Nojima Co.,Ltd. FY2027 Q1 Earnings Report

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Executive Summary

Although revenue increased and operating income declined at the operating level during the quarter, Ordinary Income and Net Income increased substantially due to gains on the sale of investment securities. Revenue was ¥2420.8B, up +6.1% year on year, while Operating Income was ¥137.8B, down △6.2%. Ordinary Income was ¥299.1B (+84.0% YoY), and Net Income (consolidated) was ¥207.4B (+98.6% YoY), of which Net Income attributable to owners of the parent was ¥205.2B (+100.0% YoY). While the growth in SG&A expenses (+7.5%) exceeded revenue growth, causing the Operating Margin to decline to 5.7%, gains on the sale of investment securities of ¥146.3B boosted non-operating income and contributed to substantial increases in Ordinary Income and net profit.

Factors Affecting Earnings

【Revenue】Revenue was ¥2420.8B, representing a +6.1% year-on-year increase. Digital Consumer Electronics Store Operations led growth, increasing to ¥903.4B (37.3% of total revenue, +17.5%), while Carrier Shop Operations remained broadly flat at ¥915.9B (37.8% of total revenue, +0.6%). Overseas Operations at ¥212.9B (+6.6%), Internet Operations at ¥190.6B (+3.6%), and Products at ¥163.4B (+2.9%) posted solid revenue growth, while Media declined to ¥55.8B (△7.6%).

【Profit and Loss】Cost of sales was ¥1710.4B (+6.8%), slightly exceeding revenue growth (+6.1%), resulting in a gross margin of 29.3%. SG&A expenses increased by 7.5% to ¥572.5B, exceeding the rate of revenue growth, and the SG&A ratio rose to 23.7%. Consequently, Operating Income declined to ¥137.8B (△6.2%), and the Operating Margin fell to 5.7%. Meanwhile, non-operating income surged to ¥167.5B (¥19.9B in the same period of the previous year), primarily due to gains on the sale of investment securities of ¥146.3B, resulting in Ordinary Income of ¥299.1B (+84.0%). After recording extraordinary losses of ¥3.3B, including impairment losses of ¥1.6B, Profit Before Tax was ¥296.2B. Following income taxes of ¥88.8B (an effective tax rate of approximately 30.0%), Net Income was ¥207.4B (+98.6%), including ¥205.2B attributable to owners of the parent (+100.0%). The earnings profile was characterized by higher revenue but lower profit at the operating level, while gains on the sale of investment securities resulted in higher revenue and profit at the Ordinary Income and Net Income levels.

Segment Analysis

On a segment-profit basis, Digital Consumer Electronics Store Operations and Carrier Shop Operations formed the two principal earnings pillars, while Overseas Operations became loss-making. Digital Consumer Electronics Store Operations generated revenue of ¥903.4B (+17.5%) and segment profit of ¥61.2B (¥62.6B in the previous year, △2.3%), with a margin of 6.8%, representing higher revenue but lower profit. Carrier Shop Operations generated revenue of ¥915.9B (+0.6%) and segment profit of ¥56.6B (¥60.4B in the previous year, △6.3%), with a margin of 6.2%, representing a decline in profit. Products generated revenue of ¥163.4B (+2.9%) and segment profit of ¥15.2B (¥12.2B in the previous year, +25.2%), with a margin of 9.3%, representing higher revenue and profit. Internet Operations generated revenue of ¥190.6B (+3.6%) and segment profit of ¥9.9B (¥18.2B in the previous year, △45.5%), with a margin of 5.2%, representing a substantial decline in profit. Media generated revenue of ¥55.8B (△7.6%) and segment profit of ¥4.9B (¥2.6B in the previous year, +88.2%), with a margin of 8.8%, representing lower revenue but higher profit. Overseas Operations generated revenue of ¥212.9B (+6.6%) and a segment loss of ¥0.15B (segment profit of ¥0.08B in the previous year), shifting from profitability to a loss. Adjustments include gains on the sale of investment securities of ¥146.3B, which made a substantial contribution to Ordinary Income.

Key Financial Indicators

【Profitability】The Operating Margin was 5.7%, down 0.7pt from 6.4% in the previous year, while the Net Income Margin attributable to owners of the parent improved substantially to 8.5% (4.5% in the previous year). This improvement in the Net Income Margin should be noted as being attributable not to operating performance but to gains on the sale of investment securities.【Cash Flow Quality】Accounts receivable of ¥1147.8B and inventories of ¥934.3B indicate substantial working capital levels. Investment securities declined to ¥79.5B (¥383.0B in the previous year), reflecting the conversion of holdings into cash through sales.【Investment Efficiency】ROE was 8.0%.【Financial Soundness】The Equity Ratio improved by +3.4pt to 44.2% (40.8% in the previous year). Interest-bearing debt totaled ¥651.3B, comprising short-term borrowings of ¥149.0B, current portion of long-term borrowings of ¥142.3B, and long-term borrowings of ¥360.0B. Compared with cash and deposits of ¥873.6B, the Company has sufficient repayment capacity.

