| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥731.9B | ¥732.1B | +0.0% |
| Operating Income | ¥5.3B | ¥14.3B | -62.9% |
| Ordinary Income | ¥5.9B | ¥14.7B | -59.6% |
| Net Income | ¥-3.8B | ¥11.6B | -15.2% |
| ROE | -3.7% | 10.6% | - |
For the fiscal year ended March 2026, Revenue was ¥731.9B (YoY ±0%) and essentially flat, while Operating Income declined sharply to ¥5.3B (down ¥9.0B, -62.9%), Ordinary Income to ¥5.9B (down ¥8.8B, -59.6%) and Net Income turned to a loss of ¥-3.8B (down ¥15.4B, -132.9%). Revenue was nearly unchanged from ¥732.1B a year earlier. Gross margin fell to 51.6% from 52.3% a year earlier (down 0.7pt). Operating margin worsened by 1.3pt from 2.0% to 0.7%, reflecting the heavy burden of fixed costs. The primary cause of the net loss was the recognition of special losses of ¥7.2B, including impairment losses of ¥7.2B, which pushed profit before tax down to ¥-1.3B. Non-operating income/expense saw dividend income of ¥0.8B offset by interest expense of ¥2.0B, so interest burden compressed Ordinary Income. By segment, the core Conveyor Belt Sushi (Kaiten Sushi) Business recorded Revenue of ¥592.5B (-0.5%) and Operating Income of ¥5.2B (-63.1%), with margin falling to 0.9%. The Delica Business recorded Revenue of ¥143.4B (+2.5%) but an Operating Loss of ¥0.5B (widening from prior-year loss of ¥0.2B). Both segments clearly saw profitability deterioration.
[Revenue] Revenue was ¥731.9B, essentially flat YoY (±0%). By segment, the Kaiten Sushi Business was ¥592.5B (80.9% of total, -0.5% YoY) and declined slightly, while the Delica Business was ¥143.4B (19.6% of total, +2.5% YoY) and increased modestly, with the net change offsetting across segments. The slight revenue decline in Kaiten Sushi is attributed mainly to sluggish customer traffic at existing stores, while Delica increased sales due to expanded transactions with convenience stores and supermarkets. Cost of goods sold was ¥354.1B, producing a gross margin of 51.6% (down 0.7pt from 52.3%), pressured by ingredient prices and yield factors.
[Profitability] SG&A expenses were ¥372.5B (50.9% of Revenue), up ¥4.3B YoY, and expense growth against flat Revenue pressured Operating Income. Breakdown: Personnel expenses ¥164.2B (22.4% of Revenue) and rent ¥47.0B (6.4%), indicating heavy fixed-cost burden; Operating Income fell to ¥5.3B (Operating margin 0.7%). Non-operating items included dividend income ¥0.8B and interest income ¥0.2B, while interest expense ¥2.0B depressed Ordinary Income, which remained ¥5.9B (Ordinary margin 0.8%). Special losses included impairment losses of ¥7.2B (Kaiten Sushi ¥7.1B, Delica ¥0.02B), causing profit before tax to fall to ¥-1.3B and, after corporate taxes of ¥2.7B, a Net Loss of ¥3.8B. In conclusion, flat Revenue and falling profitability led to a substantial deterioration in earnings.
The Kaiten Sushi Business reported Revenue ¥592.5B (-0.5%) and Operating Income ¥5.2B (-63.1%), with margin falling to 0.9%. Segment profit declined by ¥8.8B from ¥13.9B in the prior year, and impairment losses of ¥7.1B comprised the bulk of company-wide special losses. Declining store-level profitability and higher fixed-cost burden were primary drivers, making the relative weight of personnel and rent more apparent. The Delica Business increased Revenue to ¥143.4B (+2.5%) but recorded an Operating Loss of ¥0.5B (widening from prior-year loss of ¥0.2B); manufacturing cost and logistics cost increases pushed its margin down to -0.3%. Impairment losses were minor at ¥0.02B, but improvement in core profitability remains a key issue. Both segments urgently need structural improvements to profitability.
[Profitability] Operating margin 0.7% (down 1.3pt from 2.0%), Ordinary margin 0.8% (down 1.2pt from 2.0%), Net margin -0.5% (down 2.1pt from 1.6%) — profitability declined at all levels. Gross margin 51.6% (down 0.7pt from 52.3%) suggests deterioration in ingredient costs and yields. SG&A ratio 50.9% (up 0.6pt from 50.3%) reflects relatively heavier fixed-cost burden amid flat Revenue. ROE was -3.7% (down 13.6pt from 9.9%) as Net Loss materially impaired capital efficiency.
