| 指標 | 当期 | 前年同期 | YoY |
|---|---|---|---|
| Revenue | ¥1462.2B | ¥1307.9B | +11.8% |
| Operating Income | ¥101.5B | ¥71.1B | +42.8% |
| Ordinary Income | ¥97.7B | ¥64.5B | +51.5% |
| Net Income | ¥66.5B | ¥43.7B | +52.0% |
| ROE | 3.7% | 2.5% | - |
The Q1 results for the fiscal year ending May 2026 showed Revenue of ¥1,462.2B (YoY +¥154.3B +11.8%), Operating Income of ¥101.5B (YoY +¥30.4B +42.8%), Ordinary Income of ¥97.7B (YoY +¥33.2B +51.5%), and Net Income of ¥66.5B (YoY +¥22.8B +52.0%), marking a strong quarter with double-digit growth in top line and all profit stages. Gross margin slightly improved to 35.9% (from 35.8% a year ago, +0.1pt), SG&A ratio improved to 32.1% (from 33.7% a year ago, -1.6pt) reflecting efficiency gains, and Operating Margin materially improved to 6.9% (from 5.4% a year ago, +1.5pt). Progress against the full-year forecast stands at Revenue 26.9%, Operating Income 44.1%, and Net Income 53.2%, indicating profit-side performance is progressing well ahead of the typical 25% benchmark.
[Revenue] Revenue expanded solidly to ¥1,462.2B (YoY +11.8%). As the company operates a single segment selling retail and building materials, there is no segment breakdown; however, Gross Profit grew to ¥525.2B (YoY +12.6%), outpacing Revenue growth and resulting in a modest improvement in Gross Margin to 35.9% (from 35.8% a year ago, +0.1pt). Cost of goods sold rose to ¥890.8B (YoY +11.9%), roughly in line with Revenue growth, and improvements in product mix and pricing policies appear to have contributed to Gross Margin expansion. Equity-method investment income of ¥3.8B was recorded, indicating related companies contributed to non-sales income sources.
[Profit & Loss] Operating Income reached ¥101.5B (YoY +42.8%), significantly outpacing Revenue growth. SG&A expenses were controlled to ¥469.9B (approx. +6.7% YoY), markedly below Revenue growth (+11.8%), bringing the SG&A ratio down to 32.1% (from 33.7% a year ago, -1.6pt). Fixed-cost absorption from scale and efficiency initiatives produced operating leverage. Non-operating items were pressured by higher interest expense of ¥8.9B (from ¥7.0B a year ago, +¥1.9B), resulting in a net non-operating deficit of ¥-3.8B, partly offset by foreign exchange gains of ¥1.0B and equity-method investment income of ¥3.8B. Consequently, Ordinary Income rose to ¥97.7B (YoY +51.5%), maintaining a higher growth rate than Operating Income. Extraordinary items were minimal (asset retirement loss of ¥0.2B), yielding Pre-Tax Income of ¥97.5B (YoY +51.4%). Income taxes were ¥31.0B (effective tax rate 31.8%), resulting in Net Income of ¥66.5B (YoY +52.0%) and a Net Margin of 4.5% (from 3.3% a year ago, +1.2pt). In summary, the quarter demonstrated revenue and profit expansion driven by Gross Margin improvement and SG&A efficiency, with clear enhancement in core profitability.
[Profitability] Operating Margin improved to 6.9% (from 5.4% a year ago, +1.5pt) and Net Margin improved to 4.5% (from 3.3% a year ago, +1.2pt). Gross Margin rose slightly to 35.9% (from 35.8% a year ago, +0.1pt), while SG&A Ratio fell to 32.1% (from 33.7% a year ago, -1.6pt), indicating effective operating leverage. ROE improved to 3.7% year-on-year but remains at a low absolute level.
[Cash Quality] Non-operating items show interest expense increased to ¥8.9B (from ¥7.0B a year ago, +¥1.9B), reflecting high reliance on borrowings. Interest coverage (Operating Income ÷ Interest Expense) is 11.4x, indicating adequate interest servicing capacity, but rising rates would increase the burden. Accounts receivable rose to ¥257.0B (from ¥180.5B a year ago, +42.4%), far outpacing Revenue growth and suggesting lengthening collection terms. Inventories remain high at ¥1,486.9B (from ¥1,459.6B a year ago, +1.9%), indicating room to improve inventory turnover.
