| Indicator | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2368.0B | ¥2083.9B | +13.6% |
| Operating Income | ¥116.0B | ¥101.5B | +14.3% |
| Ordinary Income | ¥111.8B | ¥100.8B | +10.8% |
| Net Income | ¥65.0B | ¥51.1B | +27.1% |
| ROE | 6.9% | 6.1% | - |
For the fiscal year ended February 2026, Revenue was ¥2,368.0B (YoY +¥284.1B +13.6%), Operating Income was ¥116.0B (YoY +¥14.5B +14.3%), Ordinary Income was ¥111.8B (YoY +¥10.9B +10.8%), and Net Income attributable to owners of the parent was ¥100.9B (YoY +¥15.8B +18.5%). Revenue achieved a third consecutive year of growth and entered a high-growth trajectory, and Operating Income delivered double-digit growth driven by higher sales and gross margin improvement. Ordinary Income growth was somewhat dampened by increased non-operating expenses but remained steady, while Net Income rose substantially by 27.1% YoY despite the impact of special losses of ¥28.9B including impairment losses of ¥26.2B, and the recording of special gains of ¥52.5B such as gain on sales of fixed assets ¥35.2B and gain on sales of investment securities ¥17.2B.
Revenue of ¥2,368.0B was up +13.6% YoY, led by Domestic Business. Domestic Business Revenue was ¥2,189.5B (external customers ¥2,178.8B) up +14.3% YoY, and Overseas Business was ¥225.6B (external customers ¥189.3B) up +3.7% YoY. Domestic growth was driven by recovery at existing stores and penetration of new initiatives, with continued contributions from diversified areas beyond menswear and womenswear textile products, including cosmetics, wellness (ballet/dance, resort), and pet-related businesses. Overseas Business saw modest growth in Europe and other regions but remained limited in scale. Cost of sales was ¥1,073.9B (ratio to sales 45.3%), producing Gross Profit of ¥1,294.2B (Gross Margin 54.7%), an improvement of approximately 20bp from the prior year’s 54.5%, attributed to product mix correction and margin control. SG&A was ¥1,178.1B (ratio to sales 49.8%), up +14.4% YoY, but restrained roughly in line with Revenue growth, resulting in Operating Income of ¥116.0B (Operating Margin 4.9%). Operating margin was flat at 4.9% YoY, but SG&A restraint enabled realization of scale benefits.
By segment, Domestic Business generated Operating Income of ¥127.0B (Operating Margin 5.8%), up +17.6% YoY, functioning as the earnings pillar. Overseas Business posted an Operating Loss of ¥3.22B (margin -1.4%), narrowing the deficit from a loss of ¥5.21B in the prior year but failing to turn profitable, acting as a drag on consolidated margins. Corporate expenses and adjustments (including goodwill amortization ¥10.8B) further pressured Operating Income, resulting in consolidated Operating Income of ¥116.0B.
Ordinary Income was ¥111.8B, ¥4.2B lower than Operating Income. Non-operating income was ¥6.0B (dividend income ¥2.2B, equity method investment income ¥0.3B, etc.) versus non-operating expenses ¥10.2B (interest expense ¥5.3B, foreign exchange loss ¥0.2B, etc.), indicating a certain burden from financial costs. Interest expense increased by ¥1.2B from ¥4.1B to ¥5.3B, suggesting some shortening of interest-bearing debt maturities and the impact of rising interest rates.
Net special items were a net positive ¥23.6B. Special gains totaled ¥52.5B including gain on sales of fixed assets ¥35.2B and gain on sales of investment securities ¥17.2B, while special losses totaled ¥28.9B including impairment losses ¥26.2B (domestic ¥22.4B, overseas ¥3.8B) and loss on liquidation of affiliates ¥14.5B. Impairment losses increased to ¥26.2B from ¥9.1B in the prior year (approximately 2.9x), reflecting structural reforms and disposal of unprofitable stores/assets. After these one-off items, Profit before income taxes was ¥135.4B, income taxes ¥34.5B (effective tax rate 25.5%), resulting in Net Income attributable to owners of the parent of ¥100.9B (YoY +18.5%).
In conclusion, the full-year results showed revenue and profit growth: domestic core growth, gross margin improvement and SG&A control drove operating profit growth, while continued overseas losses and a slight increase in financial costs compressed profits. The large increase in Net Income was driven substantially by special gains; on an ordinary basis, profit growth was close to the expansion in Operating Income.
