| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥74.2B | ¥48.1B | +54.1% |
| Operating Income / Operating Profit | ¥15.8B | ¥10.1B | +56.9% |
| Ordinary Income | ¥15.5B | ¥10.0B | +55.3% |
| Net Income / Net Profit | ¥11.6B | ¥6.5B | +78.1% |
| ROE | 9.2% | 5.5% | - |
2026 Q1 results delivered high growth: Revenue ¥74.2B (YoY +¥26.1B +54.1%), Operating Income ¥15.8B (YoY +¥5.7B +56.9%), Ordinary Income ¥15.5B (YoY +¥5.5B +55.3%), Net Income ¥11.6B (YoY +¥5.1B +78.1%). Revenue was primarily driven by the consolidation of Decorte Holdings Co., Ltd. as a consolidated subsidiary and the inclusion of the Wedding & Photo Business (Revenue ¥21.8B, +1,165%), while existing businesses also grew across all segments: Directly Operated Stores +8.4%, Affiliate +11.0%, KV +20.9%, Life Design +47.0%. Operating margin improved to 21.3% (prior 20.9%) up +0.4pt, reflecting scale expansion and operating leverage. Ordinary income margin was 20.9% (prior 20.7%) up +0.2pt, and net income margin improved to 15.7% (prior 13.5%) up +2.2pt, aided by a special gain on sale of investment securities of ¥2.2B. ROE was 9.2%, supported by improved asset efficiency and profitability. Dividend policy remains at zero, prioritizing internal reserves for growth investment.
[Revenue] Revenue ¥74.2B (+54.1%) reflects the combined effect of the M&A consolidation of the Wedding & Photo Business and double-digit growth in existing businesses. By segment: Affiliate ¥10.6B (+11.0%, composition 14.3%), Directly Operated Stores ¥25.2B (+8.4%, 33.9%), Party ¥4.3B (+7.4%, 5.8%), KV ¥9.6B (+20.9%, 12.9%), Life Design ¥3.8B (+47.0%, 5.1%), Wedding & Photo ¥21.8B (+1,165%, 29.4%). Wedding & Photo accounted for a large increase versus prior Q1 and was the main driver, representing 42% of the company-wide revenue increase. Among existing businesses, Life Design accelerated growth at +47.0%, and KV was solid at +20.9%. Party grew only +7.4%, limiting its contribution. Revenue recognition mix: point-in-time transferred services ¥43.2B, over-time transferred services (e.g., subscription) ¥29.9B, other revenue (financial/leasing) ¥1.2B — indicating diversification of revenue streams.
[Profitability] Gross profit was ¥61.1B (gross margin 82.3%), down -8.7pt from 91.0% a year earlier. The main cause was a change in cost structure due to the inclusion of the Wedding & Photo Business (Cost of Sales ¥13.1B, up +204% from prior ¥4.3B). SG&A was ¥45.3B (SG&A ratio 61.0%), a -0.2pt improvement from 61.2%, showing cost containment against higher sales. Operating Income ¥15.8B (Operating margin 21.3%) improved +0.4pt from 20.9% prior year. Non-operating items: Interest income ¥0.1B, Interest expense ¥0.4B, Foreign exchange loss ¥0.0B, Investment partnership loss ¥0.0B — net non-operating expense was minor at ¥0.5B. Ordinary Income ¥15.5B (Ordinary income margin 20.9%) improved +0.2pt from 20.7% prior year. A special gain on sale of investment securities ¥2.2B was recorded as extraordinary income; extraordinary losses were negligible (loss on disposal of fixed assets ¥0.0B). Profit before tax was ¥17.7B (+79.2% YoY). After income taxes ¥6.1B (effective tax rate 34.3%) and noncontrolling interests ¥1.3B, Net Income attributable to owners of the parent was ¥10.3B (+67.5%). In summary, a revenue and profit growth structure has been established through M&A consolidation and expansion of high-margin existing segments.
