Japan Eyewear Holdings Co.,Ltd. FY2026 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥13.42B
• Operating Income: ¥4.32B
• Net Income: ¥2.65B
• EPS: ¥109.94

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Japan Eyewear Holdings (IFRS, consolidated) delivered solid Q3 FY2026 results with revenue of 134.22 and operating income of 43.19, rising 11.0% and 10.1% YoY, respectively. The topline expansion reflects resilient demand and/or successful mix/price execution, while profitability remained robust despite slightly lower operating leverage than revenue growth. Gross profit of 95.45 implies a very high gross margin of 71.1%, supporting a strong EBITDA margin of 41.3% and an estimated operating margin of roughly 32.2%. SG&A was 56.30 (41.9% of sales), and the gap between gross profit minus SG&A and reported operating income suggests positive net other operating items under IFRS. Net income reached 26.51 (+9.4% YoY), with an effective tax rate of 28.4%, broadly in line with a normalized range. DuPont analysis indicates ROE of 15.6% (net margin 19.8%, asset turnover 0.344x, financial leverage 2.29x), an attractive return profile driven primarily by strong margins rather than asset intensity. Cash generation was solid: operating cash flow (OCF) of 36.05 covered investment needs and supported free cash flow (FCF) of 21.63, while financing cash flow was an outflow of -25.64 reflecting debt service and shareholder returns. The balance sheet shows total assets of 390.12 with a high share of noncurrent assets (80%+), equity of 170.10 (equity ratio 43.6%), and liabilities of 224.11; interest-bearing debt disclosed totals at least 123.75 (short + long). Liquidity ratios are not fully calculable due to missing current liability details, but current assets stand at 74.36 with modest trade payables and receivables. Dividend sustainability appears acceptable: the calculated payout ratio is 60.1% and FCF coverage is reported at 1.36x; cash dividends paid of 9.81 are 2.2x covered by FCF, though timing differences between accrual-based payout and cash outflows likely exist. Operating leverage appears modest this quarter as operating income growth (10.1%) trailed revenue growth (11.0%), indicating cost growth broadly in line with sales or deliberate reinvestment in SG&A. The strong EBITDA and cash conversion (OCF/NI 1.36x) suggest high earnings quality. Capital structure is moderate with debt-to-equity of 1.32x and an equity ratio near mid-40s, but interest coverage cannot be assessed due to unreported interest expense. Inventory (18.71) and receivables (13.79) appear manageable relative to sales, and net working capital intensity is moderate. Overall, profitability, cash flow, and balance sheet quality support continued reinvestment and shareholder returns, with key watchpoints including cost discipline, inventory turns, and leverage. Data limitations (numerous N/As) constrain precision on liquidity and coverage metrics, but the available figures depict a healthy fundamental profile.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 19.8% (26.51 / 134.22)
• asset_turnover: 0.344x
• financial_leverage: 2.29x
• calculated_ROE: 15.6% (matches reported) margin_quality:
• gross_margin: 71.1% (95.45 / 134.22) — very high; likely supported by brand strength/mix and/or direct retail model
• sg&a_ratio: 41.9% (56.30 / 134.22)
• operating_margin_est: 32.2% (43.19 / 134.22)
• ebitda_margin: 41.3% (55.49 / 134.22)
• notes: Gross profit minus SG&A equals 39.15, below operating income of 43.19; IFRS presentation likely includes net positive other operating income/expense. operating_leverage:
• revenue_growth_yoy: 11.0%
• operating_income_growth_yoy: 10.1%
• leverage_comment: Slightly sub-1x operating leverage (~0.92x), implying cost growth broadly matched sales; fixed-cost absorption benefits were modest this quarter.

Growth Assessment

revenue_sustainability: Double-digit revenue growth (+11.0% YoY) suggests healthy demand and/or pricing. With high gross margins, mix and DTC exposure likely support sustainability, though broader consumer trends and competitive pricing remain variables. profit_quality: Net income growth (+9.4% YoY) tracks operating performance; effective tax rate is normalized at 28.4%. EBITDA growth is implied by operating growth and steady D&A (12.30). Margin resilience indicates quality earnings rather than one-offs. outlook: Assuming stable consumer demand, continued cost control, and disciplined inventory management, mid-to-high single digit earnings growth appears attainable. Watch potential wage/retail rent pressures and FX on sourcing, which could affect gross margin.

