PARIS MIKI HOLDINGS (7455) FY2026 Q3 Earnings Report

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Executive Summary

The cumulative results for FY2026 Q3 represented higher revenue and higher profit, with profit growth exceeding revenue growth, and focused primarily on margin improvement. Revenue was ¥395.3B (+2.1% YoY), Operating Income was ¥17.4B (+35.2%), Ordinary Income was ¥19.1B (+15.0%), and Net Income was ¥11.7B (+17.5%). The main drivers of profit growth were improved profitability in the Japan Business and restraint in SG&A expenses. The gross margin improved to 68.3% (67.8% in the previous year), the SG&A ratio improved to 63.9% (64.4% in the previous year), and the Operating Income margin expanded to 4.4% (3.3% in the previous year).

Factors Affecting Performance

【Revenue】Revenue was ¥395.3B, representing moderate revenue growth of +2.1% YoY. While the Japan Business remained the primary contributor at ¥352.3B (+2.7% YoY), the Overseas Business continued to post declining revenue at ¥43.0B (-3.1% YoY). The Japan Business accounted for 89.0% of consolidated revenue, indicating a structure in which the growth driver remains dependent on the Japan Business.

【Profitability】Operating Income rose 35.2% YoY to ¥17.4B, significantly exceeding revenue growth, with operating leverage confirmed through an improvement in the gross margin (+0.5pt) and a decline in the SG&A ratio (-0.5pt). Segment profit in the Japan Business improved to ¥21.2B (+26.4% YoY), with the profit margin improving to 6.0% (4.9% in the previous year). Meanwhile, the Overseas Business continued to record a loss of ¥3.8B, with the loss ratio remaining at approximately 8.7%, almost unchanged from the previous year. Ordinary Income was ¥19.1B (+15.0%), and Net Income was ¥11.7B (+17.5%). Extraordinary gains and losses, including an impairment loss of ¥0.7B, slightly restrained profit growth. Overall, the Company achieved higher revenue and higher profit, with profit growth relying more heavily on margin improvement than on revenue expansion.

Segment Analysis

The Japan Business recorded revenue of ¥352.3B (+2.7% YoY), segment profit of ¥21.2B (+26.4%), and a profit margin of 6.0% (4.9% in the previous year), improving and becoming the primary driver of consolidated profit. The Overseas Business posted revenue of ¥43.0B (-3.1%) and a segment loss of ¥3.8B (¥3.9B in the previous year). Although the loss narrowed slightly, the loss ratio remained approximately 8.7%, at the same level as the previous year, indicating the continuation of structurally unprofitable operations. Impairment losses on property, plant and equipment were ¥0.56B in Japan and ¥0.14B overseas, for a total of ¥0.70B, up from ¥0.49B in the previous year. Profitability management of store assets therefore remains an ongoing area requiring monitoring.

Key Financial Metrics

【Profitability】The Operating Income margin improved to 4.4% from 3.3% in the same period of the previous year, but remained below 5%. Despite the high gross margin of 68.3%, the heavy SG&A ratio of 63.9% continues to constrain profitability. The Net Income margin improved to 2.9% from 2.5% in the previous year.【Cash Quality】Interest income of ¥0.9B exceeded interest expense of ¥0.2B, indicating a minimal interest burden. The effective tax rate was approximately 38%, meaning that the tax burden relatively constrained the conversion of pretax earnings into Net Income.【Investment Efficiency】Annualized ROE was 4.4%, explained by the combination of the Net Income margin, asset efficiency, and conservative financial leverage of 1.27x. Inventories were ¥88.6B, accounting for 20.3% of total assets, and low inventory efficiency remains a constraint on improving capital efficiency.【Financial Soundness】The Equity Ratio was 78.9%, while the current ratio was equivalent to 363.3%, both extremely high. Interest-bearing debt remained at a very low level, indicating a conservative financial foundation.

Cash Flow Analysis

Although individual data from the statement of cash flows has not been disclosed, cash trends can be inferred from changes in the balance sheet. Cash and deposits were ¥132.3B, broadly unchanged from ¥132.3B in the previous year, while short-term borrowings declined substantially from ¥17.6B to ¥0.8B. This indicates that the Company was able to maintain its cash position while reducing interest-bearing debt, suggesting that the use of funds resulting from accumulated earnings and an increase in inventories (inventories +¥4.5B) may have been absorbed through cash-generation efficiency underlying earnings and debt repayment. Net assets increased by ¥16.8B from ¥327.7B to ¥344.5B, with the accumulation of retained earnings and comprehensive income contributing to the expansion of shareholders’ equity. Overall, the Company’s cash trends indicate a direction of strengthening its financial position while reducing its reliance on external funding.

