Quick View
| Metric | Current Period | Same Period of Previous Year | YoY |
|---|---|---|---|
| Revenue | ¥24.77B | ¥25.00B | −0.9% |
| Operating Income | ¥0.40B | ¥0.34B | +16.0% |
| Ordinary Income | ¥0.47B | ¥0.48B | −3.5% |
| Net Income | ¥0.29B | ¥0.26B | +14.1% |
| ROE | 0.9% | 0.8% | - |
Executive Summary
While revenue decreased 0.9% year on year, operating income increased 16.0%, resulting in earnings that improved profitability despite lower revenue. Revenue was ¥24.77B (-0.9% YoY), operating income was ¥0.40B (+16.0%), ordinary income was ¥0.47B (-3.5%), and net income attributable to owners of the parent was ¥0.29B (+14.1%). Although the operating margin improved to 1.6% from the same period of the previous year, its absolute level remains low. Ordinary income did not increase as much as operating income due to higher non-operating expenses.
Factors Affecting Earnings
【Revenue】Revenue was ¥24.77B, down 0.9% year on year. The Supermarket Business accounts for the majority of the Group, and since segment information is not disclosed, trends in same-store sales and customer numbers are considered to be the primary factors.
【Profit and Loss】Cost of sales decreased from the previous year to ¥17.20B, resulting in a gross margin of 29.4%. SG&A expenses also decreased to ¥7.17B, and operating income consequently increased to ¥0.396B (+16.0% YoY). Meanwhile, ordinary income was limited to ¥0.466B (-3.5% YoY) due to higher non-operating expenses, including interest expenses of ¥0.03B. Net income was ¥0.292B (+14.1% YoY), partly reflecting the absence of extraordinary losses such as losses on disposal of fixed assets recorded in the same period of the previous year. Overall, the results represent a pattern of lower revenue but higher profit, with cost reductions exceeding the decline in the top line and driving an improvement in profit margins.
Key Financial Indicators
【Profitability】The operating margin was 1.6% (approximately +0.2pt year on year), the net profit margin was 1.2% (approximately +0.2pt YoY), the gross margin was 29.4%, and the SG&A ratio was 29.0%, indicating a structure in which store operating expenses absorb most of gross profit. 【Cash Flow Quality】Comprehensive income of ¥0.41B exceeded net income of ¥0.29B by ¥0.11B, primarily due to an increase in the valuation difference on securities. 【Investment Efficiency】ROE was 0.9% (based on quarterly results), and is estimated at approximately 3.6% on an annualized basis. There is substantial room to improve capital efficiency within the asset-intensive business structure, in which fixed assets account for 73.4% of total assets. 【Financial Soundness】The equity ratio was 58.2% and the current ratio was 112.8% (current assets of ¥15.13B / current liabilities of ¥13.41B), indicating a stable financial foundation for a retail company holding substantial store assets.
Cash Flow Analysis
Since actual figures from the cash flow statement have not been disclosed, cash trends are analyzed based on changes in the balance sheet. Cash and deposits were ¥7.05B, a decrease of ¥1.47B from ¥8.52B in the same period of the previous year. The Company held accounts payable of ¥5.56B against inventories of ¥2.86B and accounts receivable of ¥2.50B, and its working capital structure utilizing trade payables is typical of a food supermarket. Long-term borrowings decreased from the previous year to ¥7.68B, while the amount of long-term borrowings due within one year was ¥3.13B, a level that can be sufficiently covered by cash and deposits of ¥7.05B. Going forward, it will be important to confirm cash generation from operating activities and free cash flow after capital expenditures.
Quality of Earnings
There were no extraordinary losses in the current quarter, while the elimination of the ¥0.079B loss on disposal of fixed assets recorded in the same period of the previous year affected the relationship between ordinary income and net income. Non-operating income of ¥0.118B consisted primarily of dividend income of ¥0.023B, while non-operating expenses of ¥0.048B consisted mainly of interest expenses of ¥0.033B. Corporate income taxes and other taxes of ¥0.174B were recorded against pretax income of ¥0.466B, resulting in an effective tax rate of approximately 37.3%. Comprehensive income of ¥0.406B exceeded net income of ¥0.292B by ¥0.114B, with an increase in the valuation difference on other securities serving as an upward factor. Non-operating income remained below 0.5% of revenue, suggesting that the increase in profit was not attributable to temporary non-operating factors but primarily reflected a recurring improvement in the earnings structure arising from reductions in cost of sales and SG&A expenses.
Earnings Forecast and Guidance
The full-year plan calls for revenue of ¥104.00B, operating income of ¥2.30B (+6.8% versus the previous fiscal year), and ordinary income of ¥2.51B (+3.8% YoY). Q1 progress rates were 23.8% for revenue, 17.2% for operating income, 18.6% for ordinary income, and 21.7% for net income (against the full-year net income plan of ¥1.35B). Progress toward the operating income and ordinary income targets is below the standard 25%. However, the Q1 year-on-year increase in operating income of +16.0% is ahead of the +6.8% growth assumed in the full-year plan, and trends in the gross margin and SG&A expenses in the second half will be key to achieving the plan. No revision to the earnings forecast was made during the current quarter.
Shareholder Returns
The full-year dividend forecast is ¥70.00 per share, implying a forecast payout ratio of approximately 43.4% against forecast full-year EPS of ¥161.33. The dividend paid in the same period of the previous year was ¥35 per share (interim), and it will be necessary to await disclosure of the full-year results to confirm the sustainability of annual dividend growth. The Company holds 901 thousand treasury shares (¥2.33B), but no results for treasury share repurchases during the current period have been disclosed; accordingly, the payout ratio is assessed based solely on dividends.
Risk Factors
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Business concentration risk: Concentration in the Supermarket Business means that performance is directly linked to trends in that business. Revenue in the current quarter decreased 0.9% year on year, and recovery in same-store sales and customer numbers will be key to earnings.
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Profitability risk: The operating margin of 1.6% is below the industry median of 3.2%. If increases in procurement prices, personnel expenses, and logistics costs cannot be passed on through pricing, the thin-margin earnings structure may come under further pressure.
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Capital efficiency risk: Within the asset-intensive business structure, including tangible fixed assets of ¥35.32B and land of ¥12.18B, improving earnings generation relative to invested capital is a medium- to long-term challenge.
Industry Benchmark (Reference; Compiled by the Company)
Industry Benchmark (retail)
Profitability and Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 1.6% | 3.2% (0.7%–7.3%) | −1.6pt |
| Net Profit Margin | 1.2% | 2.1% (0.4%–5.9%) | −1.0pt |
The Company's profitability is below the industry median and positioned within the lower-tier group.
Growth and Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | −0.9% | 7.7% (1.4%–14.4%) | −8.6pt |
Revenue growth is substantially below the industry median, contrasting with peer companies that are on a revenue growth trajectory.
※Source: Compiled by the Company
Key Takeaways from the Earnings
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While revenue decreased 0.9% year on year, operating income increased 16.0% through reductions in cost of sales and SG&A expenses, confirming improvements in cost management.
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The operating margin of 1.6% is below the industry median of 3.2%, and the structure in which SG&A expenses absorb most of gross profit remains in place. Sensitivity of profit to fluctuations during periods of declining revenue is relatively high.
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Q1 progress toward the full-year operating income plan was 17.2%, below the standard 25%; however, the year-on-year profit growth rate is running ahead of the full-year plan, making second-half trends in the gross margin and SG&A expenses the focal point for progress.
Theoretical Share Price (Reference Value)
| Scenario | Theoretical Share Price |
|---|---|
| bear (Bearish) | ¥3,297 |
| base (Base) | ¥3,364 |
| bull (Bullish) | ¥3,399 |
| Calculation Assumption | Value |
|---|---|
| Book Value per Share (BPS) | ¥3,961 |
| Adjusted Forecast EPS | ¥165.8 |
| Cost of Equity r | 9.77% (10-year Japanese government bond 2.77% + equity risk premium 6.00% + size premium 1.00%) |
| Persistence Factor for Residual Income ω / Explicit Forecast Period | 0.62 / 5 years |
| Assumed Payout Ratio | 43.4% |
| Forecast EPS Confidence Adjustment | ×1.028 (based on the track record of guidance achievement in the same industry) |
| Implied PBR / PER | 0.85x / 20.3x |
Sensitivity: ¥3,272–¥3,460 at ±1% for the cost of equity, and ¥3,345–¥3,377 at ±0.1 for ω.
Notes:
- Because forecast ROE is below the cost of equity, the theoretical value is below book value per share.
- Net assets as of the quarter-end are used (there is a timing difference relative to 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 and is not a forecast of the market share price or a recommendation of any specific investment action, nor does it predict or guarantee future share prices.)
This report is an earnings analysis document automatically generated by AI based on XBRL earnings summary 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 discretion and responsibility, with consultation with a professional adviser as necessary.
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AI Financial Analysis
Executive Summary
Albis delivered a modestly stronger FY2027 Q1 profit outcome despite a 0.9% year-on-year decline in revenue. Revenue was ¥24.77bn, while operating income increased 16.0% to ¥396m. Net income rose 14.3% to ¥292m, and EPS was ¥35.02. The result was driven primarily by cost discipline rather than top-line expansion. Gross profit declined to ¥7.28bn from ¥7.46bn, and the gross margin narrowed by approximately 46bp to 29.4%. However, SG&A expenses fell 2.8% to ¥7.17bn, faster than the revenue decline. The SG&A ratio consequently improved by approximately 55bp to 29.0%. This produced a 24bp expansion in operating margin to 1.6% from approximately 1.4% a year earlier. Ordinary income nevertheless declined 3.5% to ¥466m because non-operating income fell to ¥118m from ¥178m. Dividend income increased to ¥23m, but the overall non-operating income reduction outweighed the operating improvement. Pre-tax profit increased 15.6% because the prior-year quarter included a ¥79m fixed-asset disposal and retirement loss that did not recur. The resulting net-income growth therefore includes a favorable comparison effect from the absence of that prior-year extraordinary loss. Comprehensive income rose 51.8% to ¥406m, supported by a ¥113m positive valuation difference on securities. The quarterly annualized ROE was 3.5%, reflecting a low 1.2% net margin despite reasonable annualized asset turnover of 1.741x. Management retained full-year guidance, targeting revenue of ¥103.999bn, operating income of ¥2.302bn, ordinary income of ¥2.508bn, and net income of ¥1.348bn. Q1 operating-income progress was below the standard seasonal 25% benchmark, making the pace of gross-margin recovery and further SG&A control central to achieving the annual plan.
Profitability Analysis
The annualized Q1 DuPont ROE of 3.5% comprises a 1.2% net profit margin, annualized asset turnover of 1.741x, and financial leverage of 1.72x. The constraining element is profitability, not balance-sheet utilization: turnover is relatively solid for a supermarket operator, while the net margin remains structurally thin. Operating margin improved to 1.6% from approximately 1.4%, a 24bp expansion, as the SG&A ratio improved to 29.0% from approximately 29.5%. SG&A declined 2.8% year on year versus a 0.9% revenue decline, indicating positive operating leverage from expense control. This was partly offset by gross-margin compression to 29.4% from approximately 29.8%, which indicates that merchandise margin and/or procurement conditions remain a pressure point. The gross-profit decline of 2.4% was more than offset by the 2.8% SG&A reduction. Operating income consequently rose by ¥55m to ¥396m. The operating improvement appears operationally meaningful because it arose below gross profit, but its durability depends on continued control of labor, logistics, utility, and other store operating costs without undermining sales productivity. Ordinary income fell by ¥17m to ¥466m because non-operating income declined by ¥60m, demonstrating that non-core income volatility can matter at the current level of operating profit. The tax burden was 0.627, equivalent to a 37.3% effective tax rate, which reduced the conversion of pre-tax profit into net income. Interest coverage of 12.0x remains adequate, and the interest burden factor of 1.177x reflects net non-operating income rather than a material debt-service constraint. The quality alerts warrant attention: the 1.6% EBIT margin is below the 5% general profitability benchmark and leaves limited buffer against food-cost inflation, wage increases, or competitive pricing. The reported ROIC of 2.9% is also below 5%, signaling that returns on the substantial store and property asset base remain modest. For a food-supermarket operator, low margins are industry-characteristic, but the investment relevance is heightened because a small gross-margin deterioration can absorb a large share of operating profit.
Growth Assessment
Revenue declined ¥230m year on year to ¥24.77bn, so Q1 did not demonstrate top-line growth. The earnings advance was instead generated by an improvement in the cost base. Gross profit fell ¥182m, indicating that the sales decline and lower gross margin remain the principal operational headwinds. Inventory increased 3.4% year on year to ¥2.86bn while revenue decreased, which should be monitored for its implications for inventory productivity, markdown exposure, and cash absorption. The group remains overwhelmingly concentrated in the supermarket business, which is its core business. Full-year revenue guidance implies Q1 progress of 23.8%, only 1.2 percentage points below the standard 25% Q1 pace. Operating-income progress is 17.2%, 7.8 percentage points below the standard pace. Ordinary-income progress is 18.6%, 6.4 percentage points below the standard pace. Net-income progress is 21.7%, 3.3 percentage points below the standard pace. Thus, the principal execution requirement is a stronger profit conversion over the remaining quarters, particularly at the operating-income level. Full-year guidance calls for operating income growth of 6.8% and ordinary income growth of 3.8%, so management is assuming an improvement from the Q1 run rate. Revenue sustainability will depend on maintaining customer traffic and ticket size amid intense regional grocery competition, while preserving merchandise margin. Store productivity, comparable-store sales, labor-cost efficiency, and inventory turnover are the most relevant retail operating indicators for assessing whether cost control can translate into sustained earnings growth.
Financial Health
Financial health is sound overall, supported by total equity of ¥33.10bn and an equity ratio of 58.2%. Total assets decreased 2.8% year on year to ¥56.91bn, while total liabilities declined 6.9% to ¥23.81bn. The current ratio was 112.8%, above 1.0x, and working capital was positive at ¥1.72bn. The quick ratio was 91.5%, below 1.0x, indicating that liquidity relies partly on normal inventory conversion and ongoing operating cash receipts. Cash and deposits were ¥7.05bn, equivalent to 12.4% of total assets. Current liabilities were ¥13.41bn, including ¥3.13bn of current portions of long-term loans, so the company needs to maintain dependable operating cash generation and refinancing access. Nonetheless, current assets exceed current liabilities and there is no current-ratio warning. Long-term loans were ¥7.68bn, down 8.5% year on year, while the reported debt-to-equity ratio was 0.72x and debt/capital was 18.8%. These leverage indicators are below the specified warning thresholds, and interest coverage of 12.0x supports manageable debt service. Property, plant and equipment accounted for 62.1% of assets, reflecting a capital-intensive owned-store and land base. This asset composition supports operating infrastructure but raises the importance of store-level return discipline, given the 2.9% ROIC. Asset retirement obligations of ¥897m represent an embedded long-term obligation associated with the physical store footprint.
Notable B/S Changes
Cash and deposits: -¥1.47bn (-17.3%) to ¥7.05bn - lower liquidity buffer, increasing the importance of operating cash conversion and working-capital control. Total assets: -¥1.64bn (-2.8%) to ¥56.91bn - balance-sheet contraction was primarily associated with lower current assets and lower PPE. PPE: -¥0.43bn (-1.2%) to ¥35.32bn - the company retains a highly property-intensive asset base, representing 62.1% of total assets. Inventories: +¥0.09bn (+3.4%) to ¥2.86bn - inventory increased despite lower revenue, requiring monitoring of sell-through and markdown risk. Total liabilities: -¥1.75bn (-6.9%) to ¥23.81bn - deleveraging supported the increase in the equity ratio to 58.2%. Long-term loans: -¥0.71bn (-8.5%) to ¥7.68bn - debt reduction improves solvency, although current loan maturities remain relevant to liquidity management. Investment securities: +¥0.17bn (+9.3%) to ¥1.98bn - together with positive securities valuation gains, this contributed to comprehensive income exceeding net income.
Cash Flow Quality
Cash and deposits declined ¥1.47bn year on year to ¥7.05bn. Working capital remained positive at ¥1.72bn, supported by current assets of ¥15.13bn relative to current liabilities of ¥13.41bn. Merchandise inventory rose ¥93m to ¥2.86bn, while trade payables declined ¥128m to ¥5.56bn. This combination indicates a less favorable working-capital direction than a year earlier because inventory increased while supplier financing decreased. Trade receivables decreased ¥64m to ¥2.50bn, partly offsetting the inventory-related cash commitment. The balance-sheet movement reinforces the importance of monitoring inventory sell-through, procurement terms, and cash conversion through the peak seasonal quarters. The sizeable owned-property base of ¥35.32bn in PPE means recurring maintenance and renewal investment will remain relevant to free-cash-flow capacity.
Dividend Sustainability
The full-year dividend forecast is ¥70 per share, unchanged from the announced plan. Against forecast EPS of ¥161.33, the implied dividend payout ratio is approximately 43.4%. This is below the 60% sustainability benchmark and leaves a meaningful earnings retention buffer. The forecast dividend represents a cash commitment of roughly ¥585m when applied to the Q1 average share base of 8.36 million shares. Forecast net income of ¥1.348bn would cover this implied dividend commitment by approximately 2.3x. Retained earnings were ¥23.95bn, providing a substantial accumulated equity buffer. The sustainability of the dividend outlook will nevertheless depend on delivery of the full-year earnings plan and on maintaining cash resources alongside store-related investment needs. No dividend revision was announced with the Q1 results.
Risk Assessment
Business risks include Food-supermarket competition and consumer price sensitivity: with a 1.6% operating margin, modest price investment or gross-margin pressure can have a disproportionate effect on earnings., Cost inflation risk: labor, logistics, energy, and food procurement inflation could reverse the Q1 SG&A-ratio improvement and further compress the 29.4% gross margin., Sales productivity risk: Q1 revenue declined 0.9%, and sustained negative comparable-store sales, customer traffic weakness, or unfavorable ticket-size trends would limit the ability to leverage fixed store costs., Inventory execution risk: inventory rose 3.4% while revenue fell, increasing the importance of sell-through, perishability management, markdown discipline, and inventory turnover., Asset productivity risk: PPE represents 62.1% of total assets; underperforming stores or weak returns on owned land and buildings could weigh on capital efficiency..
Financial risks include Liquidity is adequate but not abundant: the 112.8% current ratio is above 1.0x, while the 91.5% quick ratio means liquidity depends partly on inventory conversion and recurring cash receipts., Maturity-management risk: ¥3.13bn of current portions of long-term loans are included in current liabilities, requiring sustained operating cash flow and/or refinancing capacity., Capital-efficiency risk: reported ROIC of 2.9% is below 5%, indicating modest returns relative to the capital committed to the store network., Non-operating earnings volatility: ordinary income fell 3.5% despite operating-income growth because non-operating income declined by ¥60m..
Key concerns include The LOW_OPERATING_EFFICIENCY alert is material: EBIT margin of 1.6% is well below the 5% general benchmark. While thin margins are common in food retail, the limited earnings buffer makes gross-margin preservation and cost control decisive for the full-year plan., The CAPITAL_EFFICIENCY alert is material: ROIC of 2.9% is below the 5% threshold. The combination of low ROIC and a PPE-heavy balance sheet suggests that future store investment, renovations, and property utilization must generate stronger incremental returns., Q1 operating-income progress of 17.2% is below the standard 25% pace for the full-year forecast, although management has not revised guidance. The pace of margin improvement in subsequent quarters is therefore a central monitoring item., The Q1 net-income increase partly reflects the absence of the prior-year ¥79m fixed-asset disposal and retirement loss, so reported net-income growth is stronger than the change in recurring ordinary income..
Investment Implications
Key takeaways include Q1 operating profit improved 16.0% despite a 0.9% revenue decline, demonstrating effective SG&A control., Operating-margin expansion to 1.6% was achieved despite a 46bp gross-margin decline, underscoring both cost discipline and the fragility of profit conversion., The balance sheet is conservatively capitalized, with a 58.2% equity ratio, 18.8% debt/capital, and 12.0x interest coverage., The principal strategic challenge is raising returns from the capital-intensive store asset base, as ROIC was 2.9% and annualized ROE was 3.5%., The implied full-year dividend payout ratio of 43.4% is moderate relative to forecast earnings..
Metrics to watch include Comparable-store sales, customer traffic, ticket size, and store productivity, Gross margin and SG&A ratio, especially labor, logistics, and energy-cost trends, Inventory growth, turnover, markdowns, and supplier payment terms, Operating-income progress versus the ¥2.302bn full-year forecast, ROIC, annualized ROE, and returns on the PPE-heavy store network, Cash balance, current loan maturities, and working-capital conversion.
Regarding relative positioning, Albis exhibits the typical profile of a regional food-supermarket operator: stable recurring demand, thin margins, substantial property and store assets, and modest capital returns. Its Q1 cost control and balance-sheet capitalization are relative strengths, while negative revenue growth, gross-margin compression, and sub-5% ROIC constrain the quality of earnings improvement.