| Metric | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2840.1B | ¥2256.6B | +25.9% |
| Operating Income | ¥160.3B | ¥167.3B | -4.2% |
| Profit Before Tax | ¥142.0B | ¥154.4B | -8.0% |
| Net Income | ¥120.1B | ¥110.4B | +8.8% |
For FY2026, Revenue was ¥2840.1B (YoY +¥583.6B +25.9%), achieving significant top-line growth, while Operating Income decreased to ¥160.3B (YoY -¥7.0B -4.2%). Profit Before Tax was ¥142.0B (YoY -¥12.4B -8.0%), and Net Income attributable to owners of the parent was ¥120.1B (YoY +¥9.7B +8.8%), marking an increase in Net Income. Revenue growth was the third consecutive year of increases, while Operating Income entered a corrective phase from last year’s high level. Gross margin deteriorated, with Cost of Sales ratio worsening to 50.8% (prior year 40.9%) — a 9.9pt decline — and Operating Margin contracted to 5.6% (prior year 7.4%) — a 1.8pt decline — indicating margin compression despite top-line expansion. The gap between Operating Income and Profit Before Tax was driven by an increase in financial expenses to ¥19.2B (prior year ¥13.9B), with interest burden reducing profit levels by approximately 12%. Net Income was supported by a decrease in non-controlling interests (prior year ¥11.4B profit → this period ¥0.8B loss), which relatively increased the portion attributable to the parent and secured Net Income growth.
Revenue of ¥2840.1B (+25.9%) was primarily driven by the rapid expansion of the Platform Business. External revenue from the Platform Business surged to ¥779.9B (prior year ¥204.2B, +282.0%), a 3.8x increase, accounting for 27.5% of consolidated sales. The Brand Business was ¥1939.3B (+1.7%) with slight growth, while the Digital Business declined to ¥118.6B (-18.0%). The sharp shift in sales mix and contributions from newly consolidated subsidiaries were the main causes of revenue growth. However, Cost of Sales ratio deteriorated to 50.8% (prior year 40.9%), a 9.9pt deterioration, as the Platform Business’s low gross-margin structure pulled down the company average. SG&A expenses were controlled to ¥1232.7B (prior year ¥1162.8B, +6.0%), a slower increase than sales growth, but deterioration in gross margin led to an Operating Margin decline to 5.6%.
P&L: Operating Income of ¥160.3B (-4.2%) resulted as growth in Gross Profit to ¥1396.7B (+4.8%) could not fully absorb higher SG&A. Equity-method investment losses expanded to ¥27.9B (prior year ¥3.0B loss), and the Digital Business posted an operating loss of ¥5.7B (prior year ¥26.1B profit), both weighing on profit. Profit Before Tax of ¥142.0B (-8.0%) was mainly due to increased financial expenses of ¥19.2B, causing an ¥18.3B decline at non-operating income/expense. Meanwhile, corporate income tax decreased to ¥22.7B (prior year ¥32.6B) and the effective tax rate fell to 16.0% (prior year 21.1%), resulting in Net Income of ¥120.1B (+8.8%). The shift of non-controlling interests to a loss also contributed to boosting Net Income. In summary, this was a revenue-increase/earnings-decrease type result, where changes in business mix and insufficient cost absorption pressured margins.
The Brand Business recorded Revenue of ¥2000.9B (prior year ¥1988.9B, +0.6%) and Segment Profit of ¥88.5B (prior year ¥110.6B, -20.0%), a decline. Margin fell to 4.4% (prior year 5.6%) — down 1.2pt. Equity-method investment losses improved to ¥0.7B (prior year ¥3.4B loss), but other expense increases resulted in Operating Income of ¥89.2B (prior year ¥92.9B, -4.0%).
The Digital Business had Revenue of ¥313.4B (prior year ¥325.4B, -3.7%) and Segment Profit of ¥22.8B (prior year ¥26.2B, -13.0%), both down. Margin narrowed to 7.3% (prior year 8.0%). A sharp expansion of equity-method investment losses to ¥27.2B (prior year ¥0.4B profit) led to an operating loss of ¥5.7B (prior year ¥26.1B profit), a swing to red.
The Platform Business posted Revenue of ¥1304.2B (prior year ¥744.5B, +75.2%) and Segment Profit of ¥41.7B (prior year ¥18.3B, +128.0%), a substantial profit increase. Margin improved to 3.2% (prior year 2.5%) — up 0.7pt. Including other income of ¥4.5B (which included negative goodwill gain of ¥1.5B), Operating Income was ¥46.2B (prior year ¥66.8B, -30.8%).
The Common/Corporate segment had Revenue of ¥75.9B (prior year ¥100.5B, -24.5%) and Segment Profit of ¥11.2B (prior year ¥14.9B, -24.8%), contracting, but a large improvement in other income to ¥19.4B (prior year -¥18.7B) led to Operating Income of ¥30.6B (prior year ¥11.4B loss), turning to profit. Overall, Platform Business rapid growth and Common segment income improvements drove revenue increases, while the Digital Business struggles and Brand Business margin declines were primary causes of consolidated Operating Income decline.