Affiliate: Revenue ¥10.6B (+11.0%), Operating Income ¥7.0B (+18.6%), maintaining an outstanding margin of 66.0%. Directly Operated Stores: Revenue ¥25.2B (+8.4%), Operating Income ¥6.1B (+21.9%), margin improving to 24.3%. Party: Revenue ¥4.3B (+7.4%), Operating Income ¥0.6B (-10.1%), margin 14.8% — revenue up but profit down, indicating lower efficiency. KV: Revenue ¥9.6B (+20.9%), Operating Income ¥1.2B (+7.0%), margin 12.3% — revenue and profit up but operating efficiency slowed. Life Design: Revenue ¥3.8B (+47.0%), Operating Income ¥1.1B (-11.1%), margin 27.9% — high growth but profit decreased. Wedding & Photo: Revenue ¥21.8B (+1,165%), Operating Income ¥4.1B (+869%), margin 18.6% — significant consolidated contribution. Consolidated operating income after company-wide adjustments was ¥15.8B, after deducting corporate-level expenses ¥4.2B. Profitability-wise, Affiliate, Directly Operated Stores, and Life Design function as high-margin segments; KV and Wedding & Photo are mid-margin; Party has room for improvement.
[Profitability] Operating margin 21.3% improved +0.4pt from 20.9% prior year and remains at a high level. ROE 9.2%, with Net income margin 15.7% (prior 13.5%, +2.2pt), Total Asset Turnover 0.235x (prior 0.148x), and Financial Leverage 2.48x. Improvement in net income margin includes the contribution of the special gain of ¥2.2B, but operating-level margin improved +0.4pt, indicating core profitability gains. [Cash Quality] Interest coverage: Operating Income ¥15.8B ÷ Interest expense ¥0.4B = 39.5x, extremely high, indicating minimal interest burden. DSO: Accounts receivable ¥26.1B ÷ (Revenue ¥74.2B ÷ 90 days) = 32 days, maintaining prior-year levels and stable collections. Inventory turnover: Cost of Sales ¥13.1B ÷ Inventory ¥0.2B = 65.5 turns, indicating rapid turnover. [Investment Efficiency] Total asset turnover 0.235x improved markedly from 0.148x, supported by post-M&A revenue growth and asset compression. Goodwill ¥47.2B represents 37.2% of shareholders' equity ¥127.0B — somewhat high. [Financial Soundness] Equity Ratio 40.3% (prior 36.6%) improved +3.7pt, strengthening the capital base. D/E ratio: interest-bearing debt ¥72.5B ÷ Net assets ¥108.2B = 0.67x, leverage within acceptable range. Current ratio 119.7% (prior 110.3%) improved +9.4pt, indicating healthy short-term liquidity.
Operating Cash Flow disclosure is not provided, but balance sheet items allow cash flow analysis. Cash and deposits ¥45.5B decreased ¥3.9B from ¥49.4B a year earlier. Short-term portion of long-term borrowings ¥13.0B (prior ¥18.2B, -¥5.2B), accounts payable ¥6.5B (prior ¥10.8B, -¥4.3B), and corporate tax payable ¥4.9B (prior ¥9.8B, -¥4.9B) show a compression of current liabilities, suggesting cash was used for debt repayment and tax payments. Investment securities ¥20.3B decreased ¥0.4B from ¥20.6B, consistent with recording a special gain of ¥2.2B on sale. Accounts receivable ¥26.1B (prior ¥27.6B, -¥1.5B) indicates collection progress; inventory remains low at ¥0.2B. Tangible fixed assets ¥81.0B decreased ¥1.1B from ¥82.1B due to depreciation. Goodwill ¥47.2B decreased ¥1.7B from ¥48.9B due to amortization. Working capital support from customer-related liabilities — advance receipts ¥10.4B and deposits received ¥12.3B — underpins cash generation. Long-term borrowings ¥44.8B decreased ¥2.5B from ¥47.3B, indicating repayment. Overall, the cash decline reflects prudent allocation to debt repayment and tax payments, with short-term liquidity maintained at a current ratio of 119.7%.
Operating Income ¥15.8B vs Ordinary Income ¥15.5B — non-operating expense of ¥0.5B is minor. Interest expense ¥0.4B, foreign exchange loss ¥0.0B, investment partnership loss ¥0.0B — non-operating costs are limited to routine financial costs. Extraordinary gain ¥2.2B (gain on sale of investment securities) is a non-recurring factor; core profitability should be assessed at the operating level. The difference between Profit before tax ¥17.7B and Ordinary Income ¥15.5B is due to the extraordinary gain ¥2.2B. Comprehensive income ¥11.3B versus Net income ¥11.6B shows a ¥0.3B gap. Other comprehensive income — Valuation difference on other securities -¥0.3B — slightly reduced comprehensive income but impact is minimal. Noncontrolling interests ¥1.3B reflect contributions from consolidated subsidiaries; attributable to owners of the parent ¥10.3B. Non-operating income ¥0.2B comprised of interest income ¥0.1B and subsidies ¥0.0B — low non-operating contributions. Overall, earnings quality is high and based on recurring operating activities; excluding the special gain, operating leverage is functioning.
