PARIS MIKI HOLDINGS Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥26.16B
• Operating Income: ¥1.37B
• Net Income: ¥737M
• EPS: ¥15.03

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

For FY2026 Q2, Paris Miki Holdings delivered stable topline and solid earnings leverage: revenue was ¥26.159bn (+0.2% YoY), while operating income rose 16.0% to ¥1.367bn and net income increased 18.2% to ¥0.844bn. Operating margin expanded to roughly 5.2% (¥1.367bn/¥26.159bn), evidencing tighter SG&A control and/or a favorable gross margin mix. Gross profit of ¥17.702bn implies a very high gross margin of 67.7%, consistent with an eyewear/optical retail model with significant service and lens value-add. Ordinary income of ¥1.475bn exceeded operating income by about ¥108m, indicating modest non-operating gains; interest expense was minimal at ¥11m. Net profit margin was 3.23%, and the DuPont framework shows ROE of 2.50% on low financial leverage (1.32x) and moderate asset turnover (0.588x). Balance sheet strength is a clear positive: equity is ¥33.77bn against total assets of ¥44.462bn, implying an equity-to-asset ratio of roughly 76% despite the reported equity ratio field showing 0.0% (undisclosed in XBRL). Current ratio is a robust 314% and quick ratio 216%, supported by ¥27.141bn of current assets and ¥8.655bn of current liabilities. Total liabilities are modest at ¥10.213bn, translating to a debt-to-equity ratio of 0.30x (using total liabilities as a proxy for interest-bearing debt given limited disclosure). Operating cash flow was ¥0.773bn, yielding an OCF/NI ratio of 0.92—close to 1.0, and acceptable for a mid-year period that can reflect seasonal working-capital needs. Reported depreciation is 0 and EBITDA is 0, which we interpret as undisclosed rather than true zero; thus, EBITDA-related metrics cannot be relied upon. Effective tax rate is better approximated at about 29–30% (¥0.435bn tax vs. ¥1.475bn ordinary income) rather than the reported 0.0% metric. Inventory stood at ¥8.414bn, indicating a meaningful working-capital commitment typical of the eyewear category that requires breadth of SKUs, sizes, and lenses. Financing cash outflow of ¥0.213bn suggests modest shareholder returns and/or debt service, while annual dividends are currently undisclosed (DPS 0.00 reported). With nearly flat sales but double-digit earnings growth, the narrative is margin-driven improvement and cost discipline rather than demand-led expansion. Given undisclosed items (cash balance, depreciation, capex, share count, and equity ratio field), conclusions emphasize observable non-zero data and derived ratios from the provided balance sheet and income statement. Overall, the company appears financially conservative with strong liquidity and low leverage, improving profitability, and decent cash conversion for a first-half period, but revenue momentum remains muted and capital allocation (dividends, capex) visibility is limited.

Profitability Analysis

ROE of 2.50% decomposes into a net profit margin of 3.23%, asset turnover of 0.588x, and financial leverage of 1.32x. The primary driver is improved operating margin: operating income grew 16.0% on +0.2% revenue, taking operating margin to roughly 5.2%, reflecting SG&A efficiencies and/or mix benefits atop a structurally high gross margin (67.7%). Ordinary income exceeded operating income by about ¥108m, adding a modest non-operating contribution; interest burden is de minimis (¥11m) with coverage around 124x. Net income margin at 3.23% indicates that much of the operating gains flowed through after tax. Operating leverage was positive in the period: small sales growth led to outsized operating profit gains, implying good fixed-cost absorption and cost containment. Margin quality appears underpinned by the service-led model and pricing/mix rather than discounting; however, sustainability will depend on maintaining lens/service mix and controlling store-level expenses. Because depreciation and EBITDA are undisclosed, we cannot comment on EBITDA margins or the non-cash cost structure beyond noting that EBIT-to-gross margin conversion improved. Tax expense of ¥0.435bn implies an effective tax rate near 29–30%, consistent with Japan statutory norms.

Growth Assessment

Topline growth was essentially flat at +0.2% YoY, suggesting limited volume or ticket expansion in the period. Despite muted revenue, operating income grew 16.0% and net income 18.2%, pointing to efficiency gains and better operating leverage. The gross margin of 67.7% is strong for the category and supportive of profit stability, but sustaining this level requires continued success in higher-value lenses and services. Ordinary income outperformed operating income, aided by modest non-operating gains, though we do not assume these are structural. With asset turnover at 0.588x (based on period-end assets), growth is not being driven by aggressive asset utilization; store footprint productivity and inventory efficiency will be key to unlocking higher turnover. Outlook-wise, the company’s conservative balance sheet provides capacity to invest in store refurbishment, digital fitting, and CRM to reinvigorate sales, but there is no disclosure of capex in this period to evidence such investment. The near-term earnings trajectory appears more dependent on cost control than demand acceleration; watch for same-store sales trends and traffic conversion in H2. International exposure (not quantified here) could add FX sensitivity to reported growth if present. Given the nature of eyewear replacement cycles and aging demographics, base demand is stable, but competitive pricing from value chains may cap growth without differentiation. Overall, profit growth quality is reasonable given flow-through to net income and cash, though revenue sustainability remains the key swing factor.

Financial Health

Liquidity is strong: current ratio 313.6% and quick ratio 216.4% reflect ample short-term assets versus obligations (CA ¥27.141bn vs. CL ¥8.655bn). Working capital is sizable at ¥18.486bn, consistent with inventory-intensive retail. Solvency profile is conservative: total liabilities of ¥10.213bn vs. equity of ¥33.77bn yield a debt-to-equity proxy of 0.30x and an implied equity ratio near 76%. Interest burden is negligible (¥11m), and coverage is very high at ~124x on operating income. The balance sheet appears overcapitalized relative to risk, offering resilience to shocks and flexibility for investment. Cash and equivalents are undisclosed in this dataset, but given the current asset position and low leverage, liquidity risk looks low. No detail on long-term interest-bearing debt composition is provided; however, total liabilities are modest, limiting refinancing risk. Overall capital structure is equity-heavy and conservative, appropriate for a retail business with cyclical exposure.

Cash Flow Quality

Operating cash flow of ¥0.773bn versus net income of ¥0.844bn yields an OCF/NI ratio of 0.92, a respectable mid-year conversion that suggests limited accrual buildup. Working capital likely absorbed some cash, consistent with inventory needs in eyewear retail, though detailed movements by line item are not disclosed. Free cash flow cannot be reliably computed because capex is undisclosed (investing CF reported as 0, interpreted as not reported). Earnings quality appears decent: profits are supported by cash generation with minimal interest drag and a tax expense in line with statutory rates. Non-operating contributions exist but are small relative to EBIT, reducing reliance on non-core income. With depreciation undisclosed, we cannot parse the split between cash and non-cash operating costs; however, high gross margins and improved operating margins are consistent with a service-rich model that typically has manageable maintenance capex. Monitoring inventory turnover and payable days will be important to ensure cash conversion remains at or above earnings over the full year.

Dividend Sustainability

The period shows DPS 0.00 and a payout ratio of 0.0%, which we treat as undisclosed rather than definitive. Financing cash outflow of ¥0.213bn hints at some capital allocation (potential debt service or small shareholder returns), but details are not provided. Given strong liquidity, low leverage, and positive OCF, the balance sheet can support dividends; however, without capex data and with flat sales, prudent policy would prioritize reinvestment until growth visibility improves. FCF coverage of dividends cannot be assessed due to missing capex. Policy outlook is therefore unclear; the company’s conservative capital structure suggests capacity, but disclosure is insufficient to gauge intent or sustainability. Any shift to a regular dividend would hinge on consistent OCF/NI ≥1.0, stable inventories, and visibility on maintenance and strategic capex.

Risk Assessment

Business Risks:

• Intense competition in domestic eyewear retail, including price-led formats and e-commerce
• Limited topline growth (+0.2% YoY) indicating demand softness or share pressure
• Inventory obsolescence/style risk and the need to carry broad SKU assortments
• Store productivity and fixed-cost absorption risk in a mature store base
• Dependence on higher-margin lens/service mix to sustain elevated gross margins
• Potential FX exposure and overseas market risks (if international operations are material)
• Labor cost inflation and technician scarcity affecting service quality and margins
• Consumer demand sensitivity to economic conditions and discretionary spend

Financial Risks:

• Working-capital intensity tied to inventory, which can depress cash conversion in slower periods
• Limited visibility on capex and lease commitments (investing CF undisclosed)
• Earnings sensitivity to gross margin mix; any shift to discounting could pressure operating margins
• Accounting disclosure gaps (depreciation, cash balance) that limit ratio robustness

Key Concerns:

• Revenue stagnation despite margin gains; sustainability of profit growth without sales acceleration
• Undisclosed capex and depreciation constrain assessment of true FCF and maintenance needs
• Reliance on cost control for earnings growth may have diminishing returns if topline remains flat

Investment Implications

Key Takeaways:

• Operating leverage drove profit growth: +16% operating income on +0.2% revenue
• Gross margin is high at 67.7%, supporting margin resilience if mix is maintained
• Balance sheet is very conservative with implied equity ratio ~76% and D/E ~0.30x
• Cash conversion is acceptable mid-year with OCF/NI ~0.92
• Interest burden is minimal; coverage ~124x reduces financial risk
• Topline momentum is weak; growth depends on mix, pricing, and store productivity
• Disclosure gaps (cash, depreciation, capex, dividends) limit FCF and payout analysis

Metrics to Watch:

• Same-store sales growth and ticket size
• SG&A-to-sales ratio and operating margin progression
• Inventory turnover (days) and OCF/NI ratio ≥1.0 on a full-year basis
• Capex levels (maintenance vs. growth) and resulting FCF
• Store count, refurbishment activity, and digital/omnichannel KPIs
• Non-operating income volatility and FX impacts (if applicable)

Relative Positioning: Within Japanese optical retail, Paris Miki appears financially conservative with high gross margins and improving operating efficiency, but exhibits slower revenue growth than growth-oriented peers; balance sheet strength outpaces many competitors, while operating margins likely trail best-in-class lean operators.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis