TSUTSUMI JEWELRY CO.,LTD. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥13.67B
• Operating Income: ¥1.15B
• Net Income: ¥768M
• EPS: ¥49.16

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

Tsutsumi Co., Ltd. (single-entity, JGAAP) reported solid topline and operating performance for FY2026 Q2, with revenue of ¥13,667 million, up 20.8% YoY. Operating income grew 16.9% YoY to ¥1,149 million, indicating positive operating momentum albeit with some margin dilution relative to sales growth. Ordinary income of ¥1,223 million exceeded operating income, suggesting net positive non-operating contributions. Despite this, net income fell 26.2% YoY to ¥768 million and EPS was ¥49.16, implying bottom-line pressure likely from extraordinary items rather than taxes, as reported income tax was only ¥1 million. Gross profit is stated at ¥5,280 million and the gross margin at 38.6%; these margin figures appear internally consistent and are used for analysis. The balance sheet shows an exceptionally strong equity base with total equity of ¥67,882 million against total assets of ¥69,938 million (implying an equity ratio around 97%), and very low liabilities of ¥1,837 million. Liquidity is extremely comfortable: current ratio 3,291% and quick ratio 2,414%, driven by ¥56,415 million in current assets and only ¥1,714 million in current liabilities. Inventory stands at ¥15,041 million, a meaningful working-capital commitment consistent with jewelry retail. DuPont indicates modest half-year ROE of 1.13% (net margin 5.62% × asset turnover 0.195 × leverage 1.03), primarily constrained by low asset turnover and very low financial leverage. Operating margin of about 8.4% and ordinary margin of about 9.0% show reasonable operating efficiency for the category. The sharp divergence between operating growth and net income decline likely reflects non-recurring factors within extraordinary gains/losses under JGAAP, not captured in the provided line items. Cash flow data (OCF, FCF, C&CE) and dividends were not disclosed in this dataset; as such, cash conversion, FCF coverage, and payout assessment cannot be verified from the period’s figures. Given the strong balance sheet, solvency risk is low; however, inventory intensity and potential extraordinary items are key to watch. Overall, the company demonstrates good revenue momentum and healthy operating fundamentals, with an exceptionally conservative capital structure, but the absence of cash flow disclosure and the net income decline from non-operating/extraordinary effects temper the quality of earnings this period. All conclusions are based strictly on disclosed non-zero figures, acknowledging missing items.

Profitability Analysis

ROE_decomposition: DuPont ROE (reported): 1.13% = Net margin 5.62% × Asset turnover 0.195 × Financial leverage 1.03. The main constraint is low asset turnover inherent to inventory-heavy retail and an ultra-low leverage profile; margins contribute most to ROE, leverage contributes minimally. margin_quality: Gross margin: 38.6% (gross profit ¥5,280m on revenue ¥13,667m). Operating margin: ~8.4% (¥1,149m/¥13,667m). Ordinary margin: ~9.0%. Net margin: 5.62%. Operating income grew slower than revenue (+16.9% vs +20.8%), implying slight OPEX deleverage or mix effects. The drop from ordinary to net income points to extraordinary items rather than tax burden (tax ~¥1m). operating_leverage: Revenue +20.8% YoY vs operating income +16.9% YoY suggests modest negative operating leverage in the period, likely from higher SG&A (e.g., personnel, rent, promotions) or mix. Gross margin level indicates decent pricing/merchandising discipline, but incremental margins softened YoY.

Growth Assessment

revenue_sustainability: The 20.8% YoY revenue growth is robust for a jewelry retailer, implying healthy demand and/or expanded selling footprint or effective promotions. Sustainability depends on consumer discretionary trends and gold/precious metal price dynamics affecting ticket size. profit_quality: Operating profit growth is positive but lagging sales, indicating some cost pressure. Ordinary income outpaced operating income, but net income declined due to extraordinary items; hence, underlying operating quality looks acceptable while bottom-line quality is clouded by non-recurring effects. outlook: If sales momentum continues and SG&A growth normalizes, operating margin could stabilize around the mid- to high-8% range for the half-year profile. Net income recovery hinges on the absence of further extraordinary losses. Asset turnover remains a structural constraint to ROE; improvement would require stronger sales productivity and inventory efficiency.

