Nojima (7419) FY2026 Q3 Earnings Report

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Executive Summary

Revenue and earnings increased alongside improved SG&A efficiency, indicating favorable results in terms of earnings quality and sustainability. Revenue was ¥7,139.3B (+15.8% YoY), Operating Income was ¥406.1B (+25.0%), Ordinary Income was ¥450.4B (+29.4%), and Net Income attributable to owners of the parent was ¥291.9B (+26.5%). The recovery in profitability of the core Carrier Shop Operations Business and increased revenue in the Digital Consumer Electronics Specialty Store Operations Business drove overall performance.

Factors Affecting Performance

【Revenue】Revenue was ¥7,139.3B (+15.8% YoY), with the two core businesses leading revenue growth. The Carrier Shop Operations Business generated ¥2,817.4B (+6.5%), the Digital Consumer Electronics Specialty Store Operations Business generated ¥2,436.0B (+9.6%), and the Overseas Business generated ¥645.8B (+6.1%), with all three businesses recording revenue growth. The newly consolidated Product Business generated ¥462.0B (additional contribution associated with the consolidation of VAIO Corporation), while the Media Business generated ¥185.5B (+103.9%, contribution from the business combination), further boosting revenue. In contrast, the Financial Business declined significantly to ¥18.5B (△56.4%).

【Profit and Loss】Operating Income increased 25.0% YoY to ¥406.1B, exceeding the rate of revenue growth. The gross margin was 28.5%, down approximately 0.4pt from the same period of the previous year, while the SG&A ratio remained broadly flat at 22.8%. This cost absorption capacity improved the Operating Income margin to 5.7% (5.3% in the previous year). Ordinary Income was ¥450.4B (+29.4%), and the ¥44.3B difference from Operating Income included non-operating factors such as dividend income of ¥11.2B, gains on sales of securities, and foreign exchange gains of ¥7.6B. Net extraordinary losses amounted to ¥7.9B, including impairment losses of ¥5.5B, but were not material enough to undermine the overall earnings growth trend. In conclusion, the Company recorded increases in both revenue and earnings.

Segment Analysis

The Carrier Shop Operations Business recorded segment profit of ¥181.7B (+61.8%), leading overall profit growth. Its profit margin improved significantly from the previous year to 6.4%. The Digital Consumer Electronics Specialty Store Operations Business maintained revenue and profit growth, with profit of ¥151.9B (+5.5%) and a profit margin of 6.2%. The Internet Business recorded revenue of ¥545.6B (+3.5%) but a decline in profit to ¥50.8B (△3.6%); although its profit margin of 9.3% was relatively high, the business has been unable to convert revenue growth into profit growth. The Overseas Business recorded higher profit of ¥6.3B (+36.1%), but its profit margin remained at 1.0%. While the Media Business doubled its revenue (+103.9%), profit declined to ¥11.3B (△33.0%), warranting close attention to profitability during the early phase of business expansion.

Key Financial Indicators

【Profitability】The Operating Income margin improved to 5.7% from 5.3% in the same period of the previous year, while the Net Income margin attributable to owners of the parent rose to 4.1% from 3.7%. ROE was 12.4%. Against a Net Income margin of 4.1%, asset turnover and financial leverage provide additional returns, indicating that profitability is supported by asset efficiency and leverage.【Cash Quality】The ¥44.3B increase in Ordinary Income over Operating Income included market-dependent factors such as dividend income of ¥11.2B, gains on sales of securities, and foreign exchange gains of ¥7.6B. Accordingly, it is difficult to regard the entire 29.4% growth in Ordinary Income as an improvement in the core business.【Investment Efficiency】Goodwill of ¥386.8B represented 16.1% of net assets, while intangible assets of ¥1,010.8B represented 17.5% of total assets. Goodwill was revised in connection with the finalization of purchase price allocation related to the Media Business, declining from ¥92.1B to ¥58.4B. Continued monitoring of investment recovery is necessary.【Financial Soundness】The Equity Ratio was 41.5% (improved YoY), while cash and deposits increased substantially by +41.4% YoY to ¥941.6B, strengthening liquidity. The interest-bearing debt structure is centered on long-term borrowings of ¥428.6B, and financial risk is limited.

