| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥4385.5B | ¥3820.2B | +14.8% |
| Operating Income / Operating Profit | ¥450.4B | ¥361.1B | +24.8% |
| Ordinary Income | ¥468.7B | ¥345.9B | +35.5% |
| Net Income / Net Profit | ¥348.2B | ¥257.1B | +35.4% |
| ROE | 9.1% | 7.7% | - |
The interim period of FY2026 (1 Sep 2025 – 28 Feb 2026) delivered Revenue of ¥4,385.5B (YoY +¥565.3B +14.8%), Operating Income of ¥450.4B (YoY +¥89.3B +24.8%), Ordinary Income of ¥468.7B (YoY +¥122.8B +35.5%), and interim Net Income attributable to owners of the parent of ¥342.6B (YoY +¥87.8B +34.5%), achieving double-digit growth across profit measures. Operating margin improved to 10.3% (up +0.8pt from 9.5% a year ago), and net margin improved to 7.8% (up +1.1pt from 6.7%), indicating profitability gains outpacing revenue growth. The East Asia Business led high growth with Revenue +23.3% and Operating Income +29.0%, while the Domestic Business also expanded steadily with Revenue +8.1% and Operating Income +14.2%.
Revenue: Operating revenue reached ¥4,385.5B (YoY +14.8%), driven by East Asia Business at ¥1,360.6B (+23.3%) showing the strongest growth. Southeast Asia & Oceania Business increased to ¥331.2B (+35.4%), and Americas/Europe Business to ¥250.2B (+17.9%), maintaining double-digit growth across overseas regions. Core Domestic Business was steady at ¥2,443.4B (+8.1%), underpinning company-wide revenue expansion. Product sales were ¥4,361.1B (+15.0%), and other operating revenue was ¥24.4B (+3.0%), indicating continued merchandise-led growth.
Profitability: Cost of sales was ¥2,087.9B (up +11.8%), rising less than revenue and resulting in Gross Profit of ¥2,297.6B (up +17.6%) and Gross Profit Margin of 52.4% (up +1.3pt from 51.1%), a notable improvement in gross margin. Selling, general and administrative expenses were ¥1,847.1B (up +16.1%), increasing faster than revenue, but gross margin improvement absorbed this, yielding Operating Income of ¥450.4B (up +24.8%). Non-operating income was ¥35.5B (prior year ¥11.0B), with ¥30.1B of foreign exchange gains contributing, and non-operating expenses were ¥17.2B (prior year ¥26.2B), including interest expense of ¥15.2B but declining from prior year. Ordinary Income grew to ¥468.7B (up +35.5%), outpacing operating income growth. Extraordinary gains totaled ¥26.1B (including ¥23.7B gains on sale of investment securities), while extraordinary losses were limited to ¥2.1B (impairment losses ¥1.0B, loss on disposal of fixed assets ¥1.1B), resulting in Profit Before Tax of ¥492.7B (up +44.6%). After deducting income taxes of ¥144.5B, Net Income attributable to owners of the parent reached ¥342.6B (up +34.5%). In summary, high overseas growth and gross margin improvement drove revenue and profit increases, with foreign exchange contribution and one-off gains further boosting ordinary and net income.
Domestic Business: Revenue ¥2,443.4B (YoY +8.1%), Operating Income ¥274.9B (YoY +14.2%), margin 11.3% (up +0.6pt from 10.7%) — margin improved due to pricing policy penetration and cost management.
East Asia Business: Revenue ¥1,360.6B (+23.3%), Operating Income ¥275.6B (+29.0%), margin 20.3% (down ▲1.1pt from 21.4%) — high revenue growth made Operating Income the largest among segments, though margin slightly declined.
Southeast Asia & Oceania Business: Revenue ¥331.2B (+35.4%), Operating Income ¥48.5B (+47.0%), margin 14.7% (up +1.2pt from 13.5%) — both revenue and profit grew strongly with margin improvement.
Americas/Europe Business: Revenue ¥250.2B (+17.9%), Operating Income ¥39.9B (+9.7%), margin 15.9% (down ▲1.2pt from 17.1%) — revenue growth outpaced profit growth.
Corporate adjustments were ▲¥189.2B (prior year ▲¥163.1B), reflecting increased unallocated costs. East Asia Business Operating Income nearly matched Domestic, highlighting overseas as the primary driver of profit growth.
Profitability: Operating margin 10.3% (up +0.8pt from 9.5%), Gross Profit Margin 52.4% (up +1.3pt from 51.1%), indicating improved gross profitability. SG&A ratio was 42.1% (up +0.4pt from 41.7%) but operating leverage was effective. ROE was 9.1%, reflecting efficient use of equity.
