced operating margin to 5.6% (-1.8pt). Realizing Platform scale benefits and SG&A efficiency are critical to margin recovery; cost control is essential to achieve the company target (operating margin 5.8%). Second, balance between cash generation and liquidity. Despite healthy OCF ¥31.0B and FCF ¥26.9B, short-term liquidity is tight (current ratio 0.92x, cash/short-term borrowings 0.48x), making refinancing/liquidity management a top priority. Prolonged inventory days (80) press on working capital and can increase cash flow volatility depending on sales. Third, capital allocation and constrained investment. Capex/depreciation 0.24x is minimal, indicating underinvestment in maintenance and growth, risking medium-term store and digital competitiveness. While dividends are sustainable, trade-offs between shareholder returns and growth investment will directly affect future enterprise value; Platform and Digital monetization and timing of investment resumption will be pivotal for shareholder value.
This report was automatically generated by AI analyzing XBRL financial statement data and is intended as an earnings analysis document. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the firm based on public financial statements. Investment decisions are your responsibility; consult advisors as necessary before acting.