| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥655.2B | ¥610.1B | +7.4% |
| Operating Income / Operating Profit | ¥47.1B | ¥49.2B | -4.3% |
| Ordinary Income | ¥49.9B | ¥51.9B | -4.0% |
| Net Income / Net Profit | ¥27.5B | ¥26.4B | +4.2% |
| ROE | 8.4% | 8.1% | - |
For the fiscal year ending February 2026, Revenue was ¥655.2B (YoY +¥45.1B +7.4%), Operating Income was ¥47.1B (YoY -¥2.1B -4.3%), Ordinary Income was ¥49.9B (YoY -¥2.0B -4.0%), and Net Income attributable to owners of the parent was ¥27.5B (YoY +¥1.1B +4.2%). Revenue increased in both directly operated stores and franchised stores (Direct +¥21.6B, Franchise +¥22.2B), and by region Japan +¥43.3B, Overseas +¥1.8B, indicating domestic demand-led expansion. Although Operating Income benefited from higher sales, a slight increase in Cost of Goods Sold ratio (50.3%→50.3%) and a rise in SG&A ratio (42.0%→42.5%) led to a decline in profit. Operating margin worsened by -0.9pt to 7.2% from 8.1% a year earlier. Recording of extraordinary losses of ¥10.9B (impairment losses ¥8.1B, loss on retirement of fixed assets ¥2.8B) reduced profit before tax to ¥39.5B (prior year ¥47.5B, -16.9%), but a reduction in income taxes (¥15.2B→¥13.3B) resulted in a slight increase in Net Income of +4.2% YoY. Recurring profitability declined at the operating and ordinary stages, but temporary losses were absorbed via tax burden reduction, resulting in a small increase in Net Income.
Revenue increase drivers were Direct store sales +¥21.6B (prior year ¥224.9B→¥246.5B), Franchise sales +¥22.2B (¥375.5B→¥397.7B), and Other +¥1.4B, expanding across all segments. By region Japan +¥43.3B (¥507.1B→¥550.4B), Overseas +¥1.8B (¥102.9B→¥104.7B), led by domestic market. Gross profit margin was 49.7% (prior year 50.0%), a contraction of -0.3pt, with a slight increase in Cost of Goods Sold ratio (impacted by raw materials and logistics costs). SG&A expenses were ¥278.5B (prior year ¥255.9B, +8.8%); major increases include Salaries and allowances +¥4.5B (¥54.4B, +9.1%), Rent +¥3.2B (¥30.6B, +11.8%), Depreciation +¥3.0B (¥15.9B, +23.2%). SG&A ratio rose to 42.5% (prior year 42.0%), offsetting the revenue gains. Operating Income was ¥47.1B (-4.3%), operating margin 7.2% (-0.9pt). Non-operating income was ¥11.9B (mainly Other non-operating income ¥2.1B, etc.), non-operating expenses ¥9.2B (interest expenses ¥0.7B, other ¥1.4B, etc.), yielding net non-operating income of +¥2.7B. Ordinary Income was ¥49.9B (-4.0%). Extraordinary gains ¥0.5B and extraordinary losses ¥10.9B (impairment losses ¥8.1B, loss on retirement of fixed assets ¥2.8B) resulted in profit before tax of ¥39.5B (-16.9%). Income taxes were ¥13.3B (effective tax rate 33.7%, prior year 32.1%), and after deducting non-controlling interests ¥0.5B, Net Income attributable to owners of the parent was ¥27.5B (+4.2%). Although the one-off extraordinary losses of ¥10.9B depressed Net Income, tax burden reduction allowed a small YoY increase in Net Income. Conclusion: revenue up but profit down at operating and ordinary stages; Net Income increased modestly due to tax effects.