Profitability: Operating Margin of 5.6% declined 1.8pt from 7.4% last year, mainly due to a 9.9pt deterioration in Cost of Sales ratio to 50.8% (prior year 40.9%). ROE was 13.7% (prior year 13.5%), up 0.2pt, decomposed as Net Income margin 4.2% × Total Asset Turnover 1.01x × Financial Leverage 2.91x. ROA was 5.1%, down 0.9pt from 6.0% last year.
Cash Quality: Operating Cash Flow (OCF) was ¥309.8B, 2.6x Net Income of ¥120.1B, significantly above the industry median cash conversion rate of 1.57. Accrual ratio was -6.8%, indicating strong cash backing for profits.
Investment Efficiency: Total Asset Turnover of 1.01x improved from 0.82x last year, approaching the industry median of 1.17x. Financial Leverage was 2.91x, down from 3.17x last year, slightly above the industry median of 1.88x.
Financial Soundness: Equity Ratio was 33.8%, up 4.1pt from 29.7% last year but well below the industry median of 50.2%. Interest-bearing debt was ¥817.9B (short-term ¥378.2B, long-term ¥439.6B) against cash of ¥181.1B, yielding Net Debt of ¥636.8B. Estimated EBITDA approximately ¥379B (Operating Income + Depreciation & Amortization ¥189.4B) gives Net Debt/EBITDA of 1.68x, indicating higher reliance on debt compared with the industry median net cash position of -0.59x.
Operating Cash Flow was ¥309.8B (prior year ¥320.0B, -3.2%), about 2.2x Profit Before Tax of ¥142.0B. In addition to non-cash expenses such as Depreciation & Amortization of ¥189.4B, adjustments included derivative valuation gains of ¥14.1B, step-acquisition gains of ¥18.4B, loss on disposal of fixed assets ¥20.0B, etc., and working capital improvements (Accounts receivable down ¥57.8B, Accounts payable down ¥90.7B, Inventory down ¥15.9B) generated cash. Investing Cash Flow was -¥41.3B (prior year -¥102.6B), with tangible fixed asset acquisitions of ¥44.6B and intangible asset acquisitions of ¥24.6B partly offset by proceeds from sales of ¥17.1B and proceeds from subsidiary acquisitions ¥8.7B. Free Cash Flow was ¥268.5B (prior year ¥217.4B, +23.5%), ample, and Financing Cash Flow was -¥309.4B (prior year -¥207.6B), absorbing net repayments of debt of ¥102.9B (short-term down ¥102.9B, long-term up ¥92.3B less repayments of ¥86.8B), dividends of ¥31.4B, lease liability repayments of ¥145.8B, and acquisition of non-controlling interests ¥14.8B. Cash and cash equivalents declined to ¥181.1B (prior year ¥217.5B, -¥36.4B), though foreign exchange gains of ¥4.5B provided support. OCF remaining at 2.6x Net Income and improvements in inventory/accounts receivable efficiency plus lower tax burden strengthened cash generation.
Operating Cash Flow of ¥309.8B is 2.6x Net Income of ¥120.1B, and the accrual ratio of -6.8% indicates extremely strong cash backing for earnings. Working capital reductions — Accounts receivable down ¥57.8B and Inventory down ¥15.9B — show working capital absorption, and cash conversion quality has not deteriorated despite rapid sales expansion. Operating Income of ¥160.3B vs. Profit Before Tax of ¥142.0B shows that financial expenses of ¥19.2B (prior year ¥13.9B, +38.1%) reduce profits by about 12%. Other income of ¥50.4B includes temporary items such as derivative valuation gains ¥14.1B, step-acquisition gains ¥18.4B, and negative goodwill gain ¥1.5B; coupled with a reduction in other expenses to ¥26.3B (prior year ¥58.9B), there was a net non-operating contribution of ¥24.1B. Expansion of equity-method investment losses to ¥27.9B (prior year ¥3.0B loss) reflects deterioration at associates in the Digital Business and is a recurring profit headwind. Corporate income tax of ¥22.7B implies an effective tax rate of 16.0% on Profit Before Tax ¥142.0B, down 5.1pt from 21.1% last year, which boosted Net Income. Non-controlling interests swung to a ¥0.8B loss (prior year ¥11.4B profit), a one-off effect that relatively increased profit attributable to owners of the parent. Overall, operating profit decline was offset by one-time non-operating gains and lower tax burden to realize higher Net Income, but underlying recurring profitability has deteriorated due to margin compression.
