| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥4390.5B | ¥3644.2B | +20.5% |
| Operating Income | ¥155.9B | ¥116.8B | +33.5% |
| Equity Method Investment Gains/Losses | - | - | - |
| Ordinary Income | ¥157.0B | ¥119.6B | +31.2% |
| Net Income | ¥163.6B | ¥72.9B | +124.3% |
| ROE | 27.1% | 13.1% | - |
For the full year ended March 2026, Revenue was ¥4390.5B (YoY +¥746.3B, +20.5%), Operating Income was ¥155.9B (YoY +¥39.1B, +33.5%), Ordinary Income was ¥157.0B (YoY +¥37.4B, +31.2%), and Net Income was ¥163.6B (YoY +¥90.7B, +124.3%), delivering significant top-line and bottom-line growth. Operating margin improved to 3.6% from 3.2% a year earlier (+0.4pt). Gross margin declined to 12.0% from 12.3% (-0.3pt), but SG&A ratio improved to 8.4% (-0.7pt), enhancing profitability. By segment, the Toys Business led the company with Operating Income of ¥113.2B (72.6% of total), Amusement achieved Operating Income growth of +71.7%, and Video Games turned from a loss to Operating Income of ¥22.0B, while the Video & Music Business recorded an Operating loss of ¥11.2B. Operating Cash Flow was ¥158.3B, 1.57x Net Income, and Free Cash Flow remained ample at ¥146.5B.
[Revenue] Revenue totaled ¥4390.5B, up +20.5% YoY, representing a substantial increase. By segment, Video Games delivered the largest growth with Revenue of ¥1190.2B (+52.5%), Amusement was ¥654.0B (+24.9%), and Toys was ¥1924.2B (+13.5%)—all performing solidly. Video & Music declined to ¥622.2B (-3.6%). The sharp increase in Video Games revenue was driven by a higher number of hit titles and a favorable hardware cycle; Amusement benefited from expansion of capsule-toy specialty stores and improved same-store performance; Toys was supported by sustained demand for trading cards and new IP launches. Video & Music was affected by market contraction and a reduced title lineup. Gross profit was ¥526.3B (gross margin 12.0%), down ¥18.6B in absolute terms from ¥544.9B (gross margin 12.3%) a year earlier, but the contribution in absolute gross profit was secured through revenue expansion.
[Profitability] Cost of sales was ¥3864.2B (cost ratio 88.0%), up ¥426.7B YoY, and the slight decline in gross margin mainly reflects a mix effect from the higher proportion of Video Games. SG&A was ¥370.4B (SG&A ratio 8.4%), up ¥37.2B YoY, but improved versus sales from 9.1% to 8.4% (-0.7pt), demonstrating economies of scale. Executive compensation was ¥105.4B (prior year ¥101.7B), freight ¥28.8B (prior year ¥27.0B), and promotion expenses ¥26.9B (prior year ¥16.0B); although each item increased, they remained contained relative to revenue growth. Operating Income was ¥155.9B (operating margin 3.6%), up +33.5% YoY. By segment, Video Games improved sharply from ¥2.5B to ¥22.0B (+773.4%), Amusement was ¥51.9B (+71.7%), and Toys was ¥113.2B (+24.1%), while Video & Music recorded a loss of ¥11.2B (prior year profit ¥9.8B). Non-operating income was ¥5.5B (including dividend income ¥1.7B and foreign exchange gains ¥1.0B), and non-operating expenses were ¥4.4B, resulting in Ordinary Income of ¥157.0B (+31.2%), largely tracking Operating Income. Extraordinary gains were ¥0.2B (gain on sale of investment securities, etc.), extraordinary losses ¥0.6B (impairment losses ¥0.2B, valuation losses on investment securities ¥0.8B, etc.), making Pre-tax Income ¥156.6B (+47.9%). Income taxes were ¥55.6B (effective tax rate 35.5%), resulting in Net Income of ¥163.6B (+124.3%). In conclusion, revenue and profit expansion were primarily driven by Video Games turning profitable and high growth in Amusement.
The Toys Business reported Revenue of ¥1924.2B (+13.5%) and Operating Income of ¥113.2B (+24.1%, margin 5.9%), accounting for 72.6% of the company's Operating Income and serving as the largest earnings source. Stable demand for trading cards and new IP launches contributed to revenue growth, and SG&A efficiency improved margins. The Video & Music Business recorded Revenue of ¥622.2B (-3.6%) and an Operating loss of ¥11.2B (margin -1.8%), falling into loss from a prior-year profit of ¥9.8B. Market contraction and a thin title pipeline are the main causes, and fixed-cost burden compressed profitability. The Video Games Business saw Revenue of ¥1190.2B (+52.5%) and Operating Income of ¥22.0B (prior year ¥2.5B, +773.4%, margin 1.8%), reflecting a rapid recovery. Increased hit titles and a strong hardware cycle expanded both volume and value materially, achieving profitability through scale. The Amusement Business reported Revenue of ¥654.0B (+24.9%) and Operating Income of ¥51.9B (+71.7%, margin 7.9%), maintaining high profitability. Accelerated openings of capsule-toy specialty stores and high utilization at existing stores contributed, producing the highest margin among segments. Segment assets were Toys ¥398.2B, Video & Music ¥145.6B, Video Games ¥240.8B, and Amusement ¥134.7B, with notable asset expansion in Video Games (from prior year ¥147.8B, +62.9%).