[Investment Efficiency] Total Assets increased to ¥5,370.6B (from ¥5,047.9B a year ago, +6.4%), notably with Investment Securities jumping to ¥240.4B (from ¥61.4B a year ago, +291.8%). Reallocation of surplus to marketable assets has increased sensitivity to market valuation fluctuations. Goodwill stands at ¥154.6B (8.7% of net assets), a moderate level with limited impairment risk at present.
[Financial Soundness] Equity Ratio slightly declined to 33.3% (from 34.4% a year ago, -1.1pt). Current Ratio is 127.7% (from 133.0% a year ago, -5.3pt) and Quick Ratio is 34.1% (from 30.5% a year ago, +3.6pt), reflecting a liquidity structure dependent on inventories. D/E ratio deteriorated to 2.01x (from 1.86x a year ago) and Debt/Capital is 46.9%, indicating somewhat elevated leverage and warranting caution on borrowing dependence. Cash and deposits stood at ¥162.7B (from ¥155.2B a year ago), a slight increase, and the cash-to-short-term-debt ratio is 0.55x, suggesting tight short-term liquidity. Asset retirement obligations are large at ¥197.3B (5.5% of total liabilities), making future decommissioning cost management important.
Because the cash flow statement is not disclosed, funding trends are analyzed from balance sheet movements. Cash and deposits rose slightly to ¥162.7B (from ¥155.2B a year ago, +¥7.5B), limited relative to Net Income expansion of ¥66.5B. Accounts receivable increased sharply to ¥257.0B (from ¥180.5B a year ago, +¥76.5B), implying lengthening collection terms that likely extended the cash conversion cycle. Inventories remained high at ¥1,486.9B (from ¥1,459.6B a year ago, +¥27.3B), and inventory builds are pressuring working capital. Conversely, accounts payable rose substantially to ¥484.9B (from ¥385.4B a year ago, +¥99.5B), partially offsetting working capital needs via extended payment terms. Long-term borrowings increased to ¥1,286.3B (from ¥1,182.4B a year ago, +¥103.9B), suggesting external funding was used to finance investments and working capital. The ¥179.1B increase in Investment Securities indicates strategic investments or expanded surplus management; while this may improve non-operating income, it also introduces market risk. Overall, while profitability is improving, rising receivables and inventories plus higher interest expense are reducing cash quality, making working capital management and inventory efficiency key priorities going forward.
Earnings quality is generally sound. Of Operating Income ¥101.5B, core business activities are the primary source, and Non-Operating Income of ¥7.3B is composed of recurring items such as equity-method investment income ¥3.8B, FX gains ¥1.0B, and insurance income ¥0.2B. Non-Operating Expenses of ¥11.1B are mainly interest expense ¥8.9B, reflecting borrowing dependence, but interest coverage of 11.4x indicates sufficient servicing ability. Extraordinary items are minimal (asset retirement loss ¥0.2B), so one-off impacts are limited. Comprehensive Income of ¥67.0B is nearly identical to Net Income ¥66.5B; Other Comprehensive Income is small at ¥0.6B (FX translation adjustments ¥0.3B, valuation differences on securities ¥0.2B, etc.), so valuation and FX volatility have limited impact on earnings. The gap between Ordinary Income and Net Income is ¥31.2B, with an effective tax rate of 31.8%, a standard level with no tax distortions observed. From an accrual perspective, Net Income ¥66.5B accompanies increases in Accounts Receivable +¥76.5B and Inventories +¥27.3B, indicating timing differences in cash conversion. Although Accounts Payable +¥99.5B partially offsets this, working capital accumulation could dampen Operating Cash Flow growth. In sum, earnings are mainly operationally driven and healthy, but improving working capital efficiency would further enhance earnings quality.
Full-year guidance remains unchanged at Revenue ¥5,435.0B (assumed +5.4% YoY), Operating Income ¥230.0B (assumed +2.7%), Ordinary Income ¥210.0B (assumed +1.2%), and Net Income ¥125.0B. Progress through Q1 is Revenue 26.9%, Operating Income 44.1%, Ordinary Income 46.5%, and Net Income 53.2%, showing profit-stage progress far above the standard 25% benchmark. In particular, Operating Income progress of 44.1% suggests SG&A efficiency has delivered stronger-than-expected operating leverage, indicating substantial upside potential to the full-year forecast. Full-year assumed Operating Margin is 4.2% (Q1 actual 6.9%), and seasonal factors or increased investment costs may be expected from Q2 onward; however, if current margin levels persist, the full-year guidance appears conservative. Dividend forecast remains at ¥70 per share annually (payout ratio approx. 15.8%), with no revision.