[Cash Quality] Operating Cash Flow (OCF) was ¥25.3B. EBITDA (Operating Income ¥5.3B + Depreciation ¥23.2B = ¥28.5B) implies a cash conversion ratio of 0.89x, and considering non-cash items such as impairment, cash-generation capacity remains broadly healthy. Free Cash Flow (FCF) was ¥4.0B (OCF ¥25.3B - Investing CF ¥21.3B) positive. Capex ¥18.6B vs Depreciation ¥23.2B yields a capex-to-depreciation ratio of 0.80x, indicating a restrained investment stance.
[Investment Efficiency] ROA (on Ordinary Income) was 2.0% (down 2.7pt from 4.7%). Total asset turnover improved to 2.52x (from 2.36x), offsetting some profitability decline. EPS was -7.99円 (deterioration of 28.76円 from prior-year 20.77円). BPS was 206.88円 (down 12.78円 from 219.66円).
[Financial Soundness] Equity Ratio was 35.3% (up 0.4pt from 34.9%). Current Ratio was 104.7% (down 10.7pt from 115.4%), Quick Ratio 101.5% (down 10.2pt from 111.7%) — liquidity is near lower bounds but maintained. Interest-bearing debt (long-term borrowings ¥39.5B + bonds due within 1 year ¥1.0B + long-term borrowings due within 1 year ¥25.0B) totals ¥65.5B, giving Debt/EBITDA of 2.30x and interest coverage (EBIT/interest expense) of 2.67x — interest resilience is in a range that requires attention.
OCF was ¥25.3B, down 34.1% from ¥38.3B a year earlier, but considering non-cash charges such as impairment losses of ¥7.2B, underlying cash generation was maintained. OCF subtotal before working capital changes was ¥28.4B; working capital saw inventory decrease ¥0.6B, trade receivables decrease ¥1.4B, and trade payables increase ¥1.0B, yielding modest working capital improvement. After corporate tax payments of ¥1.6B, OCF was finalized. Investing CF was -¥21.3B, mainly capex ¥18.6B and business transfer payments ¥2.6B. With Depreciation ¥23.2B, the capex-to-depreciation ratio of 0.80x indicates restrained, turnover-conscious investment. FCF remained positive at ¥4.0B. Financing CF was -¥22.9B (repayment of long-term borrowings ¥26.9B, new borrowings ¥20.0B, lease liabilities repayment ¥5.2B, dividend payments ¥2.5B), reducing cash by ¥19.1B and leaving ending cash balance of ¥60.3B. Net interest and dividend income was ¥1.0B received against ¥2.5B paid, a net negative interest position, but coverage by OCF mitigates short-term liquidity risk.
Ordinary Income of ¥5.9B included special losses of ¥7.2B (all impairment losses of ¥7.2B), which significantly suppressed Net Income as a temporary factor. The impairment was mainly due to deterioration in store-level profitability in the Kaiten Sushi Business, reflecting an accounting recognition of lower future cash flows; as a non-cash expense it does not directly affect OCF. Non-operating income totaling ¥4.2B comprised dividend income ¥0.8B, interest income ¥0.2B, foreign exchange gains ¥0.1B, etc., all incidental to core operations. Non-operating expenses of ¥3.6B were driven mainly by interest expense ¥2.0B, indicating interest burden compressed Ordinary Income. Comprehensive income was ¥-4.0B (worse ¥0.2B than Net Income ¥-3.8B), with FX translation adjustments ¥-0.1B, valuation differences on available-for-sale securities ¥0.1B, and deferred hedge gains/losses ¥-0.0B — other comprehensive income items were minor. From a quality perspective, excluding the one-off impairment, operating-stage profitability (Operating margin 0.7%) remains fragile, so sustainable improvement in gross margin and SG&A efficiency is essential.
Full Year guidance targets Revenue ¥798.4B (YoY +9.1%), Operating Income ¥13.7B (+156.6%), Ordinary Income ¥13.9B (+134.2%), and Net Income ¥9.4B (EPS 18.99円), planning for a V-shaped recovery. The plan assumes an Operating margin of 1.7% (an improvement of 1.0pt from this period’s 0.7%), requiring the one-off impairment to fall away plus concurrent Revenue growth and expense efficiency gains. Achieving +9.1% Revenue growth will require increases in traffic and average spend at existing stores and effects from new openings. Delivering +156.6% Operating Income will rely on gross margin improvements (ingredient mix optimization, yield improvements) and SG&A restraint (personnel and rent efficiency, labor-saving investments). Progress rate is unclear based on current-period results; realization of the full-year plan depends on the speed of cost-structure reforms, so quarterly progress monitoring is important.