Profitability: Operating margin 7.2% (prior year 8.1%, -0.9pt), Net margin 4.2% (prior year 5.2%, -1.0pt), ROE 8.4% (down from the prior-year equivalent 10.1%), all declined YoY. ROE of 8.4% is explained by Net margin 4.2% × Total Asset Turnover 1.40 × Financial Leverage 1.47, with decline mainly driven by lower Net margin. Cash quality: Operating Cash Flow (OCF) ¥55.9B is 2.03x Net Income ¥27.5B, indicating high quality. OCF/EBITDA ratio is 0.83x (EBITDA = Operating Income ¥47.1B + Depreciation ¥20.1B = ¥67.2B), near a healthy level. Investment efficiency: Total Asset Turnover 1.40x (prior year 1.35x, improved); Inventory turnover days ~10.7 days (Inventory ¥10.5B ÷ daily sales ¥1.79B, slight increase from prior year 10.0 days), maintaining high efficiency. CapEx ¥32.4B / Depreciation ¥20.1B = 1.61x, indicating an active investment stance. Financial soundness: Equity Ratio 68.3% (prior year 70.0%, -1.7pt), Current Ratio 237% (prior year 291%), Quick Ratio 224.5% (current assets excluding inventories ¥188.9B / current liabilities ¥84.2B), showing high liquidity. Interest-bearing debt is only long-term borrowings ¥2.1B, net cash ¥130.7B (cash ¥132.8B - borrowings ¥2.1B), Debt/EBITDA = 0.03x, an extremely conservative position.
OCF was ¥55.9B (prior year ¥53.2B, +5.2%). Starting from profit before tax ¥39.5B, add non-cash expenses such as Depreciation ¥20.1B and impairment losses ¥8.1B, and adjust for working capital changes (Inventories -¥2.0B, Trade receivables -¥1.4B, Trade payables +¥1.1B, etc.), producing subtotal OCF ¥72.0B. After income taxes paid -¥16.2B, final OCF ¥55.9B. Investing CF was -¥49.3B, mainly CapEx -¥32.4B, acquisition of subsidiary shares -¥13.1B, purchase of short-term investment securities -¥19.9B, and redemptions +¥20.0B. Free Cash Flow was ¥6.6B (OCF ¥55.9B + Investing CF -¥49.3B). Financing CF was -¥29.3B, primarily dividends paid -¥25.5B and lease liability repayments -¥3.6B. Cash and equivalents decreased from ¥152.6B at the beginning of the period to ¥130.5B at period end, a decline of -¥22.1B. OCF/EBITDA = 0.83x, FCF/OCF = 11.8%, indicating limited cash-generation capacity after investments and shareholder returns. With dividends paid ¥25.5B versus FCF ¥6.6B, FCF coverage is 0.26x, meaning dividend payments are being partially funded from cash reserves.
Ordinary Income ¥49.9B is driven by operating activities, with net non-operating income +¥2.7B (0.4% of sales) having minimal impact. Major items of non-operating income ¥11.9B are interest and dividend income received ¥0.8B and other non-operating income ¥2.1B; each is well below 5% of sales, indicating core earnings are concentrated in Operating Income. Conversely, extraordinary losses ¥10.9B (impairment losses ¥8.1B, loss on retirement of fixed assets ¥2.8B) materially reduced profit from Ordinary Income to profit before tax. The impairments and retirements are largely one-off associated with the rationalization of unprofitable stores and assets and are non-cash expenses that have been added back to OCF. The structure where OCF is 2.03x Net Income reflects the non-cash nature of impairments and retirements. The accrual ratio (OCF - Net Income) / Total Assets = -5.9% (negative), indicating cash generation exceeds accounting profits and implying good earnings quality. Recurring earning power should be evaluated at the Operating and Ordinary stages; Net Income is more volatile due to one-off losses.
Full Year / FY forecast: Revenue ¥726.0B (YoY +10.8%), Operating Income ¥50.0B (+6.0%), Ordinary Income ¥50.4B (+1.1%), Net Income attributable to owners of the parent ¥27.2B (-1.1%), EPS ¥17.04. Progress rates are Revenue 90.2% (¥655.2B/¥726.0B), Operating Income 94.2% (¥47.1B/¥50.0B), Ordinary Income 99.0% (¥49.9B/¥50.4B), Net Income 101.1% (¥27.5B/¥27.2B). High progress at the operating and ordinary stages suggests the full-year plan is broadly achievable. Net Income slightly exceeds the plan, which may indicate that the size of extraordinary losses differed from assumptions at the time the plan was set. Forecasted full-year Operating margin is approximately 6.9% (¥50.0B/¥726.0B), slightly below the current 7.2%, reflecting conservative assumptions that incorporate higher SG&A or investment costs in Q4. With Revenue growth +10.8% and Operating Income growth +6.0%, operating leverage appears limited; cost control and improvement in same-store profitability are key to achieving the full-year targets.