Full-year dividend forecast is maintained at ¥70 per share. With 34,682 thousand shares issued less 6,514 thousand treasury shares, the year-end shares outstanding are approximately 28,168 thousand, implying an estimated annual dividend payout of approximately ¥1.97B. Against full-year Net Income forecast of ¥125.0B, the Payout Ratio is about 15.8%, a conservative level supporting dividend sustainability. Given Cash & Deposits of ¥162.7B and the trend of expanding Operating Income, dividend payment capacity is deemed sufficient. No share buyback disclosure exists; shareholder returns are dividend-centric. Considering relatively high leverage (D/E 2.01x), prioritizing financial soundness and debt repayment while keeping a conservative payout policy is reasonable. If earnings growth continues, scope for dividend increases may emerge, but current policy is judged conservative and focused on stable dividends.
Working Capital Management Risk: Accumulation of Accounts Receivable ¥257.0B (YoY +42.4%) and Inventories ¥1,486.9B may prolong the cash conversion cycle. Receivables growth outpacing Revenue suggests lengthening collection terms, increasing credit risk and pressuring Operating Cash Flow. Elevated inventory days carry risks of markdowns or valuation losses, potentially headwinds to Gross Margin. Failure to improve working capital efficiency could result in cashless profit growth, reducing capital efficiency and financial flexibility.
Leverage and Interest Burden Risk: High borrowing dependence with D/E ratio 2.01x and Debt/Capital 46.9%, and Long-term Borrowings at ¥1,286.3B (YoY +8.8%). Interest expense rose to ¥8.9B (YoY +27.6%), increasing interest burden; rising rates would heighten profit pressure. Although Interest Coverage is 11.4x, any slowdown in Operating Income growth would reduce coverage. Short-term liquidity is tight (Cash/Short-term Debt ratio 0.55x), necessitating caution on refinancing and liquidity management.
Market Volatility Risk of Investment Securities: Investment Securities surged to ¥240.4B (YoY +291.8%), now representing 4.5% of Total Assets and 13.5% of Net Assets. Increased allocation to marketable assets raises the risk that equity or interest rate fluctuations will affect Net Assets and Comprehensive Income. Large market valuation swings could increase Net Asset volatility and destabilize the Equity Ratio. Deterioration in investee performance or impairments could also apply downward pressure on Net Income.
Profitability & Returns
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.9% | 3.4% (0.8%–7.7%) | +3.6pt |
| Net Margin | 4.5% | 2.2% (0.5%–6.2%) | +2.3pt |
The company’s Operating Margin and Net Margin both materially exceed industry medians, placing it among the more profitable players in the retail sector.
Growth & Capital Efficiency
| 指標 | 自社 | 中央値 (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 11.8% | 7.7% (0.8%–14.6%) | +4.1pt |
Revenue growth also exceeds the industry median, indicating solid top-line expansion relative to peers.
※ Source: Company compilation
Upside potential to full-year guidance from margin improvement and front-loaded progress: Q1 Operating Margin of 6.9% (improved +1.5pt) and full-year progress of 44.1% suggest SG&A efficiency and Gross Margin improvements have progressed more than expected. Given Q1 materially exceeds the assumed full-year Operating Margin of 4.2%, and after considering seasonality, there appears to be conservative leeway in the full-year guidance. If margin improvement trends persist, substantial upside revision to full-year results is possible.
Room to improve working capital efficiency and cash generation: Rapid increase in Accounts Receivable (YoY +42.4%) and persistently high Inventories indicate delayed cash conversion relative to profit growth. While higher Accounts Payable partially offsets this, optimizing working capital could enhance Operating Cash Flow and asset turnover, improving capital efficiency. Accelerating inventory turnover and shortening receivable collection should be monitored closely in future results.
Balancing leverage and dividend policy: Despite high leverage (D/E 2.01x), a conservative dividend policy (Payout Ratio 15.8%) helps preserve financial stability and dividend continuity. Interest Coverage at 11.4x provides room for servicing, and if profit growth continues, debt reduction and potential dividend increases are feasible. Improving financial health and strengthening shareholder returns will be mid-term focal points.
This report is an earnings analysis document automatically generated by AI based on XBRL earnings report data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by our firm from public financial statements. Investment decisions are your own responsibility; please consult a professional advisor as needed.