Full-year forecast: Revenue ¥3000.0B (vs. actual +5.6%), Operating Income ¥175.0B (vs. actual +9.2%), Net Income attributable to owners of the parent ¥126.0B (vs. actual +4.9%), EPS ¥173.10 (actual ¥171.36). Achievement rates against actuals are Revenue 94.7%, Operating Income 91.6%, Net Income 95.3%, indicating progress broadly in line with the plan though Operating Income achievement is slightly lower. The forecast assumes a recovery in Operating Margin to 5.8% (actual 5.6%), requiring improvements in gross margin and SG&A efficiency. Revenue growth forecast +5.6% assumes a marked slowdown from actual +25.9%, incorporating a plateau in Platform Business growth and stabilization of existing businesses. Forecast EPS ¥173.10 is 1.0% above actual ¥171.36, and forecast dividend ¥31.00 is reconciled with actual ¥109.00 (based on average shares during the period, pre-split 2-for-1 on 2026-03-01) after share split conversion. Forecast payout ratio based on post-split EPS is about 18%, a significant decline from actual 25.2%, but adjustments around pre-/post-split should be noted. Achieving the forecast Operating Income growth of +11.5% (actual was -4.2%) hinges on recovering 1.8pt of margin and absorbing fixed costs.
Annual dividend of ¥109 (interim ¥49, year-end ¥60) results in total dividends of ¥27.3B against Net Income attributable to owners of the parent of ¥120.1B, implying a payout ratio of 25.2%. This is an increase of ¥72 from the prior year dividend of ¥37 (same payout ratio 25.2%), but a 1-for-2 share split was implemented on 2026-03-01, so comparisons should be made on a pre-split basis. On a post-split basis, the prior year equates to ¥20 and this period to ¥54.5, representing an effective increase of ¥34.5. DOE of 3.3% is at the same level as the prior year. Dividends represent 8.8% of OCF (¥27.3B ÷ ¥309.8B) and 10.2% of FCF (¥27.3B ÷ ¥268.5B), indicating sufficient capacity to pay. Total shareholder returns including share buybacks of ¥4.7B (average treasury stock during the period ¥9.3B) amount to ¥32.0B, yielding a Total Return Ratio of 26.7%. BPS was ¥1,300.45 (prior year ¥1,191.48), up +9.1%, indicating steady capital accumulation. Forecast dividend ¥31.00 (post-split) is lower than the post-split actual of ¥54.5, but company notes state that “the annual dividend for FY2026 considering the share split is ¥54.50,” and the forecast ¥31.00 refers to FY2027 on a post-split basis. Therefore, dividend policy continuity is maintained year-over-year.
Industry Position (reference — Company analysis): Compared with the retail industry median for FY2025, the company’s Operating Margin of 5.6% is 1.0pt above the industry median of 4.6%, indicating relatively good profitability. ROE of 13.7% far exceeds the industry median of 5.9%, placing the company among the top in capital efficiency. However, Equity Ratio of 33.8% is 16.4pt below the industry median of 50.2%, highlighting high dependence on interest-bearing debt. Net Debt/EBITDA of 1.68x contrasts with the industry median net cash position of -0.59x, and Financial Leverage of 2.91x exceeds the industry median 1.88x by 1.03x. Total Asset Turnover of 1.01x is slightly below the industry median 1.17x, but Revenue growth of +25.9% far outpaces the industry median +4.3%, indicating strong growth. OCF/Net Income of 2.6x (cash conversion rate) substantially exceeds the industry median 1.57x, showing superior cash generation. Payout ratio of 25.2% aligns with the industry median of 27%. Inventory turnover days are estimated at approximately 80 days (Inventory ¥31.68B ÷ Cost of Sales ¥1443.4B × 365 days), slightly above the industry median 65.7 days, indicating average inventory efficiency. Accounts receivable turnover days are estimated at approximately 45 days (Accounts receivable ¥351.5B ÷ Revenue ¥2840.1B × 365 days), well above the industry median 21.1 days, indicating a long receivable collection structure. Overall, the company combines high growth, high ROE, and strong cash generation, while leverage and low Equity Ratio emerge as financial soundness challenges.
Key points include, first, the business-structure shift driven by the rapid expansion of the Platform Business. External revenue rose +282% YoY to account for 27.5% of consolidated revenue, but its low gross-margin structure reduced consolidated Operating Margin by 1.8pt. Future profit growth depends on improving Platform Business margins while recovering profitability in existing businesses. Second, the coexistence of strong cash generation — OCF/Net Income 2.6x — and a high-leverage structure with interest-bearing debt of ¥817.9B and Net Debt/EBITDA of 1.68x. Financial expenses of ¥19.2B (+38.1%) are pressuring profits, and the trend of financing costs in a rising-rate environment will determine profit levels. Third, rapid expansion of equity-method investment losses of ¥27.9B and the operating loss in the Digital Business suggest a need to reorganize the business portfolio including associates. The large reduction in investment carrying value already reflects losses, but note the potential for additional costs from withdrawal/restructuring. Dividend policy maintains practical continuity post-split, with a payout ratio in the 25% range and FCF coverage in the 10% range; scope for further increases depends on progress in recovering Operating Margin.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on publicly available financial statements. Investment decisions should be made at your own responsibility; consult a professional advisor as needed.