| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1428.5B | ¥1215.7B | +17.5% |
| Operating Income | ¥86.5B | ¥61.9B | +39.9% |
| Ordinary Income | ¥88.3B | ¥64.8B | +36.3% |
| Net Income | ¥56.4B | ¥46.7B | +20.7% |
| ROE | 4.5% | 4.0% | - |
For the cumulative Q2 (first half) of the fiscal year ending February 2026, Revenue was ¥1,428.5B (YoY +¥212.8B, +17.5%), Operating Income was ¥86.5B (YoY +¥24.7B, +39.9%), Ordinary Income was ¥88.3B (YoY +¥23.5B, +36.3%), and Net Income attributable to owners of the parent was ¥56.4B (YoY +¥9.7B, +20.7%). Revenue achieved double-digit growth for the second consecutive period, and the operating margin improved to 6.1% from 5.1% in the prior-year period, a 1.0pt improvement. SG&A ratio improved to 51.2% from 53.0% a year earlier, demonstrating operating leverage. Conversely, gross profit margin declined to 57.2% from 58.1% (−0.9pt), suggesting pressure from raw material costs and product mix. Comprehensive income was ¥110.6B, about twice Net Income, with ¥54.3B from foreign currency translation adjustments contributing.
Revenue: Top-line achieved high growth of ¥1,428.5B (+17.5% YoY). The Japan segment posted Revenue of ¥961.2B (+20.4%), representing 67.3% of the total, driven by domestic demand recovery and comp-store customer traffic recovery. The Asia segment reported ¥467.3B (+11.9%) with a 32.7% share, and Australia recorded ¥61.5B (+13.6%); all segments saw revenue increases. Japan was the largest contributor to growth, and Asia maintained double-digit growth. Profitability: Cost of sales was ¥610.7B, producing Gross Profit of ¥817.8B (gross margin 57.2%). Gross margin declined 0.9pt from 58.1% year-on-year, pressured by higher raw material costs and changes in product mix. SG&A was ¥731.3B (SG&A ratio 51.2%), improving 1.8pt from 53.0% last year, reflecting successful cost containment against revenue growth. As a result, Operating Income rose substantially to ¥86.5B (Operating margin 6.1%), up 39.9% YoY. At the Ordinary Income level, non-operating income totaled ¥6.3B (including interest income ¥3.0B and foreign exchange gains ¥1.0B), while non-operating expenses were ¥4.5B (including interest expense ¥4.0B), yielding a net contribution of +¥1.8B and Ordinary Income of ¥88.3B (+36.3%). Extraordinary items included impairment losses ¥2.5B and loss on retirement of fixed assets ¥1.1B, totaling extraordinary losses ¥4.2B; pre-tax profit was ¥84.6B. After deducting income taxes of ¥28.2B (effective tax rate 33.4%), final Net Income was ¥56.4B (+20.7%). The divergence between Ordinary Income and Net Income is mainly due to extraordinary losses and tax burden; impacts from one-off factors are limited. In conclusion, the company delivered growth in both revenue and profit, with particularly pronounced expansion at the operating income level.
Japan segment: Revenue ¥961.2B (+20.4% YoY), Operating Income ¥33.7B (+422.8%), operating margin 3.5%. This is a substantial improvement from the prior-year operating margin of 0.8%, reflecting recovery in domestic store profitability. Impairment losses of ¥0.96B were recorded. Asia segment: Revenue ¥467.3B (+11.9%), Operating Income ¥51.3B (−3.9%), operating margin 11.0%. While profit amount slightly declined, margins remain high and support group profitability. Impairment losses were ¥1.55B. Australia: Revenue ¥61.5B (+13.6%), Operating Income ¥2.0B (−6.9%), operating margin 3.3%. Revenue rose but profit declined, leaving profitability at a low level. By segment contribution to operating income, Asia accounted for 59.1% of the total, Japan 38.9%, and Australia 2.3%. Asia’s high-margin structure underpins the company’s consolidated margins, while further improvement in Japan’s profitability presents upside.
