| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥205.2B | ¥202.8B | +1.2% |
| Operating Income / Operating Profit | ¥23.1B | ¥25.3B | -8.8% |
| Ordinary Income | ¥23.5B | ¥25.3B | -7.2% |
| Net Income / Net Profit | ¥16.2B | ¥9.3B | +73.2% |
| ROE | 7.0% | 4.1% | - |
For FY2026 Q2 results: Revenue ¥205.2B (YoY +¥2.3B +1.2%), Operating Income ¥23.1B (YoY -¥2.2B -8.8%), Ordinary Income ¥23.5B (YoY -¥1.8B -7.2%), Net Income ¥16.2B (YoY +¥6.8B +73.2%). While the company shows a revenue increase with operating-stage profit decline, Net Income rose substantially despite recording a special loss (impairment ¥7.6B). Revenue growth was modest, while SG&A ratio rose about 80bp YoY, compressing operating profitability. Operating margin declined to 11.3% (prior year 12.5%), but stable tax burden and effects of special items improved net margin to 7.9% (prior year 4.6%). Progress against full-year guidance stands at Revenue 45.6%, Operating 46.2%, Ordinary 46.9%, Net 47.6% — slightly below standard mid-year progress (50%) but within an acceptable range. Gross margin remains high at 79.9%. Cash ¥177.3B and Equity Ratio 82.5% indicate a solid balance sheet. Inventory days are long at 214 days, making working capital efficiency a key second-half issue.
【Revenue】 Revenue was ¥205.2B (YoY +1.2%), a slight increase. Segment-level disclosure is omitted, but the business mix centered on cosmetics and healthcare mail-order remains unchanged. Cost of goods sold was ¥41.2B (YoY +¥1.5B +3.7%), growing faster than sales, leaving gross profit at ¥164.0B (YoY +¥0.9B +0.5%). Gross margin was 79.9% (prior year 80.4%), down about 50bp, but the high-margin structure persists.
【Profit & Loss】 SG&A was ¥140.9B (YoY +¥3.1B +2.2%), outpacing sales growth (+1.2%), pushing SG&A ratio to 68.7% (prior year 67.9%), up about 80bp. Operating Income was ¥23.1B (YoY -¥2.2B -8.8%), with an operating margin of 11.3% (prior year 12.5%), worsening about 120bp, suggesting lower efficiency in promotion and advertising spend. Non-operating income/expense netted +¥0.4B (interest income and FX gains etc. ¥0.9B, expenses ¥0.5B), minor. Ordinary Income was ¥23.5B (YoY -¥1.8B -7.2%), reflecting the operating-stage decline. A special loss for impairment of ¥7.6B was recorded, leaving profit before tax ¥23.5B (YoY +¥5.8B +32.5%). After corporate taxes ¥7.3B (effective tax rate 31.2%), Net Income was ¥16.2B (YoY +¥6.8B +73.2%). Although operating-stage results declined, the same impairment of ¥7.6B was recorded in the prior-year period, resulting in a large YoY increase in Net Income. Comprehensive income was ¥14.4B, with other comprehensive losses of ¥1.7B (securities valuation difference -¥1.9B, foreign currency translation +¥0.1B, retirement benefit adjustment -¥0.0B) compressing Net Income. Conclusion: revenue up but operating/ordinary down; Net Income up due to one-off items.
【Profitability】Operating margin 11.3% (prior year 12.5%) fell about 120bp, but a high gross margin of 79.9% indicates core business strength remains. Net margin 7.9% (prior year 4.6%) improved about 330bp, though this includes special items; evaluating recurring profitability should focus on operating/ordinary stages. ROE 7.0% improved YoY but remains at a mid-level. 【Cash Quality】CCC 216 days, with inventory days 214 days indicating a long cash conversion cycle and slow conversion of profits to cash. Inventories ¥24.1B (YoY +¥2.8B +13.1%) have accumulated; aligning sales plans and improving turnover are challenges. 【Investment Efficiency】Increase in SG&A ratio to 68.7% (prior year 67.9%) suggests deteriorating advertising/promotion efficiency and a reversal of operating leverage. Total asset turnover is 0.73x (annualized), low, indicating room to improve asset efficiency. 【Financial Soundness】Equity Ratio 82.5%, Current Ratio 540%, Quick Ratio 485% indicate extremely healthy liquidity. Cash ¥177.3B sufficiently covers short-term liabilities ¥44.1B, and interest-bearing debt is effectively zero.
