ICHIKURA CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥8.40B
• Operating Income: ¥-919M
• Net Income: ¥-653M
• EPS: ¥-107.96

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

Ichikura (6186) reported FY2026 Q2 consolidated results under JGAAP showing a contraction in topline and a deepening operating loss, highlighting substantial earnings pressure. Revenue declined 4.7% YoY to ¥8,405m, while operating income deteriorated to a loss of ¥919m (+264.9% YoY in loss), underscoring fixed-cost drag and weaker operating leverage. Gross profit is reported at ¥5,441m, implying a high gross margin of 64.7%, which likely reflects a services-heavy mix (kimono rental/bridal-related services) and/or classification effects; however, the margin expansion did not translate into profitability given elevated SG&A. Ordinary income remained close to operating income at a loss of ¥927m, suggesting limited non-operating relief. Net loss was ¥595m (flat YoY per disclosure), and EPS was -¥107.96. On the balance sheet, total assets were ¥19,493m and total liabilities ¥15,624m, implying equity of ~¥3,869m by arithmetic; reported total equity is ¥3,600m, suggesting either rounding/timing effects or other components—hence we rely on reported equity for ratios. The reported equity ratio is shown as 0% (undisclosed), but an implied equity-to-asset ratio based on reported totals is approximately 18.5%, indicating a leveraged capital structure. Liquidity is tight with a current ratio of 80.1% and negative working capital of ¥-2,551m, exposing near-term refinancing/rollover risk. Operating cash flow was negative at ¥-89m, and financing inflows of ¥266m indicate reliance on external funding to bridge cash needs. EBITDA was negative at ¥-665m and the interest coverage ratio was deeply negative, although absolute interest expense remains modest at ¥16m, implying limited near-term cash interest burden but weak debt service capacity from operations. DuPont analysis shows ROE of -16.53% driven by a negative net margin (-7.08%) and relatively high financial leverage (5.41x), with low asset turnover (0.431x) for a services retailer. Dividend DPS is zero with no payout, aligning with the current loss profile and cash flow pressure. Several critical datapoints (inventories, cash balance, investing cash flows, share count, equity ratio) are not disclosed in the XBRL and are shown as zero; conclusions are therefore framed with caution and based on available non-zero figures. Overall, Ichikura’s Q2 underscores significant earnings headwinds, constrained liquidity, and a need for cost discipline and working capital normalization to stabilize cash flow. Seasonality in the kimono/coming-of-age and wedding cycles could affect second-half performance, but visibility remains limited. The company’s ability to right-size SG&A, improve booking conversion, and enhance operating efficiency will be crucial to restoring profitability. Leverage and negative operating leverage magnify downside risk if demand softness persists.

Profitability Analysis

roe_decomposition: ROE calculated at -16.53% reflects Net Profit Margin of -7.08%, Asset Turnover of 0.431x, and Financial Leverage of 5.41x. The negative margin is the primary driver of the negative ROE; low turnover and high leverage exacerbate volatility of equity returns. margin_quality: Gross margin is high at 64.7% (gross profit ¥5,441m on revenue ¥8,405m), consistent with services-heavy revenue mix and potentially classification of certain cost items below COGS. However, SG&A intensity turned this into an operating loss of ¥919m. Ordinary loss (¥927m) is close to operating loss, indicating limited non-operating offsets. The negative effective tax (income tax ¥-257m) suggests recognition of tax benefits/deferred tax effects in loss-making conditions. operating_leverage: A 4.7% revenue decline coincided with a substantial deterioration in operating income, indicating high fixed cost absorption and unfavorable operating leverage. EBITDA of ¥-665m and interest coverage of -57.1x (EBIT-based) confirm weak operating capacity to cover fixed charges.

Growth Assessment

revenue_sustainability: Revenue fell 4.7% YoY to ¥8,405m, indicating soft demand across kimono/bridal-related services and/or store traffic/booking softness. Seasonality (coming-of-age and wedding cycles) could lift H2, but visibility is limited. profit_quality: Losses at operating and net levels despite a strong reported gross margin indicate structurally high SG&A and potentially underutilized capacity. Ordinary loss near operating loss suggests limited recurring non-operating gains. outlook: Near-term outlook hinges on cost containment, pricing/upselling, and booking recovery into peak events. Without meaningful SG&A reductions or mix improvement, sustained profitability recovery appears challenging given current operating leverage.

Financial Health

liquidity: Current assets ¥10,290m vs current liabilities ¥12,841m yield a current ratio of 80.1% and negative working capital of ¥-2,551m, indicating tight liquidity. Quick ratio is reported at 80.1%, with inventories undisclosed. solvency: Total liabilities ¥15,624m vs total equity ¥3,600m imply a debt-to-equity of 4.34x and an implied equity-to-asset ratio around 18.5% (based on available totals), signaling a leveraged balance sheet. Interest expense is modest at ¥16m but operating losses undermine coverage. capital_structure: High financial leverage (DuPont leverage 5.41x) magnifies earnings volatility. Financing cash inflow of ¥266m in the period indicates dependence on external funding to support operations.

Cash Flow Quality

earnings_quality: OCF/Net Income at 0.15 indicates weak conversion of accounting losses into operating cash flow relief. Negative OCF (¥-89m) despite substantial net loss (¥-595m) suggests working capital consumption and/or non-cash benefits not translating to cash. fcf_analysis: Free cash flow is shown as 0 due to undisclosed investing cash flows; however, with OCF negative, underlying FCF is likely negative absent asset disposals. D&A was ¥254m, but EBITDA remained negative, pointing to core cash burn. working_capital: Negative working capital of ¥-2,551m points to reliance on supplier credit and customer advances. With inventories not disclosed, it is difficult to assess stock turns; focus should be on receivable collection, deposit liabilities, and advance bookings.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is 0 with a payout ratio of 0.0%, consistent with a net loss (EPS -¥107.96) and negative operating cash flow. fcf_coverage: FCF coverage is indicated at 0.00x; given negative OCF and undisclosed investing cash flows, internal cash generation does not support dividends. policy_outlook: Given current losses, leverage, and liquidity constraints, maintenance of a no-dividend stance appears aligned with preserving cash until profitability and OCF normalize.

Risk Assessment

Business Risks:

• Demand cyclicality in kimono rental/coming-of-age and bridal markets
• Structural headwinds from demographics and declining marriage rates in Japan
• Seasonality risk leading to volatile quarterly earnings and cash flows
• Price competition and discounting in apparel/services
• Execution risk in SG&A reduction and store productivity improvements
• Customer acquisition and marketing efficiency risks
• Event cancellations or shifts in consumer behavior impacting bookings

Financial Risks:

• Tight liquidity with current ratio at 80.1% and negative working capital of ¥-2.551bn
• High leverage (debt-to-equity 4.34x; financial leverage 5.41x) increasing sensitivity to earnings volatility
• Negative EBITDA and interest coverage, limiting debt service capacity from operations
• Reliance on external financing (¥266m inflow) to fund cash burn
• Potential refinancing/covenant risks if losses persist

Key Concerns:

• Sustained operating losses despite high reported gross margin
• Weak OCF/NI conversion (0.15) indicating poor cash earnings quality
• Visibility on key balance sheet items (cash, inventories) is limited due to non-disclosure

Investment Implications

Key Takeaways:

• Revenue down 4.7% YoY to ¥8.4bn amid soft demand
• Operating loss widened to ¥-919m; ordinary loss ¥-927m
• High reported gross margin (64.7%) offset by heavy SG&A
• ROE -16.5% driven by negative margin and high leverage (5.41x)
• Liquidity strained: current ratio 80.1%, working capital ¥-2.55bn
• OCF negative (¥-89m); reliance on financing inflows (¥266m)
• Interest expense modest (¥16m) but coverage deeply negative
• Dividend suspended (DPS 0) consistent with cash preservation

Metrics to Watch:

• Same-store sales and booking pipeline for coming-of-age/wedding seasons
• SG&A run-rate and cost-out execution
• Monthly operating cash flow and working capital movements (receivables, advances, payables)
• Leverage and liquidity metrics (current ratio, debt-to-equity, interest coverage)
• EBITDA trajectory and break-even revenue thresholds
• Pricing and average selling price/mix trends
• Financing activities and refinancing timelines

Relative Positioning: Versus domestic apparel and bridal-service peers, Ichikura currently exhibits weaker profitability (negative EBITDA/operating income), tighter liquidity (sub-1.0x current ratio), and higher leverage, leaving it more exposed to demand softness and execution risk until operating efficiency improves.

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