| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥245.8B | ¥219.0B | +12.2% |
| Operating Income | ¥13.4B | ¥12.2B | +9.3% |
| Ordinary Income | ¥16.1B | ¥5.9B | +173.2% |
| Net Income | ¥9.8B | ¥1.3B | +629.6% |
| ROE | 12.2% | 1.7% | - |
FY2027 Q1 results: Revenue ¥245.8B (YoY +¥26.8B +12.2%), Operating Income ¥13.4B (YoY +¥1.1B +9.3%), Ordinary Income ¥16.1B (YoY +¥10.2B +173.2%), Net Income ¥9.8B (YoY +¥8.5B +629.6%). Revenue was driven by Domestic +11.3% and Asean +27.8%, maintaining the third consecutive quarter of double-digit growth. At the operating level, a decline in gross margin to 12.9% (prior year 13.6%, -0.7pt) partially offset the revenue benefit, but SG&A ratio was controlled at 7.5%, securing an operating margin of 5.4%. Ordinary and net income expanded more than sixfold YoY primarily due to a large improvement in non-operating income/expense, driven by ¥5.5B of foreign exchange gains (prior year recorded ¥5.4B of FX losses). ROE improved to 12.2% (prior year 7.3%), mainly due to the rise in net income margin to 4.0% (prior year 0.6%). By segment, Asean continued high-growth, high-margin performance with Revenue +27.8% and margin 6.8%; China remains a challenge with Revenue -36.9% and operating loss -¥2.2B. On the balance sheet, short-term borrowings increased by ¥50.5B to ¥225.5B, D/E ratio 7.4x, and current ratio 0.45, indicating continued short-term liability concentration and high leverage. Progress against full-year plan: Revenue 25.1%, Operating Income 16.7%, Net Income 32.9%.
[Revenue] Revenue ¥245.8B (YoY +12.2%) was led by Domestic ¥197.3B (+11.3%), accounting for 80.3% of the total and showing stable growth, while overseas Asean ¥44.4B (+27.8%) was the expansion driver. Segment revenue composition: Domestic 80.3%, Asean 18.1%, China 2.0%, Overseas (aggregate) 20.1%. Asean was the largest contributor to incremental revenue with an increase of ¥9.7B YoY, likely driven by same-store growth and area expansion from new openings. Conversely, China shrank by ¥2.8B (-36.9%), suggesting business restructuring or withdrawal. Domestic increased ¥19.9B (+11.3%), likely from higher visitor numbers, higher spend per visit, and existing-store renovations. Regional share changes: Asean share expanded +2.2pt from 15.9% to 18.1%; China contracted from 3.5% to 2.0%.
[Profitability] Gross profit ¥31.7B (gross margin 12.9%) increased ¥2.2B YoY (+7.4%). Gross margin declined -0.7pt YoY, suggesting cost pressures from higher procurement costs, increased promotion expenses, and product mix changes. SG&A ¥18.4B (SG&A ratio 7.5%) rose ¥0.7B YoY (+4.1%) but was kept below revenue growth, indicating improved fixed-cost efficiency in personnel and rent. Operating Income ¥13.4B (operating margin 5.4%) rose ¥1.1B (+9.3%), as revenue growth offset gross margin decline. At the ordinary level, non-operating income expanded to ¥6.4B (prior year ¥1.5B), mainly due to ¥5.5B FX gains (prior year FX losses of ¥5.4B recorded as non-operating expense), likely valuation gains on foreign-currency assets/liabilities from yen depreciation. Non-operating expenses ¥3.7B (prior year ¥7.9B) included interest expense ¥2.9B (prior year ¥2.4B) and FX losses of ¥5.4B, but improved YoY due to FX factors. Ordinary Income ¥16.1B (+173.2%) was driven by a ¥9.1B net improvement in non-operating items. Extraordinary items: gains ¥0.3B (e.g., fixed asset disposal), losses ¥0.5B (impairment losses ¥0.4B, store closure losses ¥0.1B), net -¥0.2B small. Pre-tax income ¥15.8B less income taxes ¥6.0B (effective tax rate 38.0%) yields Net Income ¥9.8B (+629.6%). Non-controlling interest loss -¥0.1B adjusted to parent attributable profit ¥9.9B. In conclusion, revenue and profit increased, but gross margin decline and continued China losses constrain profitability; FX improvement substantially lifted ordinary and net income.