Financial Health

liquidity: Current assets ¥56,415m vs current liabilities ¥1,714m; current ratio 3,291% and quick ratio 2,414% indicate very strong short-term liquidity. Working capital is ¥54,701m. solvency: Total liabilities ¥1,837m vs equity ¥67,882m yield a debt-to-equity of ~0.03x and an implied equity ratio of ~97%. Financial risk from leverage is minimal. capital_structure: Extremely conservative, equity-funded balance sheet with very low financial leverage (DuPont leverage 1.03). This limits ROE but enhances resilience.

Cash Flow Quality

earnings_quality: Operating CF not disclosed (reported as 0 in dataset), so OCF/NI and accrual intensity cannot be assessed. The net income decline despite higher operating profit suggests non-operating or extraordinary items, not captured in cash data here. FCF_analysis: Investing and financing CF are undisclosed; FCF cannot be computed. Capex intensity and cash conversion are unknown for the period. working_capital: Inventories are ¥15,041m (~110% of half-year sales), underscoring working-capital intensity typical for jewelry retail. Without OCF details, we cannot assess inventory turnover or cash conversion cycle dynamics this period.

Dividend Sustainability

payout_ratio_assessment: Annual DPS and payout are not disclosed in the dataset (DPS shown as 0.00 indicates not reported). EPS for the period is ¥49.16; without DPS we cannot compute payout. FCF_coverage: FCF not disclosed; coverage analysis cannot be performed. policy_outlook: With a very strong balance sheet and low leverage, capacity for shareholder returns appears ample in principle, but dividend policy visibility is limited due to missing disclosures for this period.

Risk Assessment

Business Risks:

• Demand volatility in discretionary jewelry and bridal segments amid macro fluctuations.
• Precious metal price volatility (gold/silver/platinum) affecting COGS and gross margin.
• Inventory obsolescence/markdown risk and shrinkage in an inventory-heavy model.
• Store traffic sensitivity to consumer sentiment and competitive promotions.
• FX risk on imported materials and products.
• Execution risk in merchandising and pricing mix affecting margins.
• Potential extraordinary losses under JGAAP impacting bottom line volatility.

Financial Risks:

• Low asset turnover constraining ROE despite solid margins.
• High working capital tied in inventories; potential cash conversion risk if sales slow.
• Disclosure gaps in cash flow and dividend data limit transparency.
• Concentration risk in a single-entity reporting framework (no consolidated diversification).

Key Concerns:

• Net income decline (-26.2% YoY) despite operating growth, likely from extraordinary items.
• Absence of cash flow data prevents validation of earnings-to-cash conversion.
• Inventory intensity (~¥15.0bn) heightens exposure to demand and pricing shifts.

Investment Implications

Key Takeaways:

• Strong revenue growth (+20.8% YoY) with healthy operating performance (+16.9% YoY).
• Margins are solid (GM 38.6%, OP margin ~8.4%), but incremental margin softened YoY.
• Net income decline driven by non-operating/extraordinary factors, not tax.
• Ultra-strong balance sheet (implied equity ratio ~97%, D/E ~0.03x) lowers solvency risk.
• Low leverage and low asset turnover cap ROE (DuPont ROE 1.13% for the half).
• Inventory remains sizable, a key lever for cash conversion and margin protection.
• Disclosure limitations (cash flows, dividends) constrain full quality-of-earnings assessment.

Metrics to Watch:

• Same-store sales growth and average ticket size.
• Gross margin trends versus precious metal price movements.
• SG&A ratio to sales and operating margin trajectory.
• Inventory turnover and aging; markdown rates.
• Extraordinary gains/losses and reconciliation from ordinary income to net income.
• Tax rate normalization in subsequent periods.
• Operating cash flow and free cash flow once disclosed.
• Dividend announcements and payout guidance.

Relative Positioning: Within Japanese specialty retail, Tsutsumi exhibits above-average balance sheet strength and solid gross margins, but structurally lower asset turnover and very conservative leverage result in modest ROE relative to peers; near-term positioning hinges on sustaining sales growth while managing SG&A and inventory to stabilize operating leverage.

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