Cash Flow Analysis

Although the Company has not disclosed a cash flow statement, analysis of fund movements based on changes in the balance sheet indicates that cash and deposits increased by ¥275.5B (+41.4%) YoY to ¥941.6B, suggesting stronger cash-generation capacity from operating activities. Accounts payable increased 27.1% YoY to ¥1,115.1B, with the increase in trade payables associated with revenue expansion supporting part of working capital. While total assets decreased by ¥456.4B YoY, net assets increased by ¥314.6B, indicating that accumulated profits and accumulated other comprehensive income strengthened the capital base. Long-term borrowings declined from the previous year to ¥428.6B, suggesting that no significant additional borrowing was undertaken and that business operations are increasingly funded internally.

Earnings Quality

The ¥44.3B increase from Operating Income to Ordinary Income included market-related and non-operating factors such as dividend income of ¥11.2B, gains on sales of securities, and foreign exchange gains of ¥7.6B. Although the 29.4% growth rate in Ordinary Income exceeded the 25.0% growth in Operating Income, part of the difference is non-recurring in nature. Net extraordinary losses amounted to ¥7.9B, including impairment losses of ¥5.5B (¥517 million for the Digital Consumer Electronics Specialty Store Operations Business and ¥30 million for the Carrier Shop Operations Business), but the scale was limited. Comprehensive income was ¥367.0B, exceeding Net Income of ¥297.3B. The difference was primarily attributable to valuation differences on securities of ¥51.4B and foreign currency translation adjustments of ¥18.0B, indicating high-quality comprehensive income accompanied by an increase in asset values. Overall, the increase in Operating Income was based on the sustainable factor of improved SG&A efficiency, while somewhat temporary non-operating factors contributed to the growth in Ordinary Income and Net Income.

Earnings Forecast and Guidance

The cumulative Q3 progress rates against the Full-Year plan were 76.8% for Revenue, 72.5% for Operating Income, and 75.1% for Ordinary Income. The Operating Income progress rate was slightly below the standard 75% level, but the variance was limited to approximately 3 points and does not suggest a significant downside. No revision has been made to the earnings forecast, and the Company has maintained its Full-Year forecasts of Revenue of ¥9,300B (+9.0%), Operating Income of ¥560.0B (+15.8%), and Ordinary Income of ¥600.0B (+17.2%).

Shareholder Returns

The Q2 dividend was ¥23.00 per share. As a 3-for-1 stock split of common shares was conducted in October 2025, the forecast year-end dividend for the fiscal year ending March 2026 is presented after taking the stock split into account. Without taking the stock split into account, the year-end dividend would be ¥24 and the annual dividend would be ¥47. Retained earnings increased 12.8% YoY to ¥2,160.1B, indicating continued accumulation of funds available for dividends.

Risk Factors

1. Dependence on core businesses for earnings: The Carrier Shop Operations Business is the center of Company-wide earnings, with segment profit of ¥181.7B. Changes in sales incentive policies or agency commission systems by telecommunications carriers could have a significant impact on Company-wide earnings.

2. Profitability of newly consolidated businesses: Although revenue in the Media Business increased +103.9%, segment profit declined △33.0%. The investment recovery status of goodwill associated with the business combination, revised from the provisional ¥92.1B to ¥58.4B, requires continued monitoring.

3. Profit margins of the Internet and Overseas Businesses: The Internet Business recorded revenue growth of +3.5% but profit declined △3.6%, while the Overseas Business maintained a profit margin of only 1.0%. Both businesses face structural challenges in converting revenue growth into profit growth.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (retail)

Profitability and Returns

Profitability clearly exceeds the industry median, placing the Company in the upper-tier group.

Growth and Capital Efficiency

The revenue growth rate exceeds the upper limit of the industry IQR, placing the Company in the high-growth group, including the effects of newly consolidated businesses.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. Operating Income increased +25.0% against Revenue growth of +15.8%, confirming an earnings structure in which a slight decline in the gross margin was absorbed through improved SG&A efficiency.

2. Segment profit from the Carrier Shop Operations Business accounts for approximately 4割 of total profit, indicating that the earnings trend of this business is central to evaluating Company-wide performance.

3. The stagnation of profit margins in the Internet and Overseas Businesses and the goodwill revision in the Media Business indicate that the profitability transition of newly consolidated businesses and high-profitability businesses will be key structural areas of focus going forward.

Theoretical Share Price (Reference Value)

Sensitivity: ¥969–¥1,027 at Cost of Equity ±1%, and ¥992–¥1,004 at ω±0.1.

Notes:

• Net assets as of the end of the quarter are used (there is a timing difference from the Full-Year forecast).

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / Mechanically calculated solely from publicly disclosed data; this is not a forecast of the market share price or a recommendation of any specific investment action, and does not predict or guarantee future share prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility and, where necessary, after consulting with a professional advisor.

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