Full Year / FY forecast: Revenue ¥288.0B (YoY +42.8%), Operating Income ¥40.5B (YoY +12.2%), Ordinary Income ¥39.2B (YoY +13.0%), Net Income ¥23.4B. Q1 progress rates against FY guidance: Revenue 25.8%, Operating Income 39.0%, Ordinary Income 39.6%, Net Income 49.7%, showing front-loaded progress in profit metrics. Operating Income progress of 39.0% means nearly 40% of the annual guidance was achieved in Q1; considering seasonality, this is healthy. Net Income progress 49.7% includes the one-time special gain of ¥2.2B, so on a core profit basis progress is somewhat ahead but caution is warranted regarding full-year upside. Revenue progress 25.8% is reasonable for Q1 seasonality; remaining 74.2% must be accumulated over subsequent quarters. No forecast revisions have been made; the company maintains confidence in the full-year plan at this time.
Dividend forecast remains ¥0 (no dividend). The prior year also had ¥0 dividend; the policy prioritizes internal reserves and growth investments (M&A integration, systems investment, business expansion). Net income attributable to owners of the parent increased to ¥10.3B (prior ¥6.1B), so dividend capacity exists, but a payout ratio of 0% reflects a growth-focused stance. Resumption or increase of dividends will depend on working capital normalization and stable free cash flow generation. No share buyback has been disclosed; shareholder returns are expected to be via dividends in the near term, but none are being implemented at present.
Risk of margin decline due to revenue mix shift: Gross margin is 82.3%, down -8.7pt from 91.0% prior year. The consolidation of the Wedding & Photo Business changed the cost structure and increased cost ratios. If the revenue mix shift becomes permanent, the company-wide gross margin ceiling may decline, requiring further SG&A ratio control to maintain operating margin. Optimizing sales mix and maintaining expansion of high-margin segments (Affiliate) are mitigation strategies.
Goodwill impairment risk: Goodwill ¥47.2B represents 37.2% of shareholders' equity ¥127.0B, a somewhat high level. If integration synergies from the M&A-acquired Wedding & Photo Business fall short of plan, impairment risk may materialize. The goodwill/EBITDA ratio is approximately 0.75x, given Operating Income ¥15.8B (annualized ¥63.2B), which is within tolerable range now but could become sensitive to profit stagnation or market downturns.
Working capital burden and cash conversion risk: Accounts receivable ¥26.1B, work-in-progress ¥0.1B (inventory breakdown) — DSO 32 days is stable, but the cash generation structure relies on customer-related liabilities (advance receipts ¥10.4B, deposits received ¥12.3B) and is vulnerable to demand swings. Delays in accounts receivable collection or reductions in advance receipts could increase working capital burden and pressure cash and deposits ¥45.5B.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 21.3% | 6.2% (4.2%–17.2%) | +15.1pt |
| Net Income Margin | 15.7% | 2.8% (0.6%–11.9%) | +12.8pt |
Profitability significantly exceeds industry medians, with Affiliate and Directly Operated Stores’ high-margin models being the source of advantage.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 54.1% | 20.9% (12.5%–25.8%) | +33.1pt |
Growth rate is top-tier within the industry due to consolidation effects from M&A, with existing businesses also delivering double-digit growth.
※ Source: Company aggregation
High-growth phase driven by M&A integration and segment expansion: Q1 posted Revenue +54.1% and Operating Income +56.9%, driven by consolidation of the Wedding & Photo Business and expansion of high-margin existing segments. Full-year guidance progress is front-loaded: Operating Income 39.0%, Net Income 49.7% — aside from the one-time special gain, operating-level growth is clear. Affiliate margin 66.0% and Directly Operated Stores 24.3% are highly profitable; mix optimization and realization of integration synergies are key to sustainable growth.
Structural challenges: gross margin decline and working capital management: Gross margin 82.3% (prior 91.0%, -8.7pt) primarily due to inclusion of higher-cost businesses. SG&A ratio is contained at 61.0%, but a lower gross margin ceiling constrains operating margin upside. Working capital DSO remains stable at 32 days, but dependence on advance receipts and deposits makes cash generation sensitive to demand shifts. Combined with goodwill ¥47.2B (37.2% of equity), monitoring early realization of integration synergies and maintenance of profitability are key.
This report was auto-generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm from disclosed financial statements. Investment decisions are your own responsibility; consult professional advisors as necessary.