Quality of Earnings

The 35.2% growth in Operating Income was primarily driven by structural factors, namely an improved gross margin and restraint in SG&A expenses, which increased 1.3% YoY, below the 2.1% growth in revenue. Dependence on temporary factors is therefore low. Non-operating income was ¥3.5B, consisting primarily of items such as interest income of ¥0.9B, while non-operating expenses were ¥1.9B, including a foreign exchange loss of ¥0.5B. Extraordinary gains and losses comprised extraordinary income of ¥0.9B and extraordinary losses of ¥1.1B, including an impairment loss of ¥0.7B. Their impact on Net Income was limited, although the increase in impairment losses from the previous year warrants attention. Comprehensive income was ¥17.6B, including ¥17.0B attributable to owners of the parent. The gap from Net Income of ¥11.7B was attributable to foreign currency translation adjustments of ¥2.3B and valuation differences on securities of ¥3.6B, indicating that market fluctuation factors, separate from the earning power of the core business, lifted comprehensive income.

Earnings Forecast and Guidance

The full-year Company forecast calls for revenue of ¥514.5B (+1.3% YoY), Operating Income of ¥15.5B (+11.9%), and Ordinary Income of ¥17.5B (+2.8%), with no revisions to the forecast. The cumulative Q3 progress rates were 76.8% for revenue, 112.6% for Operating Income, 109.0% for Ordinary Income, and 114.0% for Net Income (cumulative Net Income of ¥11.7B versus the Company’s full-year forecast of ¥10.1B). All exceeded the standard progress rate of 75%. In particular, profit-related metrics have already exceeded the full-year plan, suggesting that the Company may have designed its plan to incorporate increased expenses and seasonal factors in Q4.

Shareholder Returns

The Q2 dividend was ¥4.00 per share, and the full-year dividend forecast also remains unchanged at ¥4.00. The Payout Ratio calculated based on the annual dividend of ¥4.00 and the Company’s forecast Net Income attributable to owners of the parent of ¥10.1B was approximately 22.4%, a level that does not represent an excessive distribution burden. Financial capacity consisting of cash and deposits of ¥132.3B and interest-bearing debt of ¥1.8B supports the sustainability of the dividend.

Risk Factors

1. Inventory Holding Risk: Inventories were ¥88.6B, accounting for 20.3% of total assets, and increased 5.3% YoY. Low inventory efficiency could reduce the gross margin of 68.3% through discounting or inventory write-downs.

2. Continued Losses in the Overseas Business: Overseas revenue was ¥43.0B (-3.1% YoY), while the segment loss was ¥3.8B, with the loss ratio remaining at approximately 8.7%, unchanged from the previous year. There is a limit to continuously offsetting the structurally unprofitable Overseas Business solely through improvements in the Japan Business.

3. Store Fixed-Cost and Impairment Risk: Impairment losses on property, plant and equipment were ¥0.7B, up from ¥0.5B in the previous year. Changes in customer traffic trends by store location could lead to additional impairment losses or deteriorating profitability.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (retail)

Profitability and Returns

The Company’s profitability metrics are above the industry median.

Growth and Capital Efficiency

The revenue growth rate was slightly below the industry median, indicating that growth has been relatively moderate compared with the improvement in profitability.

※Source: Compiled by the Company

Key Points in the Financial Results

1. The Operating Income margin improved by approximately 1.1pt YoY, confirming operating leverage resulting from the higher gross margin and restrained growth in SG&A expenses. Whether this improvement is structural or temporary will require monitoring of SG&A trends from Q4 onward.

2. The Japan Business improved its segment profit margin to 6.0% (4.9% in the previous year) and drove consolidated profit, while the loss ratio of the Overseas Business remained approximately 8.7%, showing limited improvement. The medium-term direction of consolidated profitability will depend on whether the Overseas Business can improve its profitability.

3. While progress toward the full-year profit plan was high at 112〜114%, the Company’s forecast remains unchanged. The Q4 expense plan and the pace of inventory clearance are key points to monitor, as they will determine the actual full-year outcome.

Theoretical Share Price (Reference Value)

Sensitivity: ¥457〜¥483 at ±1% for the cost of equity, and ¥466〜¥472 at ±0.1 for ω.

Notes:

• Since Net Income progress against the full-year forecast (114%) exceeds the standard level (75%), forecast EPS has been adjusted upward within an upper limit of +10% (because companies with progress ahead of plan tend to exceed their forecasts. For businesses with strong seasonality, the adjustment may be excessive).
• Since forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• 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 / This is a mechanically calculated value based solely on publicly disclosed data; it is not a forecast of the market share price or a recommendation of any specific investment action, and 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. 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, after consulting a professional as necessary.

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