Dividends: Interim ¥8.00, Year-end forecast ¥8.00, annual ¥16.00 (same as prior year). Total dividends approximately ¥25.5B; dividend payout ratio (Payout Ratio) is 80.5% (calculated as dividends ÷ Net Income attributable to owners of the parent), high and stable at prior-year level. The payout ratio excludes share buybacks. With FCF ¥6.6B versus dividends ¥25.5B, FCF coverage is 0.26x, so dividends are not fully covered by internal cash generation and are being absorbed by cash holdings (¥132.8B). Dividend policy appears to prioritize stable dividends, but balancing high dividends with growth investment (CapEx/Depreciation = 1.61x) constrains cash allocation in the short term. Future adjustments may require either stronger OCF growth, improved investment efficiency, or flexibility in return levels. No share buyback disclosed; Total Return Ratio is not applicable.
Industry positioning (reference — company study): Compared with the retail industry median for FY2025, Operating margin 7.2% (industry median 4.6%, IQR 1.7%–8.2%) is above median and in the upper range. Net margin 4.2% (industry 3.3%, IQR 0.9%–5.8%) also exceeds median, indicating strong profitability. ROE 8.4% (industry 5.9%, IQR 2.6%–12.0%) is above median but trending down from prior-year equivalent 10.1%. Equity Ratio 68.3% (industry 50.2%, IQR 40.1%–63.6%) is high within the industry, indicating top-tier financial safety. Payout Ratio 80.5% (industry 27%, IQR 20%–34%) far exceeds industry median, reflecting an aggressive shareholder return stance. Total Asset Turnover 1.40x (industry 1.17x, IQR 0.85–1.55) and Inventory turnover days ~11 days (industry 65.7 days, IQR 17.4–111.4) both substantially outperform industry averages, indicating superior efficiency in asset turnover and inventory management. CapEx/Depreciation ratio 1.61x (industry 1.16x, IQR 0.75–1.92) is above median, showing proactive investment. Current Ratio 237% (industry 184%, IQR 126%–254%), Net Debt/EBITDA = 0.03x (industry -0.59x, IQR -2.61–1.32) point to extremely conservative financial leverage and top-class solvency in the industry. Revenue growth +7.4% (industry +4.3%, IQR +2.2%–+13.0%) slightly exceeds the median, showing solid growth. Overall, profitability, efficiency, and financial soundness are all above industry medians, with a financial strategy characterized by high dividends and active investment. However, this fiscal year's decline in Operating margin and high payout ratio placing pressure on FCF are focal points for sustainability assessment in coming periods.
The highlights of the results are: (1) despite maintaining revenue growth and strong OCF generation, SG&A inflation has reduced operating and ordinary profit margins, exposing structural issues in profitability improvement; (2) extraordinary losses of ¥10.9B (impairment and retirements) materially depressed Net Income, but tax reductions allowed a slight increase in Net Income, confirming a structure where one-off losses are absorbed by tax effects; (3) with FCF ¥6.6B versus dividends ¥25.5B and CapEx ¥32.4B, internal funds cannot simultaneously cover returns and investments, and the company is maintaining balance using substantial cash holdings (¥132.8B). Structurally, SG&A ratio rose from 42.0% to 42.5%, indicating rigidity in cost structure as increases in personnel, rent, and depreciation outpace sales growth. Payout Ratio 80.5% remains at prior-year level, indicating continued emphasis on stable dividends. Next fiscal year’s plan (Revenue +10.8%, Operating Income +6.0%) implies top-line and bottom-line growth, but Operating margin is forecast to decline to ~6.9% from this year’s 7.2%; cost control and same-store profit improvement are keys. The company retains industry-leading positions in margin, efficiency, and financial safety, and short-term margin deterioration is likely absorbable through store investment and one-off loss reversals, but the persistence of SG&A trends and the balance between dividends and investment will determine medium-term evaluation.
This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company based on public financial statements. Investment decisions are your responsibility; consult a professional advisor as appropriate.