Financial Health

liquidity:

• current_assets: 74.36
• current_liabilities: N/A (not disclosed)
• current_ratio: N/A (not calculable)
• quick_ratio: N/A (not calculable)
• comment: Liquidity assessment is constrained by missing current liabilities and cash detail. Trade receivables (13.79) and inventories (18.71) appear proportionate to sales; cash & equivalents at period end were 39.31. solvency:
• total_assets: 390.12
• total_liabilities: 224.11
• equity: 170.1
• equity_ratio: 43.6%
• debt_to_equity: 1.32x (224.11 / 170.10)
• interest_bearing_debt_disclosed: 123.75 (short-term 5.00 + long-term 118.75)
• interest_coverage: N/A (interest expense unreported)
• comment: Moderate leverage with a solid equity base; without interest expense disclosure, serviceability cannot be quantified but EBITDA margin provides cushion. capital_structure: Noncurrent assets comprise ~80.5% of total assets (313.96 / 390.12), indicating a capital-intensive base (stores/production). Equity of 170.10 supports growth and shareholder returns.

Cash Flow Quality

earnings_quality: OCF of 36.05 vs net income of 26.51 yields OCF/NI of 1.36x, indicating healthy conversion and limited reliance on working-capital release or non-cash gains. fcf_analysis:

• operating_cf: 36.05
• capex: -12.4
• reported_fcf: 21.63
• comment: FCF is strong. Reported FCF (21.63) is slightly below a simple OCF–Capex calculation, implying additional investing outflows beyond capex. working_capital:
• receivables: 13.79
• inventories: 18.71
• payables: 6.18
• net_working_capital_operating_items: 26.32
• intensity_comment: Operating NWC equals ~19.6% of sales (26.32 / 134.22), reasonable for the business; inventory and receivables levels look manageable. Period movement details are not disclosed.

Dividend Sustainability

payout_ratio_assessment: Calculated payout ratio is 60.1%, consistent with a balanced distribution policy while retaining funds for reinvestment. fcf_coverage: Reported FCF coverage is 1.36x. Based on cash dividends paid of 9.81 and FCF of 21.63, cash coverage is ~2.2x, noting timing differences between accrual-based payouts and cash payments. policy_outlook: With ROE at 15.6% and solid FCF, maintaining a steady dividend appears feasible. Scope for increments depends on capex needs, leverage tolerance, and growth investments. DPS and explicit policy are unreported; clarity on mid-term shareholder return policy would aid assessment.

Risk Assessment

Business Risks:

• Consumer demand volatility in discretionary eyewear impacting same-store sales and pricing.
• Competitive pricing pressure from mass retailers and e-commerce affecting gross margins.
• Sourcing and input cost inflation (frames, lenses, logistics) possibly compressing margins.
• Store expansion execution risk and fixed-cost absorption in a high SG&A model.
• Brand/reputation risks and product quality/recall issues.
• Regulatory changes in medical/optical standards or prescriptions affecting product mix.

Financial Risks:

• Interest rate risk and refinancing risk given disclosed loans of 123.75; interest coverage not measurable due to missing data.
• Liquidity visibility limited by unreported current liabilities; short-term funding needs uncertain.
• FX exposure on imported materials and overseas operations (if any) influencing margins and equity via OCI.
• Working capital swings (inventory build or slower collections) could pressure OCF.

Key Concerns:

• Operating leverage softened (OI growth +10.1% vs sales +11.0%); need to monitor cost discipline.
• High dependence on sustained premium gross margins (71.1%); vulnerability to mix/price shocks.
• Data gaps (interest expense, current liabilities, DPS) constrain precise coverage and liquidity analysis.

Investment Implications

Key Takeaways:

• Strong profitability profile with 32% operating margin and 41% EBITDA margin supports a 15.6% ROE.
• Cash conversion is healthy (OCF/NI 1.36x) with positive FCF after capex.
• Moderate leverage (D/E ~1.32x) and equity ratio of 43.6% indicate balanced solvency.
• Operating leverage modest this quarter; watch SG&A trajectory versus sales.
• Dividend appears serviceable with ~60% payout and FCF coverage; timing differences evident between accrual and cash.

Metrics to Watch:

• Same-store sales growth and ticket/mix to validate topline sustainability.
• Gross margin trajectory versus input costs and FX.
• SG&A ratio and operating margin to assess operating leverage.
• Inventory turns and receivables days to protect OCF.
• Net debt and interest expense to gauge coverage and refinancing risk.
• Capex pipeline versus FCF to ensure dividend headroom.

Relative Positioning: Within Japan consumer discretionary/retail peers, the company exhibits above-average margins and ROE, underpinned by strong gross profitability and solid cash generation; leverage is moderate, leaving room for disciplined growth and shareholder returns relative to peers with lower margin structures.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis