| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥2322.0B | ¥2141.3B | +8.4% |
| Operating Income | ¥72.7B | ¥71.2B | +2.1% |
| Ordinary Income | ¥77.3B | ¥74.7B | +3.5% |
| Net Income | ¥58.5B | ¥28.8B | +103.0% |
| ROE | 16.5% | 8.9% | - |
For the fiscal year ending March 2026, Revenue was ¥2322.0B (YoY +¥180.7B, +8.4%), Operating Income was ¥72.7B (YoY +¥1.5B, +2.1%), Ordinary Income was ¥77.3B (YoY +¥2.6B, +3.5%), and Net Income was ¥58.5B (YoY +¥29.7B, +103.0%). The core Gyomu Super Business led growth with Revenue of ¥1344.5B (+7.3%), while the Automotive Business at ¥496.6B (+7.8%) and the Meat Business at ¥241.0B (+14.6%) also recorded revenue increases, resulting in all segments growing. Net Income doubled due to the absence of prior-year special losses, but Operating Income growth remained limited at +2.1% as Gross Margin fell to 24.1% from 24.3% in the prior year (-0.2pt). SG&A ratio was contained at 20.9%, unchanged from the prior year, but Operating Margin deteriorated to 3.1% (prior year 3.3%, -0.2pt). Non-operating results improved due to higher interest income and expanded foreign exchange gains, widening growth at the Ordinary Income level. Special losses were limited to impairment losses of ¥6.2B; although pretax profit was slightly down YoY, an improved effective tax rate led to a substantial increase in Net Income.
[Revenue] Revenue was ¥2322.0B (YoY +8.4%), marking the third consecutive year of revenue growth. The Gyomu Super Business accounted for 57.9% of revenue and, with a +7.3% increase, drove overall performance. The Automotive Business maintained recovery at ¥496.6B (+7.8%), and the Meat Business achieved double-digit growth at ¥241.0B (+14.6%). Other businesses were steady at ¥256.5B (+9.8%), with all segments posting revenue increases. Contribution from one newly consolidated subsidiary via M&A also supported growth, but the main drivers were expansion of the store network and customer base in existing businesses. Revenue from customer contracts amounted to ¥2313.9B, representing 99.6% of total Revenue; other revenue of ¥8.1B derived from real estate leasing and similar activities.
[Profit & Loss] Cost of goods sold was ¥1762.9B (prior year ¥1621.9B), up +8.7%, slightly outpacing revenue growth (+8.4%). As a result, Gross Margin declined to 24.1% from 24.3% in the prior year (-0.2pt), and Gross Profit amounted to ¥559.1B (+7.6%). The Gross Margin contraction is attributed to product mix changes in the Gyomu Super Business and discounting pressure under competitive conditions. SG&A was ¥486.4B (prior year ¥448.2B), up +8.5%, but was contained at 20.9% of Revenue, consistent with the prior year, indicating good SG&A control. Increased goodwill amortization of ¥6.0B (prior year ¥3.5B) was a contributor to higher costs. Operating Income was ¥72.7B (+2.1%), with an Operating Margin of 3.1% (prior year 3.3%, -0.2pt), reflecting the slight deterioration in Gross Margin that constrained operating-level growth. Non-operating income resulted in net positive ¥4.6B (non-operating income ¥8.0B less non-operating expenses ¥3.4B), improving from +¥3.4B in the prior year. Interest income rose slightly to ¥0.1B, foreign exchange gains expanded to ¥1.0B (prior year ¥0.3B), and other non-operating income ¥1.9B (including fee income ¥1.9B) contributed to improvements. Interest expense was ¥1.5B (prior year ¥0.7B), doubling due to increased long-term borrowings, but interest burden remains light with Interest Coverage exceeding 47x. Ordinary Income was ¥77.3B (+3.5%), outpacing operating-stage growth. Special gains were ¥1.1B and special losses ¥6.2B (including impairment losses ¥6.2B), resulting in pretax income of ¥71.0B. After deducting corporate taxes of ¥23.4B (effective tax rate 32.9%, prior year 30.7%), profit attributable to owners of parent was ¥47.7B (prior year ¥49.4B, -3.5%). However, Net Income (based on consolidated statement of comprehensive income) was ¥58.5B (prior year ¥28.8B, +103.0%), a substantial increase owing to the removal of one-off factors such as non-controlling interest adjustments in the prior year. In conclusion, the company achieved revenue and profit growth, but at the operating level profit growth lagged revenue growth, resulting in a revenue-increasing but only modestly profit-increasing structure.
The Automotive Business recorded segment Revenue of ¥496.6B (prior year ¥460.6B, +7.8%) and segment profit of ¥22.6B (prior year ¥20.1B, +12.4%), achieving both revenue and profit growth. Segment profit margin improved to 4.5% (prior year 4.4%) due to product mix optimization and cost-efficiency gains. The Gyomu Super Business posted segment Revenue of ¥1344.5B (prior year ¥1252.7B, +7.3%) and segment profit of ¥47.5B (prior year ¥48.6B, -2.4%), resulting in revenue up but profit down. Segment profit margin declined to 3.5% (prior year 3.9%, -0.4pt), primarily attributed to Gross Margin declines from product mix shifts and intensified competition. The Meat Business achieved segment Revenue of ¥241.0B (prior year ¥210.3B, +14.6%) and segment profit of ¥2.7B (prior year ¥2.1B, +26.2%), with segment profit margin slightly increasing to 1.1% (prior year 1.0%). Other businesses (specialty foods, agri, mini-supermarkets, real estate leasing, etc.) recorded segment Revenue of ¥256.5B (prior year ¥233.4B, +9.8%) and segment profit of ¥2.8B (prior year ¥2.9B, -5.6%), a slight profit decline but limited in overall company impact given the small composition ratio.
[Profitability] Operating Margin was 3.1%, deteriorating by 0.2pt from 3.3% a year earlier. The primary cause was Gross Margin of 24.1% (prior year 24.3%, -0.2pt), while SG&A ratio was contained at 20.9% in line with the prior year. ROE (profit attributable to owners of parent / Equity) was 13.2%, below the prior year 15.0%, attributable to a decrease in profit attributable to owners of parent to ¥47.7B from ¥49.4B. ROA (Ordinary Income / Total Assets) was 10.2%, down from 11.3% in the prior year, but profitability remains at a relatively high level. [Cash Quality] Operating Cash Flow (OCF) was ¥70.7B compared with Net Income ¥58.5B, yielding a cash conversion ratio of 1.21x. OCF/EBITDA (Operating Income + Depreciation + Goodwill Amortization = ¥109.4B) ratio was 64.6%, indicating generally good conversion of profit to cash. Free Cash Flow was -¥2.5B, resulting from OCF less capital expenditures of ¥44.4B and M&A outlays of ¥26.0B. Inventory turnover days equaled Inventory ¥107.7B ÷ (COGS ¥1762.9B ÷ 365 days) = 22.3 days, an increase of +2.0 days YoY reflecting inventory build-up. Accounts receivable turnover days were Accounts Receivable ¥77.2B ÷ (Revenue ¥2322.0B ÷ 365 days) = 12.2 days, consistent with the prior year. [Investment Efficiency] Capital expenditures were ¥44.4B, 1.58x depreciation of ¥28.1B, indicating continued growth investment. ROIC (NOPAT / Invested Capital), by simple calculation: EBIT ¥72.7B × (1-0.33) ÷ (Total Assets ¥815.6B - Cash ¥207.9B - Interest-bearing Debt ¥203.1B) ≈ 12.1%, suggesting generally good capital efficiency. [Financial Soundness] Equity Ratio was 43.6% (prior year 46.1%), a slight decline but remains in a healthy range. Interest-bearing debt (short-term borrowings ¥100.2B + long-term borrowings ¥102.9B) totaled ¥203.1B, and Debt/EBITDA ratio was 1.86x, indicating solid resilience. Interest Coverage was Operating Income ¥72.7B ÷ Interest Expense ¥1.5B = 48.5x, so interest burden is light. Current Ratio was Current Assets ¥420.9B ÷ Current Liabilities ¥296.8B = 141.8%, and Quick Ratio was (Current Assets - Inventory) ¥313.2B ÷ Current Liabilities ¥296.8B = 105.5%, indicating healthy short-term liquidity.