There were no interim or year-end dividends this period; the prior year was also non-dividendary, so there is no dividend history. The reported payout ratio is 24.1%, but with a Net Loss of ¥-3.8B this period there is no practical distributable earnings and a dividend omission is a reasonable decision. FCF of ¥4.0B is positive and theoretically could fund dividends, but priority is strengthening the balance sheet and rebuilding the earnings base, so short-term dividend resumption is unlikely. Next-year guidance anticipates Net Income ¥9.4B, but dividend policy remains undecided and will be determined after confirming sustained profitability and accumulation of OCF.
Fixed-cost structure risk: Personnel expenses ¥164.2B (22.4% of Revenue) and rent ¥47.0B (6.4%) create a heavy fixed-cost burden. With weak Revenue growth, operating leverage has deteriorated and Operating margin fell to 0.7%. Continued delays in raising existing-store sales or in labor-saving / automation investments could further erode profitability. The SG&A ratio at 50.9% is close to gross margin 51.6% (difference only 0.7pt), indicating vulnerability where small gross margin declines can eliminate Operating Income.
Business concentration risk: The Kaiten Sushi Business accounts for 80.9% of Revenue, creating high concentration risk to shocks specific to the sector such as fresh-fish price volatility, intensified competition and pricing measures, and changes in consumer preferences. This period saw the Kaiten Sushi operating margin fall to 0.9% and most of the impairment losses (¥7.1B) originated in this business. The Delica Business is also in operating loss, and lack of diversification limits risk dispersion.
Financial resilience risk: Interest coverage of 2.67x (EBIT ¥5.3B / interest expense ¥2.0B) indicates limited tolerance to interest or profit shocks. Interest-rate increases or further Operating Income deterioration could increase financial burden. Current Ratio 104.7% places short-term liquidity at lower bounds; continued OCF declines could crystallize funding risks. Asset retirement obligations of ¥17.3B (9.2% of total liabilities) represent future cash outflows for store closures or refurbishments and could produce additional burden when low-profit stores are being exited.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating margin | 0.7% | 4.6% (1.7%–8.2%) | -3.9pt |
| Net margin | -0.5% | 3.3% (0.9%–5.8%) | -3.9pt |
The company’s Operating and Net margins are well below industry medians, placing it in the lower tier on profitability. Heavy fixed-cost burden and the recognition of special losses are primary causes; structural reforms are necessary to return toward industry norms.
※ Source: Company compilation
This period recorded a Net Loss due to the one-off impairment loss of ¥7.2B, but OCF ¥25.3B and FCF ¥4.0B indicate cash-generation capacity was maintained and minimal financial resilience was secured. Next-year guidance targets Operating Income ¥13.7B (+156.6%) and a V-shaped recovery, but achieving Operating margin 1.7% requires simultaneous Revenue growth and expense efficiency; verifying achievability requires quarterly progress monitoring.
Thin-profit structure is evident with Operating margin 0.7%, Gross margin 51.6% and SG&A ratio 50.9%; the heavy weight of fixed costs (personnel 22.4%, rent 6.4%) undermines competitiveness. Improving existing-store traffic and spend, optimizing ingredient mix, and reducing personnel ratio through labor-saving/automation investments are keys to mid-term profitability improvement. Revenue concentration in Kaiten Sushi (80.9%) increases business risk, but also indicates meaningful upside potential if the core business improves.
Financial buffers are thin — Interest coverage 2.67x and Current Ratio 104.7% — but Debt/EBITDA 2.30x remains within investment-grade range, so short-term financial distress risk is limited. Asset retirement obligations ¥17.3B are a potential future cash outflow, but mid-term financial stability can be achieved by accumulating OCF and using surplus cash to reduce debt. Continuing no dividend suppresses near-term shareholder return expectations but prioritizing internal capital accumulation and earnings base strengthening is reasonable and leaves room for dividend resumption after sustained profitability.
This report is an analysis of XBRL financial statement data automatically generated by AI. It is not a recommendation to invest in any particular security. The industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions are your own responsibility; consult a professional if necessary before making investment decisions.