Cash Quality: Operating Cash Flow (OCF) was ¥439.8B (prior year ¥78.1B, +463.5%), a significant improvement, and OCF/Net Income was 1.26x, confirming cash backing for profit. The accrual ratio was ▲26.1% ((Net Income ¥348.2B − OCF ¥439.8B) ÷ Total Assets ¥6,321.1B), negative indicating cash collection exceeded accounting profit, a healthy sign.
Investment Efficiency: Total Asset Turnover was 1.39x (Revenue ¥4,385.5B ÷ Ending Total Assets ¥6,321.1B × 2), showing good asset efficiency. Capex/Depreciation was 0.86x (¥120.3B ÷ ¥139.4B), within maintenance/investment range.
Financial Soundness: Equity Ratio was 60.8% (up +1.1pt from 59.7%), at a high level. Current Ratio was 287.0% (Current Assets ¥4,111.9B ÷ Current Liabilities ¥1,432.6B). Cash and deposits ¥1,522.5B covered current liabilities by 1.06x, indicating very strong short-term liquidity. Total interest-bearing debt (Short-term borrowings ¥2.5B + Long-term borrowings ¥11.1B + Bonds ¥300.0B + Current lease liabilities ¥164.2B + Non-current lease liabilities ¥459.5B) totaled ¥937.3B, yielding Net Interest-bearing Debt of ▲¥585.2B (¥937.3B − Cash ¥1,522.5B), effectively net cash. Debt/EBITDA was 0.02x (Interest-bearing debt ¥13.6B ÷ EBITDA ¥589.8B; EBITDA = Operating Income ¥450.4B + Depreciation ¥139.4B). Interest coverage was 38.7x (OCF subtotal ¥507.9B ÷ Interest payments ¥15.1B on a cash basis), indicating minimal interest burden.
Operating Cash Flow improved markedly to ¥439.8B (prior year ¥78.1B, +463.5%). OCF subtotal (before working capital changes) was ¥507.9B (prior year ¥189.6B, +167.9%), reflecting strengthened profit-generating capacity with Profit Before Tax ¥492.7B plus Depreciation ¥139.4B and other adjustments. Working capital outflows included an increase in inventories of ▲¥109.5B (prior year ▲¥177.5B), a smaller outflow than prior year. Accounts receivable movement was +¥5.8B (prior year +¥48.4B), and accounts payable increased by +¥34.0B (prior year ▲¥164.0B), contributing inflow versus large outflow last year. Income taxes paid were ▲¥55.5B (prior year ▲¥101.9B), lower than prior year, further improving OCF.
Investing Cash Flow was ▲¥157.8B (prior year ▲¥224.8B), mainly due to capital expenditures ▲¥120.3B (prior year ▲¥113.0B) and acquisition of intangible assets ▲¥60.6B (prior year ▲¥83.5B), with a reduction in outflows versus prior year. Proceeds from sale of securities ¥28.6B partially offset investing outflows. Free Cash Flow turned positive to ¥282.1B (prior year ▲¥146.7B). Financing Cash Flow was ▲¥173.3B (prior year +¥67.6B), with principal outflows including net decrease in short-term borrowings ▲¥47.1B, repayment of long-term borrowings ▲¥7.2B, lease liabilities repayments ▲¥71.8B, and dividends paid ▲¥77.7B. Cash and cash equivalents rose ¥176.1B from ¥1,353.6B at the beginning to ¥1,529.7B at period end, securing ample liquidity.
Earnings quality is solid, with Operating Income growth of +24.8% as the main driver. Ordinary Income exceeded Operating Income by ¥18.3B, with non-operating income of ¥35.5B (including ¥30.1B foreign exchange gains) offset by non-operating expenses of ¥17.2B (including interest expense ¥15.2B), yielding a net positive contribution of ¥18.3B that lifted the ordinary income margin by +0.4pt. Extraordinary gains of ¥26.1B (mainly ¥23.7B gains on sale of investment securities) were a one-off boost to Net Income but represented only 5.3% of Profit Before Tax ¥492.7B, so the impact was limited. OCF of ¥439.8B is 1.26x Net Income ¥348.2B, confirming cash backing of profits. Comprehensive income was ¥533.4B (¥524.8B attributable to owners of the parent), exceeding Net Income by ¥185.2B; Other Comprehensive Income totaled ¥181.5B (Foreign currency translation adjustments ¥80.3B, Deferred hedge gains/losses ¥121.2B, Net loss on valuation of available-for-sale securities ▲¥16.3B) contributed to this. The gap between comprehensive income and net income stems mainly from valuation differences that may reverse into profit/loss in the future but are primarily hedge- and FX-related and should be distinguished from underlying operating performance. The accrual ratio was ▲26.1% ((Net Income − OCF) ÷ Total Assets), negative and indicating healthy cash generation exceeding accounting profit. The divergence between Ordinary Income and Net Income is within tax burden of ¥144.5B (effective tax rate 29.3%) and not excessive; underlying sustainable earnings excluding one-offs remain healthy.