Operating Cash Flow was ¥70.7B (prior year ¥75.1B, -5.9%). Starting from pretax income of ¥71.0B, adding non-cash expenses such as Depreciation ¥28.1B, Goodwill Amortization ¥6.0B, and Impairment Losses ¥6.2B resulted in a subtotal of operating CF before working capital changes of ¥95.8B. Working capital changes included increases in inventory of ¥13.1B (cash outflow), increases in accounts receivable of ¥4.9B (cash outflow), and increases in accounts payable of ¥6.0B (cash inflow), yielding a net cash outflow of -¥12.0B, primarily due to inventory buildup associated with business expansion. After deducting corporate taxes paid of ¥25.3B, OCF was ¥70.7B. Investing Cash Flow was -¥73.2B (prior year -¥88.4B), with major outflows including acquisition of tangible fixed assets ¥44.4B and acquisition of subsidiary shares ¥26.0B. Including proceeds from sale of tangible fixed assets ¥1.0B and other investing activities -¥4.2B, Free Cash Flow was OCF ¥70.7B - Investing CF ¥73.2B = -¥2.5B. Financing Cash Flow was +¥41.6B (prior year +¥10.0B), driven mainly by proceeds from long-term borrowings ¥80.0B. After repayments of long-term borrowings ¥23.6B, net increase in short-term borrowings ¥3.0B, and dividend payments ¥17.5B, the company raised funds net. Consequently, Cash and Cash Equivalents increased from ¥168.1B at the beginning of the period to ¥207.3B at year-end (+¥39.2B), indicating that funding for an active investment phase was arranged via interest-bearing debt.
Ordinary Income of ¥77.3B exceeded Operating Income of ¥72.7B by ¥4.6B, so the contribution of non-operating items was 6.3%, limited in scope. Major non-operating income items were interest income ¥0.1B, foreign exchange gains ¥1.0B, and fee income ¥1.9B, all of which are recurring and peripheral to core business activities. Non-operating expenses were dominated by interest expense ¥1.5B, and the increase in interest burden is attributable to higher long-term borrowings and is expected to persist structurally. Special gains ¥1.1B and special losses ¥6.2B (including impairment losses ¥6.2B) are one-off factors; adjusting for these, pretax recurring profit on an ordinary basis is ¥77.3B. Comprehensive income was ¥46.3B, ¥12.2B below Net Income ¥58.5B, mainly due to other comprehensive loss of -¥1.4B (foreign currency translation adjustments -¥0.2B, unrealized gains/losses on securities -¥0.6B, actuarial gains/losses on retirement benefits -¥0.6B). From an accrual perspective, Operating Cash Flow ¥70.7B and Operating Income ¥72.7B are broadly consistent, indicating good cash realization of profits. However, inventory increase ¥13.1B and accounts receivable increase ¥4.9B absorbed cash, leaving scope to improve working capital efficiency. Goodwill amortization ¥6.0B is a non-cash expense characteristic of Japanese GAAP, and evaluating on an EBITDA basis (Operating Income + Depreciation + Goodwill Amortization = ¥109.4B) is useful for international comparisons. The impairment loss ¥6.2B is a one-off write-down of low-return assets and contributes to future earnings base normalization. Overall, recurring earnings quality is good and, excluding one-off items, profit levels appear sustainable.
Full year guidance: Revenue ¥2500.0B (YoY +7.7%), Operating Income ¥89.0B (YoY +22.4%), Ordinary Income ¥90.0B (YoY +16.5%), Net Income ¥58.0B. Against current-period results of Revenue ¥2322.0B and Operating Income ¥72.7B, achieving the full-year target requires an additional Revenue of ¥178.0B (+7.7%) and Operating Income of ¥16.3B (+22.4%) in the remaining period. The plan for Operating Income to grow faster than Revenue assumes improvements in Gross Margin and enhanced cost efficiency. Segment drivers include Gross Margin improvement at existing Gyomu Super stores, margin expansion in the Automotive Business, and scale expansion in the Meat Business. The full-year Operating Margin is assumed at 3.6% (current-period 3.1%, +0.5pt), contingent on product mix optimization and normalization of inventory turnover. Dividend forecast is annual ¥35.0 per share, indicating a reduction from current-period actual ¥70.0 (interim ¥20.0 + year-end ¥50.0), based on the company's assumed EPS. Progress against the full-year plan is Revenue 92.9% and Operating Income 81.7%, with profit accumulation planned to concentrate in the second half.
Annual dividend was ¥70.0 (interim ¥20.0 + year-end ¥50.0), in line with the prior year. With Net Income of ¥58.5B and total dividends paid of ¥17.5B, the Payout Ratio is 29.9%, a healthy level. Using profit attributable to owners of parent of ¥47.7B as the base, the Payout Ratio is 36.7%. Based on shares outstanding 44,071 thousand shares less treasury stock 320 thousand shares, year-end shares outstanding are 43,751 thousand shares; dividends based on this shares outstanding amount to approximately ¥30.6B, implying an effective payout ratio (Total Dividends ¥30.6B ÷ Net Income ¥58.5B) of approximately 52.3%. Share buybacks were effectively zero this period (acquisitions ¥0 million, disposals ¥70 million), so total shareholder return was limited to dividends. With Free Cash Flow at -¥2.5B and dividend payments of ¥17.5B, dividends are funded within Operating Cash Flow of ¥70.7B, so short-term sustainability is not an issue. Over the long term, if the investment phase continues, maintaining dividends will require improvements in working capital efficiency or funding via interest-bearing debt. The full-year dividend forecast of ¥35.0 per share represents a cut from the current-period actual ¥70.0, reflecting the company’s assumed full-year Net Income level. Dividend policy appears to aim for stable dividends while maintaining flexibility to respond to profit levels.
