WORKMAN CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥47.17B
• Operating Income: ¥14.44B
• Net Income: ¥9.23B
• EPS: ¥113.06

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend 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 (JGAAP, non-consolidated), Workman delivered solid profit growth on flat revenue, indicating margin-driven earnings expansion. Revenue was ¥47.2bn (+0.0% YoY), while operating income rose to ¥14.4bn (+21.1% YoY) and net income reached ¥9.23bn (+22.5% YoY). Net margin was a robust 19.6%, supported by positive non-operating balance and a normalized tax burden. Using the disclosed revenue and cost of sales, we estimate gross profit at approximately ¥6.15bn and a gross margin of about 13.1%, though the company did not report gross profit in XBRL. Operating margin is high at roughly 30.6% (¥14.4bn/¥47.2bn), suggesting strong SG&A efficiency and/or favorable mix; however, the absence of reported depreciation limits EBITDA interpretation. Ordinary income (¥14.9bn) exceeded operating income by ~¥0.43bn, implying net non-operating gains (e.g., interest/dividend income) more than offset the ¥16m interest expense. The implied effective tax rate is about 33.5% (¥4.64bn tax on ~¥13.87bn pre-tax), not 0% as the unreported flag might suggest. Balance sheet strength is notable: total assets ¥170.3bn, equity ¥139.5bn, liabilities ¥26.9bn. From these, we infer an equity ratio around 82% (assets/equity leverage ~1.22x), despite the equity ratio field being unreported. Liquidity appears ample with a current ratio of ~5.47x and working capital of ~¥98.9bn, though inventory data were not disclosed. DuPont analysis indicates ROE of 6.62%, driven by a high net margin and conservative leverage but tempered by low asset turnover (0.277x). Cash flow data (OCF/FCF) are unavailable, preventing earnings-to-cash validation. Dividend data (DPS, payout, FCF coverage) were also not disclosed this quarter. Overall, profitability is strong and financial risk is low, but flat top-line growth and missing cash flow disclosures are key areas to monitor. The outlook hinges on sustaining margin gains, securing product availability, and reaccelerating store or same-store growth, while maintaining disciplined cost control.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: 19.56%
• asset_turnover: 0.277
• financial_leverage: 1.22
• calculated_ROE: 6.62%
• comments: ROE is driven by strong margins and conservative leverage; low asset turnover dampens overall ROE relative to high absolute profitability. margin_quality:
• gross_profit_estimate: ¥6,153m (Revenue ¥47,175m - COGS ¥41,022m); gross margin ~13.1% (not disclosed in XBRL)
• operating_margin: ≈30.6% (¥14,444m / ¥47,175m)
• net_margin: 19.56%
• non_operating_items: Ordinary income exceeds operating income by ~¥430m; with ¥16m interest expense, implies net financial/other income ~¥446m. operating_leverage: Operating income +21.1% on flat revenue suggests favorable operating leverage via SG&A efficiency, mix shift, and/or procurement benefits; sustainability depends on maintaining cost discipline and product gross margins absent top-line growth.

Growth Assessment

revenue_sustainability: Top-line was flat YoY (0.0%), pointing to subdued demand or tough comps; further growth likely depends on store expansion, same-store sales, and category/mix initiatives. profit_quality: Earnings growth outpaced sales due to margin improvements and non-operating income; durability hinges on cost control and stable input costs. Effective tax rate ~33.5% indicates normalized taxation. outlook: Near-term growth will be driven by merchandising, price/mix, weather-sensitive seasonal categories, and franchise pipeline. Maintaining OI growth with flat revenue may be challenging if cost tailwinds normalize.

Financial Health

liquidity:

• current_assets: ¥121,066m
• current_liabilities: ¥22,145m
• current_ratio: ≈546.7%
• quick_ratio: ≈546.7% (inventory unreported; actual quick ratio may be lower if inventory is material)
• working_capital: ¥98,921m solvency:
• total_assets: ¥170,326m
• total_liabilities: ¥26,928m
• total_equity: ¥139,471m
• equity_ratio_estimate: ≈82% (computed: equity/asset), reported field unreported
• debt_to_equity: 0.19x (based on total liabilities/equity) capital_structure: Conservative balance sheet with low leverage and substantial equity base; interest coverage is very strong at ~903x (OI/interest expense).

Cash Flow Quality

earnings_quality: OCF data not disclosed this period; cannot reconcile earnings to cash. High net margin and strong interest coverage are positives but require validation via OCF when available. free_cash_flow_analysis: FCF unreported; capex and D&A not disclosed, limiting assessment of maintenance vs growth investment needs. working_capital: Large positive working capital (¥98.9bn) supports liquidity; inventory levels and turns are not available, limiting assessment of inventory risk.

Dividend Sustainability

payout_ratio_assessment: DPS and payout ratio were not disclosed this period; EPS was ¥113.06. Without DPS/OCF/FCF data, payout sustainability cannot be quantified. FCF_coverage: Not assessable as OCF and capex were unreported. policy_outlook: No update on dividend policy in the provided data; future distributions will depend on cash generation, investment needs, and capital policy.

Risk Assessment

Business Risks:

• Flat revenue growth indicating demand or competitive pressures
• Weather and seasonality sensitivity in workwear/outdoor categories
• Procurement and input cost volatility (materials, logistics, FX on imports)
• Execution risk in merchandising and private-label strategy
• Franchise/store expansion and same-store sales volatility
• Potential normalization of recently favorable cost/margin tailwinds

Financial Risks:

• Cash flow visibility is limited due to unreported OCF/FCF
• Interest rate and market yield sensitivity on large cash/financial asset balances (implied by non-operating income)
• Tax rate variability affecting net profit
• Working capital swings (inventory and payables) not assessable due to data gaps

Key Concerns:

• Top-line stagnation while profits rise via margins may be hard to sustain
• Lack of disclosed cash flow metrics obscures earnings quality
• Inventory information not disclosed, constraining assessment of stock health and obsolescence risk

Investment Implications

Key Takeaways:

• Profit growth (+21% OI, +23% NI) on flat sales underscores strong cost control/mix benefits
• ROE 6.6% reflects high margin offset by low asset turnover and conservative leverage
• Balance sheet is very strong with an estimated ~82% equity ratio and ~903x interest cover
• Non-operating income contributed meaningfully (~¥0.43bn), boosting ordinary income
• Cash flow and dividend data were not disclosed, limiting capital return and FCF analysis

Metrics to Watch:

• Same-store sales and traffic/ASP trends
• Gross margin and SG&A ratio trajectory
• Inventory levels and turnover (when disclosed)
• OCF/NI conversion and FCF after capex
• Store/franchise openings and pipeline
• Non-operating income sensitivity (interest/dividend income) and effective tax rate stability

Relative Positioning: Operationally efficient with high margins and low leverage versus typical apparel/retail peers, but currently exhibiting lower asset turnover and flat revenue momentum; cash flow disclosure gaps reduce visibility relative to best-in-class transparency.

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