Domestic segment: Revenue ¥197.3B (+11.3%), Operating Income ¥12.6B (-6.5%), Margin 6.4% (prior year 7.6%, -1.2pt). The decline in operating income despite revenue growth likely due to lower gross margin and higher SG&A, possibly one-off costs for existing-store renovation investments and rising personnel costs. Asean segment: Revenue ¥44.4B (+27.8%), Operating Income ¥3.0B (+24.0%), Margin 6.8% (prior year 7.0%, -0.2pt). High growth maintained with nearly flat margin, suggesting a balance between new store investments and monetization of existing stores. China segment: Revenue ¥4.8B (-36.9%), Operating Loss -¥2.2B (improved ¥1.5B from prior year -¥3.7B), Margin -46.4% (prior year -48.2%, +1.8pt). Losses narrowed but remain substantial; withdrawal/restructuring is ongoing. Overseas segment (aggregate): Revenue ¥49.3B (+16.1%), Operating Income ¥0.8B (+163.0%), Margin 1.6% (prior year 0.7%, +0.9pt). Margin remains low but improved significantly, reflecting Asean strength and China loss reduction. Contribution to consolidated Operating Income ¥13.4B: Domestic 94.0%, Asean 22.4%, China -16.4%, Corporate adjustments -0.5%. Monetization or completion of restructuring in China is key to improving consolidated margins.
[Profitability] Operating margin 5.4% (prior year 5.6%, -0.2pt) slightly deteriorated due to gross margin decline; Net margin 4.0% (prior year 0.6%, +3.4pt) improved significantly from non-operating items improvement. ROE 12.2% (prior year estimate ~1.6% based on prior net income ¥1.3B) improved, aided by sharp net margin increase and higher financial leverage at 8.4x (prior ~8.0x). ROA improved to 1.5% (prior 0.2%). [Cash Quality] Interest coverage = Operating Income ¥13.4B ÷ Interest expense ¥2.9B = 4.6x (prior year 12.2B ÷ 2.4B = 5.1x), a slight decline suggesting higher interest burden. Days sales outstanding = Accounts receivable ¥2.8B ÷ (Revenue ¥245.8B ÷ 90 days) = 1.0 day. Inventory days = Inventory ¥33.0B ÷ (Cost of sales ¥214.0B ÷ 90 days) = 13.9 days. Accounts payable days = Accounts payable ¥19.7B ÷ (Cost of sales ¥214.0B ÷ 90 days) = 8.3 days. Working capital cycle = 1.0 + 13.9 - 8.3 = 6.6 days, indicating efficiency. [Investment Efficiency] Total asset turnover annualized = ¥245.8B ×4 ÷ ¥674.7B = 1.46x. Fixed asset turnover annualized = ¥245.8B ×4 ÷ ¥481.1B = 2.04x. Asset efficiency is mid-range for a store/equipment-intensive business. [Financial Soundness] Equity Ratio 11.9% (prior 12.5%, -0.6pt) worsened slightly as total assets increased more than net assets. D/E ratio = (Short-term borrowings ¥225.5B + Long-term borrowings ¥113.1B + Current lease liabilities ¥25.0B + Non-current lease liabilities ¥27.4B - Cash ¥83.1B) ÷ Net assets ¥80.3B = 3.82x (Gross D/E = (225.5+113.1+25.0+27.4) ÷ 80.3 = 4.87x). Prior year was (175.0+121.6+26.1+31.2-78.2) ÷ 80.1 = 3.44x, indicating deterioration. Current ratio = Current assets ¥193.5B ÷ Current liabilities ¥433.7B = 0.45x; Quick ratio = (Current assets - Inventory) ¥160.5B ÷ Current liabilities ¥433.7B = 0.37x, liquidity is very low. Short-term liability ratio = Short-term borrowings ¥225.5B ÷ Total interest-bearing debt (225.5+113.1+52.4) = 57.7% (prior 175.0 ÷ (175.0+121.6+57.3) = 49.4%), showing rising maturity mismatch risk. Cash & deposits ¥83.1B (prior ¥78.2B) slightly increased but lags the pace of short-term borrowing increases; Cash ÷ Short-term borrowings = 0.37x, thin.