Revenue Concentration Risk (Gyomu Super Business 57.9%): The Gyomu Super Business accounts for 57.9% of revenue, so performance swings in this business directly affect corporate profits. This period the segment’s profit declined -2.4% YoY and its Gross Margin fell 0.4pt, contributing to the deterioration in the company’s Operating Margin. If competition intensifies, raw material price increases occur, or consumer cost-cutting strengthens, Gross Margin could be further compressed, materially damaging corporate profits. Given the thin-margin structure with a segment profit margin of 3.5%, a 1% Gross Margin decline has sensitivity of roughly ¥13B in profit reduction.
Inventory Build-up and Working Capital Efficiency Risk: Inventory increased to ¥107.7B (prior year ¥91.1B, +18.2%), extending inventory turnover days to 22.3 days (YoY +2.0 days). Inventory increase of ¥13.1B pressured OCF, and OCF/EBITDA ratio at 64.6% is at a lower-bound level. If inventory stagnation progresses, markdowns and disposal losses could increase and further erode Gross Margin, reducing cash generation capability. Accounts receivable also increased by ¥4.9B, and slack in working capital management could impair both capital efficiency and margins.
Short-term Liability Concentration and Refinancing Risk: Short-term borrowings ¥100.2B and total current liabilities ¥296.8B vs. long-term borrowings ¥102.9B result in a high short-term liability ratio of 49.3%. While cash of ¥207.9B secures short-term liquidity, interest rate hikes or a deterioration in credit conditions could raise refinancing costs. Interest expense has already risen to ¥1.5B (more than double prior year ¥0.7B), and reliance on interest-bearing debt increases interest rate sensitivity. Asset retirement obligations of ¥43.7B (9.5% of liabilities) also remain a future cash outflow consideration.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.1% | 4.6% (1.7%–8.2%) | -1.5pt |
| Net Margin | 2.5% | 3.3% (0.9%–5.8%) | -0.8pt |
Profitability trails the industry median by 1.5pt, reflecting the low-margin, high-volume discount retail business model.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 8.4% | 4.3% (2.2%–13.0%) | +4.1pt |
Revenue growth outperforms the industry median by 4.1pt, driven by store network expansion and M&A effects.
※ Source: Company compilation
Revenue growth is solid (+8.4%) and above the industry average, but with an Operating Margin of 3.1% and a thin-margin structure, the company is highly sensitive to Gross Margin fluctuations. A 0.2pt Gross Margin decline in the Gyomu Super Business has compressed company Operating Margin by the same magnitude. Product mix optimization and pricing strategy under competitive conditions are critical to future margin improvement. Containment of SG&A at 20.9% is a positive, but operating leverage is limited, so revenue growth does not automatically translate into proportional profit growth.
Cash flow: OCF of ¥70.7B indicates good cash realization of profits, but inventory buildup (+¥13.1B) and accounts receivable increase (+¥4.9B) absorbed working capital, turning Free Cash Flow negative at -¥2.5B. With continued growth investments of ¥44.4B in capex and ¥26.0B in M&A, improving working capital efficiency is urgent to restore cash generation. Payout Ratio is around 30% and is sustainable within current OCF, but in a FCF-negative phase dividend maintenance depends on OCF sufficiency and optimal allocation of investments.
Financial soundness: Debt/EBITDA 1.86x and Interest Coverage 48.5x are favorable, but the high short-term liability ratio of 49.3% increases sensitivity to interest rate rises and refinancing risk. The full-year plan assumes Operating Income growth of +22.4%, which requires Gross Margin improvement and normalization of inventory turnover; monitoring progress is important. The company is superior on growth metrics in industry comparisons but lags on profitability, and realization of structural margin improvements will be decisive for mid-to-long-term valuation.
This report was automatically generated by AI analyzing XBRL financial statement data and is provided as a financial analysis document. It does not constitute a recommendation to invest in any specific security. 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 before making investment decisions.