Cash Flow Analysis

Cash and deposits totaled ¥873.6B, down ¥89.4B from ¥963.0B in the previous year. Investment securities decreased by ¥303.5B to ¥79.5B (¥383.0B in the previous year), generating funds through the sale of equity holdings. Meanwhile, property, plant and equipment increased by ¥406.9B to ¥998.3B (¥591.4B in the previous year), indicating progress in store and real estate investment. Short-term borrowings increased by ¥89.8B to ¥149.0B (¥59.2B in the previous year), suggesting that the funds were allocated to capital expenditures and working capital requirements. The levels of accounts receivable at ¥1147.8B and inventories at ¥934.3B indicate a potential risk of funds becoming tied up in working capital, separate from the temporary cash generation through the sale of investment securities.

Earnings Quality

During the quarter, recurring Operating Income was ¥137.8B (Operating Margin of 5.7%), while non-recurring gains on the sale of investment securities of ¥146.3B were recorded in non-operating income, substantially boosting Ordinary Income and Net Income. Non-operating income of ¥167.5B represented 6.9% of revenue, and the gains on the sale of investment securities, which accounted for most of this amount, were temporary gains with low recurrence. Extraordinary losses were limited to ¥3.3B, including impairment losses of ¥1.6B and store closure losses. Income taxes of ¥88.8B (an effective tax rate of approximately 30.0%) were broadly consistent with Profit Before Tax of ¥296.2B, with no tax-related anomalies observed. The gap between Operating Income and Net Income attributable to owners of the parent of ¥205.2B was largely attributable to temporary non-operating gains. Accordingly, trends at the Operating Income level should be closely monitored when assessing underlying earnings power.

Earnings Forecast and Guidance

Progress toward the full-year earnings forecast was 23.5% for revenue (¥2420.8B/¥10300.0B) and 23.4% for Operating Income (¥137.8B/¥590.0B), both slightly below the simple quarterly run-rate of 25%. Meanwhile, Ordinary Income reached 39.4% (¥299.1B/¥760.0B), and Net Income attributable to owners of the parent reached 42.7% (¥205.2B/¥480.0B), substantially ahead of schedule. The recognition of gains on the sale of investment securities of ¥146.3B brought forward the progress ratios. The full-year Ordinary Income forecast is YoY+22.0%, while the Operating Income forecast is +1.6% YoY. Going forward, the pace of operating profit growth will determine progress toward the full-year targets. The earnings forecast was revised during the quarter.

Shareholder Returns

A 3-for-1 stock split of common shares, effective October 11, 2025, has been implemented, and the impact of the split must be taken into account when interpreting dividend data. The full-year dividend forecast is ¥10.00 per share on a post-split basis, resulting in a Payout Ratio of approximately 6.1% against forecast EPS of ¥165.05. As of the end of the quarter, there was no revision to the dividend forecast, and the dividend policy remains unchanged. Because dividends before and after the split cannot simply be aggregated, the disclosed total annual dividend is shown as “—.” The effective level of shareholder returns should therefore be assessed based on the post-split dividend forecast.

Risk Factors

1. Working capital retention risk: Accounts receivable of ¥1147.8B and inventories of ¥934.3B are at high levels. Separate from cash generation through the sale of investment securities, the collection cycle for inventory and accounts receivable may affect capital efficiency.

2. Dependence on temporary income: Gains on the sale of investment securities of ¥146.3B accounted for the majority of Ordinary Income of ¥299.1B, while Operating Income alone, at ¥137.8B, declined △6.2% year on year. Gains on sales of a similar magnitude may not recur in subsequent periods.

3. Profitability of the Overseas segment: Although Overseas Operations increased revenue to ¥212.9B (+6.6%), the segment recorded a loss of ¥0.15B, compared with profit of ¥0.08B in the previous year, shifting from profitability to a loss. Improving profitability remains a challenge.

Industry Benchmark (For Reference; Compiled by the Company)

Profitability and Returns

Both the Operating Margin and Net Income Margin exceed the retail industry median, placing the Company’s profitability in the upper tier of the industry.

Growth and Capital Efficiency

The Revenue Growth Rate was slightly below the industry median, with the pace of revenue growth remaining at a mid-range level within the industry.

Source: Compiled by the Company

Key Takeaways from the Earnings Results

1. The Operating Margin was 5.7%, down 0.7pt from 6.4% in the previous year. The fact that the increase in SG&A expenses (+7.5%) exceeded revenue growth (+6.1%) warrants monitoring from a cost-structure perspective.

2. The substantial increases in Ordinary Income and Net Income were primarily attributable to the temporary factor of gains on the sale of investment securities of ¥146.3B, indicating a different trend from underlying earnings power at the Operating Income level.

3. Digital Consumer Electronics Store Operations served as the growth driver, with revenue up +17.5%, while segment profit declined △2.3%. A key characteristic is that the increase in revenue was not accompanied by improved profitability.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit five-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥1,160–¥1,233 at ±1% for the Cost of Equity, and ¥1,187–¥1,209 at ±0.1 for ω.

Notes:

• Because progress of Net Income toward the full-year forecast (43%) exceeds the standard level (25%), forecast EPS has been adjusted upward within a maximum range of +10% (because companies whose progress is ahead of schedule tend to exceed their forecasts; the adjustment may be excessive for businesses with strong seasonality).
• Net assets as of the quarter-end are used (there is a timing difference from the full-year forecast).

(Calculation model: Residual Income Model / Interest rate reference month: 2026-06 / This value does not forecast or guarantee the future share price.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own discretion and responsibility, after consulting professionals as necessary.

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