Cash flow statement data not disclosed; funding trends analyzed from balance sheet movements. Cash & deposits increased slightly to ¥83.1B (prior ¥78.2B, +¥4.9B). Main funding sources estimated: short-term borrowings +¥50.5B, retained earnings +¥6.9B (after deducting dividends from Net Income ¥9.8B), and depreciation-equivalent reduction in fixed assets. Uses: tangible fixed assets increased to ¥387.5B (prior ¥373.7B, +¥13.8B) indicating continued new openings and CAPEX; long-term borrowings decreased to ¥113.1B (prior ¥121.6B, -¥8.5B) due to scheduled repayments. Inventory ¥33.0B (prior ¥34.1B, -¥1.1B). Accounts receivable ¥2.8B (prior ¥2.5B, +¥0.3B). Accounts payable declined to ¥19.7B (prior ¥21.0B, -¥1.3B). The large increase in short-term borrowings likely funds new store investment and fills funding for long-term borrowings repayments; absent progress in extending maturities, liquidity pressure risk persists. As a proxy for Operating Cash Flow: Operating Income ¥13.4B + estimated depreciation (annual ~¥15-20B from fixed asset turnover, Q1 ~¥4-5B) = approx ¥17-18B. Against this, CAPEX (fixed asset increase) +¥13.8B suggests investment is proceeding at a pace that may exceed profit + depreciation.
Core recurring earnings are Operating Income ¥13.4B from store operations and merchandise sales, representing sustainable earnings. Of non-operating income ¥6.4B (2.6% of sales), ¥5.5B FX gains are market-dependent and largely temporary; interest income ¥0.2B and insurance income ¥0.1B are recurring but small. Non-operating expenses ¥3.7B (1.5% of sales) are largely recurring interest expense ¥2.9B; FX losses ¥5.4B were included in non-operating expense components but netted with FX gains to reflect the ordinary income figure. Extraordinary items net -¥0.2B (gains ¥0.3B, losses ¥0.5B) represent about 2% of net income, so one-off impacts are limited. Comprehensive income ¥3.2B is ¥6.6B lower than net income ¥9.8B, primarily due to FX translation adjustment -¥6.5B and retirement benefit adjustments -¥0.1B. FX translation adjustments are unrealized and do not involve cash outflows but highlight realized FX risk from overseas operations. EBITDA estimate = Operating Income ¥13.4B + estimated depreciation ¥4-5B = approx ¥17-19B. The gap between EBITDA and Net Income is largely explained by interest ¥2.9B, taxes ¥6.0B, and FX/special items. Earnings quality is rooted at the operating level, while ordinary and net income exhibit high volatility due to FX fluctuations.
Full-year guidance: Revenue ¥980.0B (YoY +5.0%), Operating Income ¥80.0B (+30.8%), Ordinary Income ¥63.0B (-14.4%), Net Income ¥30.0B (EPS forecast ¥151.67). Q1 progress: Revenue ¥245.8B ÷ ¥980.0B = 25.1% (in line with even quarterly pace of 25%), Operating Income ¥13.4B ÷ ¥80.0B = 16.7% (below benchmark 25%, slow progress), Net Income ¥9.8B ÷ ¥30.0B = 32.9% (ahead). Operating income lag is due to gross margin decline and ongoing China losses; full-year plan likely assumes back-end weighting or margin improvements in H2. Ordinary Income guidance ¥63.0B is -14.4% YoY, suggesting Q1 FX gains may not persist for the full year or could reverse. Net income progress exceeding operating income suggests Q1 non-operating improvements materialized earlier than full-year assumptions. Full-year operating margin target = ¥80.0B ÷ ¥980.0B = 8.2%, implying substantial improvement from Q1 5.4% and requiring Asean expansion plus domestic and China margin recoveries. Dividend forecast unchanged at annual ¥10 (prior ¥10), payout ratio on forecast EPS ¥151.67 is conservative at 6.6%. No revisions to quarterly forecasts or dividend forecasts during the quarter.
Full-year dividend forecast annual ¥10 (prior year not disclosed but presumed unchanged at ¥10), payout ratio on forecast EPS ¥151.67 is ~6.6%, low. Q1 EPS ¥49.87 annualized ≈ ¥200 basis implies payout ratio ~5%, indicating ample earnings capacity. Total dividend amount = (Issued shares 19,784k - Treasury shares 2k) 19,782k × ¥10 = approx ¥198M. Dividend total vs forecast Net Income ¥30.0B yields payout 6.6%; DOE (dividend on equity) vs Net assets ¥80.3B ≈ 2.5%. No share buyback announced; shareholder returns are dividend-only. Given short-term borrowings ¥225.5B and high gross D/E 4.87x, leverage and short-term liability concentration limit scope for dividend increases; priority is internal reserves-driven deleveraging and extending borrowings. If profit growth and financial health improve, room to raise payout later exists, but near-term dividend expansion is limited; current policy is stable low payout.