Profitability: Operating margin of 6.1% improved 1.0pt from 5.1% in the prior-year period, aided by SG&A efficiency. Gross margin of 57.2% declined 0.9pt from 58.1%, but the 1.8pt improvement in SG&A ratio to 51.2% offset this. ROE improved to 4.5% from 4.0% a year earlier but remains low. Cash Quality: Operating Cash Flow (OCF) was ¥140.5B, 2.49x Net Income ¥56.4B, indicating solid cash backing of profits. OCF/EBITDA ratio was 0.80x, and inventory increase (¥23.9B) pressured working capital. Accrual ratio was −4.3%, indicating healthy accruals. Investment Efficiency: Total asset turnover was 0.74x, indicating mid-level efficiency against total assets of ¥1,934.8B. Capital expenditures were ¥93.4B versus depreciation ¥90.2B, giving a CapEx/Depreciation ratio of 1.04x, maintaining growth investment. Financial Soundness: Equity Ratio was 65.4%, slightly up from 65.0% a year ago, indicating solid financial base. Current ratio 263.5% and quick ratio 218.8% reflect very high liquidity, with cash and deposits ¥680.9B far exceeding current liabilities ¥377.3B. Cash equivalents relative to interest-bearing debt (long-term borrowings ¥60.0B) are 11.3x, effectively near net debt-free. Debt/EBITDA ratio 0.34x and interest coverage 21.9x indicate strong debt-servicing ability. Inventory turnover days were 101 days (prior year 107 days), slightly improved but still elongated, indicating room to improve working capital efficiency.
OCF was ¥140.5B (YoY +21.5%). Starting from pre-tax profit ¥84.6B, non-cash items including depreciation ¥90.2B produced operating cash subtotal ¥169.4B, from which increases in inventories ¥23.9B and corporate tax payments ¥28.4B were deducted to arrive at OCF. OCF/Net Income of 2.49x is high quality, but inventory increase pressured working capital. Investing Cash Flow was −¥98.9B, mainly acquisitions of tangible fixed assets ¥93.4B and intangible fixed assets ¥1.1B, reflecting continued growth investment for new store openings and renovations. Financing Cash Flow was −¥67.3B, primarily repayments of lease liabilities ¥46.7B, dividends ¥14.9B, and treasury stock purchases ¥10.0B. Free Cash Flow was ¥41.6B (OCF + Investing CF), comfortably covering total dividends and share buybacks of ¥24.9B. Cash and cash equivalents increased ¥9.4B from ¥671.5B at the beginning of the period to ¥680.9B at the end, including the effect of foreign currency translation adjustments of ¥35.1B, maintaining liquidity. CapEx/Depreciation ratio 1.04x indicates continued growth investment in addition to maintenance, supporting potential expansion of the revenue base.
Current period earnings start from Operating Income ¥86.5B, add net non-operating contribution of +¥1.8B (non-operating income ¥6.3B: interest income ¥3.0B, forex gains ¥1.0B, etc.; non-operating expenses ¥4.5B: interest expense ¥4.0B, etc.) to reach Ordinary Income ¥88.3B. Non-operating income to Revenue ratio is 0.44%, small, indicating earnings are fundamentally driven by core operations. Extraordinary items were net −¥3.7B (special gains ¥0.5B including gain on sale of fixed assets ¥0.1B; special losses ¥4.2B including impairment losses ¥2.5B and loss on retirement of fixed assets ¥1.1B), but impact on pre-tax profit was limited. The gap from Ordinary Income ¥88.3B to Net Income ¥56.4B is mainly due to extraordinary losses ¥3.7B and income taxes ¥28.2B (effective tax rate 33.4%), and does not indicate deterioration of recurring earnings. OCF/Net Income ratio 2.49x shows strong cash backing of earnings, and accrual ratio −4.3% is healthy; overall quality of earnings is high. However, OCF/EBITDA ratio 0.80x reflects working capital pressure from inventory increase, so recovery of working capital in H2 will be key.
Full-year guidance is maintained at Revenue ¥2,970.0B (YoY +15.7%), Operating Income ¥182.0B (YoY +17.4%), Ordinary Income ¥183.0B (YoY +15.8%), and Net Income attributable to owners of the parent ¥118.0B. First-half progress rates against full-year guidance are Revenue 48.1% (¥1,428.5B/¥2,970.0B), Operating Income 47.6% (¥86.5B/¥182.0B), Ordinary Income 48.2% (¥88.3B/¥183.0B), and Net Income 47.7% (¥56.4B/¥118.0B), roughly in line with standard progress (Q2 ~50% guideline), indicating a high probability of achieving plan at this time. SG&A efficiency improvements and substantial operating income gain in H1 support the full-year plan; however, declining gross margin and prolonged inventory turnover are H2 risks. The company is monitoring forecast revisions and progress of measures to achieve the plan.