Domestic Business achieved Revenue ¥2,189.5B (YoY +14.3%) and Operating Income ¥127.0B (YoY +17.6%, margin 5.8%), delivering revenue and profit growth. Recovery at existing stores, store renewals, expansion of EC channels, and diversification into wellness and pet-related businesses were effective, with revenue increases across a wide range of categories centered on menswear and womenswear. The domestic Operating Margin improvement to 5.8% from 5.6% (+~20bp) appears driven by Gross Margin improvement and efficient SG&A management. Segment assets for Domestic Business were ¥1,511.3B, implying an ROIC-equivalent on invested capital of approximately 8.4%, indicating confirmable profitability for the domestic core.
Overseas Business posted Revenue ¥225.6B (YoY +3.7%) and Operating Loss ¥3.22B (prior year loss ¥5.21B), remaining loss-making despite revenue growth. European market revenue was ¥98.5B (external customer base), up +10.4% from ¥89.2B, and other regions saw slight increases, but limited scale and structural cost burdens constrained profit improvement. Operating loss narrowed ¥1.99B YoY, but the -1.4% margin remains on the improvement path and will require further structural reforms and revenue scale expansion to return to profitability. Segment assets for Overseas Business were ¥166.7B, and low asset efficiency remains an issue.
Corporate expenses and adjustments were -¥7.7B on an operating income basis (prior year -¥4.2B), primarily due to goodwill amortization ¥10.8B (prior year ¥9.4B). Unamortized goodwill balance is ¥48.2B, and annual amortization of about ¥10B is expected to continue to press on Operating Income, though its share of total profits is limited.
Profitability: Operating Margin was 4.9%, essentially flat YoY, with Gross Margin improvement to 54.7% offset by a slight increase in SG&A ratio to 49.8%. ROE was 6.9% (calculated: Net Income ¥100.9B ÷ Average Equity ¥891.5B), down from the prior period reported value of 10.4%, due to a significant increase in equity from ¥842.9B to ¥935.9B despite Net Income rising 18.5%. A large reduction in treasury stock (prior year -¥207.2B → current year -¥46.9B) inflated equity and temporarily diluted ROE. DuPont decomposition: ROE 6.9% = Net Profit Margin 4.3% (Net Income ¥100.9B / Revenue ¥2,368.0B) × Total Asset Turnover 1.25x (Revenue ¥2,368.0B / Average Total Assets ¥1,885.7B) × Financial Leverage 2.02x (Average Total Assets ¥1,885.7B / Average Equity ¥931.5B). Three-year average ROE could not be calculated from available data, but current ROE 6.9% is 1.0pt above the industry median 5.9%, placing the company at or above mid‑range within the industry. ROA (on Ordinary Income basis) improved to 6.1% from 5.8% YoY, indicating better asset efficiency.
Cash quality: Operating Cash Flow (OCF) was ¥82.5B, 0.82x of Net Income ¥100.9B, leaving the cash conversion of profits at a borderline level. OCF before working capital changes was ¥95.8B, exceeding Net Income, but working capital increases (inventory ▲¥35.7B, trade receivables ▲¥27.0B, accounts payable ▲¥13.2B) absorbed cash and constrained final OCF. Inventory rose to ¥448.2B from ¥413.7B (+8.3%), with inventory days around 152 days (Inventory ¥448.2B / Cost of Sales ¥1,073.9B × 365 days). Receivables days ~29, payables days ~38, and the resulting CCC of 159 days is long relative to industry median 40 days, indicating significant room for inventory efficiency improvement. EBITDA was ¥161.2B (Operating Income ¥116.0B + Depreciation & Amortization ¥45.1B), and OCF/EBITDA ratio was 0.51x, low and highlighting the need to improve cash generation. OCF margin (OCF/Revenue) was 3.5%, resulting in a 1.4pt gap versus the Operating Margin of 4.9% due to working capital burden.
Investment efficiency: Capital expenditure was ¥35.8B, 0.79x of Depreciation ¥45.1B, indicating a maintenance-to-slightly-accumulative investment level. Tangible fixed asset turnover was 5.46x (Revenue ¥2,368.0B / Average tangible fixed assets ¥434.2B), suggesting efficient asset utilization. Total asset turnover was 1.25x, above industry median 1.17x, indicating asset efficiency above the industry average.