Full Year (FY) guidance remains: Revenue ¥8,870.0B, Operating Income ¥890.0B (YoY +20.5%), Ordinary Income ¥880.0B (YoY +21.7%), Net Income attributable to owners of the parent ¥620.0B, and EPS ¥116.80. Progress toward the full-year forecast at the interim results is: Revenue 49.4% (¥4,385.5B ÷ ¥8,870.0B), Operating Income 50.6% (¥450.4B ÷ ¥890.0B), Ordinary Income 53.3% (¥468.7B ÷ ¥880.0B), Net Income 55.3% (¥342.6B ÷ ¥620.0B), showing accelerated progress above the standard 50% pace across profit measures. While the first half included contributions from foreign exchange gains and gains on sale of investment securities, solid Operating Income growth supported by high overseas growth centered on East Asia and gross margin improvement underpins high probability of achieving the full-year plan. Dividend forecast was also revised concurrently (details released separately today), and shareholder return policy has been reviewed.
Interim dividend is ¥16 per share (prior year ¥22). Payout ratio relative to interim Net Income ¥342.6B is approximately 25% (Total dividends ¥84.9B ÷ Net Income ¥342.6B), a conservative level. Note a 2-for-1 stock split on 1 Sep 2025 was implemented; the prior year interim dividend of ¥22 is pre-split, while the current ¥16 is post-split, so direct comparison is not straightforward. Adjusting for the split, the effective dividend level has been maintained. Free Cash Flow ¥282.1B is approximately 3.3x the interim total dividends, demonstrating strong cash coverage for dividends. With Cash and deposits ¥1,522.5B and Equity Ratio 60.8%, the financial base is very robust and dividend sustainability is high. A share buyback has not been disclosed; Total Return Ratio is not applicable.
(1) Inventory increase risk: Inventories were ¥1,868.2B (prior year ¥1,697.7B, +10.0%), and contributed ¥109.5B of operating cash outflow. Although inventory growth is below Revenue growth of +14.8%, there is potential risk of wider discounting or valuation losses in the event of demand fluctuations. (2) Pace of SG&A growth: SG&A expenses were ¥1,847.1B (YoY +16.1%), outpacing Revenue growth +14.8%, and increases in personnel and store-opening related costs could pressure profitability. SG&A ratio rose to 42.1% (up +0.4pt from 41.7%), necessitating continued cost-efficiency management. (3) Foreign exchange volatility: H1 included ¥30.1B of FX gains in non-operating income which boosted Ordinary Income; adverse FX movements in H2 could reverse this effect. Comprehensive income also included Foreign currency translation adjustments ¥80.3B and Deferred hedge gains/losses ¥121.2B, indicating potential for FX movements to affect equity and earnings in the future.
Industry Position (reference, company analysis): Ryohin Keikaku’s Operating Margin 10.3%, Net Margin 7.9%, and ROE 9.1% place it at a high level among domestic retailers. In particular, Gross Profit Margin 52.4% reflects product planning capability and brand value, demonstrating the advantage of a private-brand-focused business model. Equity Ratio 60.8% and effectively net-cash financial position place the company among the most conservative in retail, with high resilience to economic cycles. East Asia Business Operating Margin 20.3% significantly outperforms Domestic 11.3%, highlighting high profitability of overseas expansion. Historically, Revenue growth of +14.8% YoY exceeds retail industry average, and double-digit growth in Operating and Net Income has continued. Overall, the company ranks in the top group within the industry on profitability, growth, and financial safety metrics.
(1) Continued high growth in overseas businesses: East Asia Business Operating Income ¥275.6B is almost on par with Domestic ¥274.9B, with Revenue +23.3% and Operating Income +29.0% sustaining high growth. Margin of 20.3% far exceeds Domestic 11.3%, establishing overseas as the profit growth driver. (2) Structural improvement in gross margin: Gross Profit Margin improved to 52.4% (YoY +1.3pt), driven by pricing policy execution and product mix improvement, forming a foundation for sustained margin improvement. (3) Sharp improvement in OCF and conversion to positive FCF: OCF ¥439.8B (prior year ¥78.1B, +463.5%) and Free Cash Flow ¥282.1B (prior year ▲¥146.7B, turned positive), demonstrating marked enhancement in cash generation. Funding capacity for dividends and investment has expanded, increasing financial flexibility.
This report was auto-generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in specific securities. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; please consult a professional advisor as needed.