No interim dividend was paid. Full-year dividend forecast is ¥30 per share (Payout Ratio 12.5%, based on full-year EPS forecast ¥240.40). Based on shares outstanding 52,272 thousand less treasury stock 3,144 thousand, the estimated annual dividend total is approximately ¥14.7B. H1 Free Cash Flow ¥41.6B sufficiently covers the projected full-year dividend, supporting dividend sustainability. Share buybacks of ¥10.0B were executed in H1; combined with dividends total shareholder returns were approximately ¥24.9B, funded within Free Cash Flow. Payout Ratio 12.5% is conservative; given ample cash ¥680.9B and stable OCF, scope for dividend increases is significant. However, reducing inventory and improving working capital efficiency would further enhance return capacity.
Prolonged inventory turnover days (101 days) and deteriorating working capital efficiency: Inventories are ¥168.8B, up +12.5% YoY, and inventory increases have manifested as OCF pressure (−¥23.9B). Continued delays in inventory turnover could lead to markdowns, disposal losses, or inventory valuation losses. Quantitatively, a 10-day increase in inventory turnover days is estimated to raise working capital by approximately ¥4B.
Dependence on domestic segment and low profitability: Japan segment accounts for 67.3% of Revenue while its operating margin remains low at 3.5%. Rising domestic labor costs or worsening consumer trends pose direct risks, and the profitability gap with Asia (margin 11.0%) constrains improvement in consolidated ROE. A 1pt decline in domestic margin would reduce consolidated Operating Income by approximately ¥9.6B.
Downward trend in gross margin and raw material price volatility risk: Gross margin at 57.2% declined 0.9pt YoY, and continued increases in raw material costs or adverse product mix could persist. A further 1pt decline in gross margin would reduce Operating Income by approximately ¥14.3B, which may be difficult to fully offset by SG&A efficiency alone. Exchange rate volatility and procurement cost upside pose structural gross margin risk.
Industry Position (reference, company analysis): In the food service industry, the company’s financial safety and liquidity rank among the top class within the sector, with Equity Ratio 65.4% and Current Ratio 263.5% well above peer medians. On growth, Revenue growth 17.5% ranks high within the industry, driven by domestic demand recovery and Asian expansion. Profitability: Operating margin 6.1% is mid-sector, with Asia segment high margin (11.0%) supporting consolidated profit while Japan’s low margin (3.5%) drags overall results. Capital efficiency: ROE 4.5% is low in the sector; abundant cash and low leverage cap capital efficiency. Over the past five periods, Revenue has maintained an increasing trend: ¥1,428.5B (H1 FY2026), Operating Income ¥86.5B, Net Income ¥56.4B, with EPS ¥114.72 and BPS ¥2,562.65 improving. Operating margin improved to 6.1% (H1 FY2026) from 5.1% a year earlier, reflecting SG&A efficiency. As typical for the foodservice industry, earnings are sensitive to labor and raw material cost volatility; this company also faces challenges of declining gross margin and deteriorating inventory efficiency. Relative industry positioning shows advantages in financial safety and growth, while improving capital efficiency is a medium-term strategic priority to strengthen competitiveness.
Three key points are highlighted. First, the improving trend in operating margin (5.1% → 6.1%) was realized through SG&A efficiency, indicating effective cost control relative to revenue growth. SG&A ratio improved 1.8pt, demonstrating operating leverage that is likely sustainable through comp-store efficiency and pacing of new openings. Second, Asia segment’s high-margin structure (11.0%) drives about 60% of consolidated operating profit, and improving regional mix is key to lifting consolidated margins. Japan segment’s low margin of 3.5% indicates room for domestic productivity improvements. Third, prolonged inventory turnover days (101 days) and weakening working capital efficiency partially impaired OCF quality; H2 progress on inventory reduction and working capital recovery will be important. Free Cash Flow ¥41.6B exceeds dividends and buybacks totaling ¥24.9B, supporting financial stability, but improving inventory efficiency could further expand return capacity and accelerate growth investment. ROE 4.5% remains low; improving domestic store profitability and optimizing capital allocation are medium-term challenges.
This report is an earnings analysis document automatically generated by AI from XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the Company based on public financial data. Investment decisions are your responsibility; please consult a professional advisor as necessary before making investment decisions.