[Profitability] Operating margin was 3.6%, up +0.4pt from 3.2% a year earlier; gross margin was 12.0%, down -0.3pt from 12.3%, but SG&A ratio improved to 8.4% (-0.7pt), demonstrating operating leverage. Operating Income was ¥155.9B (prior year ¥116.8B, +33.5%). EBITDA (Operating Income + Depreciation ¥13.1B + Goodwill Amortization ¥5.8B) reached ¥174.8B. Net margin was 3.7%, up +1.7pt from 2.0% a year earlier, and ROE was 27.1%, markedly higher than prior year 12.7%. ROA was 11.8%, up +1.6pt from 10.2%. [Cash Quality] Operating Cash Flow (OCF) of ¥158.3B was 0.97x Net Income, with an accrual ratio of -3.2%, within a healthy range. OCF/EBITDA was 0.91x, indicating good cash conversion. [Investment Efficiency] Total asset turnover was 3.05x (annualized), high and reflecting the strength of a wholesale/distribution model that offsets low margins with high turnover. ROE of 27.1% can be decomposed as Net Margin 3.7% × Total Asset Turnover 3.05 × Financial Leverage 2.39x. [Financial Soundness] Equity Ratio was 41.9%, down -3.9pt from 45.8% a year earlier, but current ratio was 158.5% and quick ratio 147.1%, showing sufficient liquidity. Interest-bearing debt is virtually zero, making interest coverage effectively infinite. Goodwill was ¥14.6B (2.4% of equity), light, providing B/S flexibility. Payout Ratio was 42.4%, within a sustainable range, and Free Cash Flow of ¥146.5B comfortably exceeds dividends ¥29.2B and share buybacks ¥18.7B in aggregate.
Operating Cash Flow was ¥158.3B, down -12.6% from ¥181.2B the prior year, but remained high at 0.97x Net Income. Subtotal (before working capital changes) was ¥201.7B, with depreciation ¥13.1B, goodwill amortization ¥5.8B, and provision for doubtful accounts ¥4.1B added back, while impairment losses ¥0.2B, foreign exchange gains ¥1.0B, and valuation losses on investment securities ¥0.8B were adjusted. In working capital, trade receivables absorbed ¥141.2B, reflecting collection terms associated with Video Games and Toys revenue expansion. Inventory increased slightly by ¥5.3B, showing good inventory management. Trade payables increased by ¥133.4B, offsetting working capital needs via maintained payable terms. Corporate tax payments were -¥46.0B, resulting in OCF of ¥158.3B. Investing Cash Flow was -¥11.8B, with capex of -¥3.7B and intangible asset investments -¥2.8B; investing was restrained and offset by withdrawal of time deposits +¥28.0B, keeping net outflow small. Free Cash Flow was ¥146.5B, similar to prior year ¥152.5B. Financing Cash Flow was -¥48.0B, mainly dividend payments -¥29.2B and share buybacks -¥18.7B. Cash and equivalents increased by ¥98.5B from opening ¥408.0B to closing ¥508.2B, maintaining ample liquidity.
Ordinary Income of ¥157.0B closely tracked Operating Income of ¥155.9B, with net non-operating difference of ¥1.1B (non-operating income ¥5.5B including dividend income ¥1.7B and foreign exchange gains ¥1.0B, less non-operating expenses ¥4.4B). Non-operating items are 0.2% of Revenue and immaterial, indicating core operations are the source of Ordinary Income. Extraordinary items netted -¥0.5B (extraordinary gains ¥0.2B, extraordinary losses ¥0.6B), showing limited one-off impacts. Comprehensive income was ¥93.8B, ¥69.8B below Net Income ¥163.6B, mainly due to valuation losses on securities of -¥7.3B and other adjustments through OCI. Operating Cash Flow ¥158.3B is 0.97x Net Income, with accrual ratio -3.2% (working capital increase -¥12.8B ÷ total assets ¥1440.0B) in a healthy range, indicating good cash backing of earnings. Goodwill amortization ¥5.8B (JGAAP) reduces Net Income but on an EBITDA basis cash-generating capability is high at ¥174.8B. Dividend income ¥1.7B is non-operating recurring income, and foreign exchange gains ¥1.0B are temporary upside from year-end FX movements, thus their contributions to core earnings are limited.