Liquidity risk: Current ratio 0.45x, Quick ratio 0.37x—very low liquidity, with short-term borrowings ¥225.5B (YoY +¥50.5B) and cash ¥83.1B indicating thin immediate liquidity. Short-term liability ratio 57.7% creates significant maturity mismatch and refinancing risk. Maintaining good lending relationships and progress in lengthening debt maturities are essential; in adverse credit conditions refinancing difficulties and higher interest rates may materialize.
Profitability deterioration risk: Gross margin at 12.9% (YoY -0.7pt) is trending downward, pressured by higher procurement costs, intensifying competition, and deteriorating product mix. China segment operating loss -¥2.2B pressures consolidated profit by ~16.4%. Domestic operating margin declined to 6.4% (prior 7.6%, -1.2pt). Asean’s strong growth and margin alone may not sustain consolidated margins; if price adjustments, cost reductions, or low-margin store rationalization fail, maintaining operating margin in the 5% range may be difficult and combined with rising interest costs could severely compress net income.
Financial leverage risk: Gross D/E 4.87x, net 3.82x—high leverage with interest-bearing debt ¥391.0B (short-term + long-term + lease liabilities) vs Net assets ¥80.3B. Interest expense ¥2.9B is 21.6% of Operating Income ¥13.4B, and interest coverage 4.6x is declining. In a rising-rate environment, interest burden could further reduce net income; equity ratio 11.9% is low, limiting capacity for additional capital raising. If operating gains slow and interest rates rise simultaneously, financial constraints could hinder growth investments and shareholder returns.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.4% | 8.0% (2.2%–15.8%) | -2.6pt |
| Net Margin | 4.0% | 5.8% (1.5%–10.7%) | -1.8pt |
Profitability is below industry median; gross margin decline and China losses are constraining factors.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 12.2% | 9.3% (0.2%–16.9%) | +2.9pt |
Revenue growth exceeds industry median, driven by Domestic +11.3% and Asean +27.8%.
※ Source: Company compilation
Continued high-growth, high-margin performance in Asean is key to consolidated growth. Asean Revenue +27.8% and margin 6.8% (exceeding Domestic 6.4%) generated Operating Income ¥3.0B in Q1 (≈22.4% of consolidated operating income). Achieving the full-year operating income target +30.8% depends on sustaining Asean store opening efficiency and continued existing-store monetization. Asean’s share of revenue rose from 15.9% to 18.1% YoY (+2.2pt), indicating a mix effect from higher-margin segment supporting consolidated margins.
Improvement in financial soundness is the watershed for medium- to long-term evaluation. Current ratio 0.45, Gross D/E 4.87x, short-term liability ratio 57.7%, interest coverage 4.6x indicate stress across liquidity, leverage, and interest burden. Short-term borrowings rose ¥50.5B YoY to ¥225.5B; lengthening maturities and building liquidity are urgent. If the full-year operating income plan ¥80B is achieved, operating cash flow plus depreciation could generate ¥80-100B annually, enabling reduction or lengthening of interest-bearing debt and improving financials. Improving equity ratio above 11.9% and current ratio above 0.6x are thresholds for investment-grade assessment.
Gross margin and China developments are the bridge points to full-year profit. If gross margin decline from 12.9% (YoY -0.7pt) continues, achieving full-year operating margin plan of 8.2% will be difficult. China’s operating loss -¥2.2B depresses consolidated profit by ~16.4%; progress in reducing this loss or completing withdrawal is prerequisite for margin recovery from Q2 onward. Continued yen depreciation would boost non-operating income but comprehensive income showed FX translation adjustment -¥6.5B, indicating FX volatility impacts both P&L and BS. Recovering gross margin into the 13% range through price revisions, product mix improvement, and cost measures, plus reducing China quarterly losses to under ¥1.0B, are necessary to achieve full-year Operating Income ¥80B and operating margin in the 8% range.
This report is an AI-generated earnings analysis document created by analyzing XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on public filing data. Investment decisions are your responsibility; consult professionals as needed before acting.