Cash flow statement disclosure is not provided, but balance sheet movements were used to analyze funding. Cash and deposits were ¥177.3B (prior year ¥181.2B, -¥3.9B), a slight decrease. Inventories were ¥24.1B (prior year ¥21.3B, +¥2.8B) up 13.1%, tying up working capital. Accounts receivable ¥32.2B (prior year ¥33.4B, -¥1.2B) slightly decreased; accounts payable ¥6.2B (prior year ¥6.5B, -¥0.3B) also slightly decreased, leading to net working capital expansion. Bonus reserves ¥1.6B (prior year ¥2.1B, -¥0.5B) and unpaid income taxes ¥7.7B (prior year ¥9.5B, -¥1.8B) declined, indicating cash outflows for payments and tax remittances. Net assets increased to ¥232.3B (prior year ¥228.1B, +¥4.2B), supported by accumulated profits. Tangible fixed assets ¥18.4B (prior year ¥18.9B) slightly decreased, indicating limited capital expenditure. Overall, inventory buildup and payment of short-term liabilities have pressured cash, suggesting a modest slowdown in cash generation from operations.
Ordinary Income ¥23.5B is based on high gross-profit core operations, while non-operating income/expense netted a minor +¥0.4B (0.2% of sales). A special loss for impairment ¥7.6B was recorded, so one-off items have material impact. Because the same impairment amount was recorded in the prior-year period, YoY interpretation of Net Income should be cautious. Comprehensive income ¥14.4B is ¥1.7B below Net Income, mainly due to securities valuation difference -¥1.9B. With operating-stage decline but large Net Income increase, assessing sustainable earnings is best done on an ordinary-income basis. Inventory days of 214 indicate delayed accrual-to-cash conversion, warranting attention to future cash generation and potential valuation loss risk.
Full-year guidance: Revenue ¥450.0B (YoY +9.4%), Operating Income ¥50.0B (YoY +4.6%), Ordinary Income ¥50.2B (YoY +2.9%), Net Income ¥34.0B, EPS ¥160.37, Annual Dividend ¥57. Progress through Q2: Revenue 45.6%, Operating 46.2%, Ordinary 46.9%, Net 47.6% — 2–4pt below standard mid-year progress (Q2 = 50%) but within an acceptable range. First-half margin pressure from higher SG&A ratio and inventory buildup weighed on operating income, but if cost efficiency improves and inventory turnover normalizes in H2, full-year targets appear achievable. No forecast revisions were announced in this quarter.
Interim dividend: none; full-year dividend forecast ¥57. Dividend payout ratio on FY forecast EPS ¥160.37 is about 35.5%, a sustainable level. Based on 21,855 thousand shares outstanding (after deducting 670 thousand treasury shares: 21,185 thousand shares), the annual dividend total is approximately ¥1.21B, and cash ¥177.3B and forecast Net Income ¥34.0B provide ample capacity. The unchanged interim no-dividend policy from the prior year suggests continuity in a stable dividend approach.
Promotional efficiency deterioration risk: Rise in SG&A ratio to 68.7% (prior year 67.9%) suggests worsening advertising/acquisition cost efficiency. Operating margin worsened about 120bp; without H2 expense optimization, operating profitability could remain under pressure. SG&A growth +2.2% outpaced sales growth +1.2%, indicating negative operating leverage.
Inventory stagnation & valuation-loss risk: Inventories ¥24.1B (YoY +13.1%) and inventory days 214 indicate prolonged stocking. If sales plans do not align, obsolescence and valuation-loss risk increase. Working capital expansion ties up funds and may delay future cash generation.
Volatility from one-off items: Recording impairment loss ¥7.6B increases Net Income volatility. The same impairment was recorded in the prior-year period, indicating recurring questions on asset profitability. Frequent special items reduce predictability of final profits and could affect stability of shareholder returns.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 11.3% | 8.8% (3.0%–11.0%) | +2.5pt |
| Net Margin | 7.9% | 5.4% (1.1%–8.2%) | +2.5pt |
Profitability metrics exceed industry medians, confirming competitive advantage from a high-gross-margin mail-order model.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 1.2% | 11.7% (-5.4%–28.3%) | -10.5pt |
Revenue growth trails the industry median by 10.5pt, highlighting relative weakness in growth pace.
※Source: Company aggregation
Decline in operating margin & SG&A efficiency: Operating margin fell from 12.5% to 11.3% (~120bp), while SG&A ratio rose about 80bp. Deterioration in advertising/promotion efficiency is pressuring operating profitability; H2 cost optimization and improved acquisition efficiency are key to achieving full-year targets. Gross margin remains high at 79.9%, indicating limited cost pressure on COGS.
Inventory stagnation and delayed cash conversion: Inventory days 214 and inventories +13.1% indicate notable buildup and lengthening. Expansion of working capital delays conversion of profits to cash; unless turnover improves, potential valuation losses and reduced cash generation could ensue.
Impact of one-off items and interpretation of Net Income: An impairment loss ¥7.6B was recorded; Net Income rose YoY +73.2% but operating-stage results declined. Recurring profitability is better assessed on ordinary-income (−7.2%) basis, and frequency of special items will affect the stability of final profits.
This report is an earnings analysis document automatically generated by AI analyzing XBRL earnings release data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility; consult a professional as necessary before making investment decisions.