The FY2027 plan calls for Revenue ¥4500.0B (YoY +2.5%), Operating Income ¥158.0B (+1.3%), Ordinary Income ¥160.0B (+1.9%), and Net Income ¥105.0B (-35.8%), representing a cautious outlook. Revenue is expected to grow modestly while Operating Income is broadly flat; reduction of the Video & Music loss and maintenance of Video Games margins will be key. The large decline in Net Income likely incorporates the expiration of temporary tax effects and other one-off items from the prior year. EPS forecast is ¥240.15 (prior year ¥230.91), and dividend forecast is annual ¥15.00, with an interim dividend maintained at a stable level and year-end dividend considered based on performance. Progress rates are high at Revenue 97.6%, Operating Income 98.7%, and Ordinary Income 98.1%, implying a high probability of achieving guidance. However, recovery of Video & Music losses and the Video Games title pipeline could create upside or downside risks.
Annual dividend is ¥25.00 per share (interim ¥25.00, year-end ¥80.00) on an effective basis considering the 1:2 stock split on January 1, 2026. Payout Ratio is 42.4%, maintaining a policy to return an appropriate portion of earnings to shareholders. Free Cash Flow ¥146.5B covers total dividends ¥29.2B by 5.0x, indicating sustainability. Share buybacks of ¥18.7B were conducted, bringing total shareholder returns to ¥47.9B (dividends + share buybacks), and Total Return Ratio is 29.3%. DOE (Return on Equity through dividends) is reported at 5.4%, showing a good balance between capital deployment and shareholder returns. Additional share repurchases of ¥4840 million (prior year ¥2996 million) contributed to improved capital efficiency and support for per-share value through a reduction in shares outstanding. For FY2027, dividend forecast is annual ¥15.00 with interim dividend kept stable and year-end dividend to be flexibly considered based on performance.
Hit-title dependence and earnings volatility in the Video Games Business: Video Games recovered to Operating Income ¥22.0B (prior year ¥2.5B) but operates on a thin margin of 1.8%, making earnings highly sensitive to the presence of hit titles and hardware cycle fluctuations. A repeat of title investment failures—prior year impairment losses of ¥13.6B—could materially impair earnings.
Structural deficit and fixed-cost burden in Video & Music: The Video & Music Business recorded an Operating loss of ¥11.2B, falling from a prior-year profit of ¥9.8B. Market contraction and a paucity of titles are primary drivers, and fixed-cost burdens make short-term recovery difficult. The risk of renewed impairments exists and could continue to pressure consolidated earnings.
Upside cost risk in logistics and promotions under a low gross margin structure: With a gross margin of 12.0% and thin margins, increases in freight (¥28.8B, prior year ¥27.0B) and promotion expenses (¥26.9B, prior year ¥16.0B) pose upside risk. If logistics or promotion costs grow faster than revenue, operating margin could be rapidly compressed. Working capital expansion—trade receivables +¥141.2B and trade payables +¥133.4B—means that lax credit management could lead to bad debts and affect liquidity.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.6% | 3.4% (1.4%–5.0%) | +0.2pt |
| Net Margin | 3.7% | 2.3% (1.0%–4.6%) | +1.4pt |
Operating margin exceeds the industry median by +0.2pt, and net margin is +1.4pt higher, placing the company relatively high in profitability within the wholesale/distribution industry.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 20.5% | 5.9% (0.4%–10.7%) | +14.7pt |
Revenue growth outperformed the industry median by +14.7pt, reflecting the strong growth in Video Games and Amusement that drives the company's industry advantage.
※ Source: Company aggregation
Sustainability of a high-turnover, high-ROE model: With total asset turnover of 3.05x and ROE of 27.1%, capital efficiency is high, and the business model covers low margins through high turnover and leverage. Strong cash generation—OCF ¥158.3B and Free Cash Flow ¥146.5B—provides substantial room to balance dividends, buybacks, and growth investments. If Toys and Amusement remain robust and Video Games sustain profitability, the company could maintain ROE above 15% in the medium term.
Potential margin improvement through correction of Video & Music losses: Video & Music's Operating loss of ¥11.2B reduces consolidated operating margin by roughly -0.3pt. If fixed-cost restructuring and title pipeline renewal achieve profitability, operating margin could improve beyond 4.0%. Video Games margin is thin at 1.8%; sustained hit titles and improved gross margins could help push consolidated EBIT margin above 5.0%.
This report was automatically generated by AI analyzing XBRL financial statement data and is intended 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 should be made at your own responsibility; consult a professional advisor as appropriate.