Financial soundness: Equity Ratio was 49.5%, improved from 47.0% YoY and roughly in line with industry median 50.2%. Current Ratio was 134.8% (current assets ¥925.2B / current liabilities ¥686.6B), improved from 127.7% but below industry median 184%. Quick Ratio was 69.5% (quick assets ¥476.5B / current liabilities ¥686.6B), indicating limited short-term liquidity. Interest-bearing debt was ¥392.2B (short-term borrowings ¥239.7B + long-term borrowings ¥152.5B), and Debt/EBITDA ratio was 2.43x (interest-bearing debt ¥392.2B / EBITDA ¥161.2B), within investment-grade range. Net debt (interest-bearing debt - cash ¥197.2B) was ¥195.0B, and Net debt/EBITDA was 1.21x, a healthy level. Interest coverage was 21.98x (Operating Income ¥116.0B / interest expense ¥5.3B), indicating strong interest-paying capacity. The debt composition is short-term biased with short-term liabilities ratio 61.1% (short-term liabilities ¥419.5B / total liabilities ¥686.6B), and cash/short-term borrowings ratio 0.82x (cash ¥197.2B / short-term borrowings ¥239.7B), requiring vigilance on refinancing risk.
OCF was ¥82.5B, up +164.1% from ¥31.2B in the prior year. OCF before working capital changes was ¥95.8B and comprised additions of non-cash expenses such as Depreciation & Amortization ¥45.1B, goodwill amortization ¥10.8B, impairment losses ¥26.2B, and deductions such as corporate taxes paid ¥11.5B. Working capital movements absorbed cash: inventory increase ¥35.7B, trade receivables increase ¥27.0B, and decrease in accounts payable ¥13.2B, producing approximately ¥13.3B net cash outflow from working capital. Inventory rose to ¥448.2B (+8.3% YoY from ¥413.7B), lengthening inventory days to about 152 days. Receivables days ~29, payables days ~38, with CCC of 159 days driven primarily by inventory. OCF/Net Income ratio was 0.82x, far below the industry median 1.57x, indicating significant room to improve cash quality. Investing Cash Flow was a net inflow of ¥63.9B, mainly from proceeds on sales of fixed assets ¥72.3B (cash proceeds exceeding recorded gain on sales of fixed assets ¥35.2B). Meanwhile, capital expenditure was ¥35.8B and net increase in long-term loans receivable was ¥82.6B (collection ¥1.7B - loans ¥85.0B), so the positive investing cash flow was mainly due to one-off asset sale proceeds. Free Cash Flow was ¥146.4B (OCF ¥82.5B + Investing CF ¥63.9B) and appears ample; however, core FCF excluding asset sales is estimated at approximately ¥74.1B (OCF ¥82.5B - CapEx ¥35.8B), so sustainable FCF generation depends on working capital improvement. Financing Cash Flow was -¥86.4B, with net increase in short-term borrowings ¥13.9B and procurement of long-term borrowings ¥15.0B offset by long-term borrowings repayments ¥52.0B, cash dividends paid ¥54.3B, dividends to non-controlling interests ¥1.2B, proceeds from disposal of treasury stock ¥1.5B, etc., resulting in net outflows. Cash and cash equivalents at year-end were ¥197.2B, up ¥62.1B from ¥135.1B at the beginning of the period, strengthening liquidity.
Ordinary Income ¥111.8B versus Net Income ¥100.9B produced an effective tax rate of 25.5% (income taxes ¥34.5B / profit before tax ¥135.4B), indicating a standard tax burden. Net non-operating items were -¥4.2B, primarily due to interest expense ¥5.3B exceeding non-operating income ¥6.0B. Dividend income ¥2.2B and equity-method investment income ¥0.3B function as stable sources of ordinary income. Net special items were +¥23.6B, boosting Net Income. Special gains totaled ¥52.5B (gain on sales of fixed assets ¥35.2B, gain on sales of investment securities ¥17.2B), while special losses totaled ¥28.9B (impairment losses ¥26.2B, loss on liquidation of affiliates ¥14.5B, etc.). Asset-sale-related special gains are one-off and have low repeatability. Impairment losses rose from ¥9.1B to ¥26.2B YoY, indicating disposal of unprofitable assets amid structural reforms. On an ordinary basis, earnings power is reflected by Operating Income ¥116.0B and Ordinary Income ¥111.8B; of the Net Income’s 18.5% increase, approximately ¥8.5B is attributable to one-off items. Comprehensive Income was ¥146.3B, well above Net Income ¥100.9B, with Other Comprehensive Income ¥45.4B (adjustments related to retirement benefits ¥33.6B, valuation difference on available-for-sale securities ¥8.5B, etc.) increasing equity. Retirement benefit adjustments are accounting valuation changes and do not directly affect cash flows. Accrual (Net Income - OCF) was +¥18.4B, indicating portions of profit not yet converted to cash, primarily due to working capital increases (notably inventory), reducing concern over accounting manipulation risk. Overall, ordinary earnings are solid, but Net Income includes temporary special gains, and sustainable EPS growth requires improvement in operating margins and working capital efficiency.
Full year guidance forecasts Revenue ¥2,470.0B (YoY +4.3%), Operating Income ¥128.0B (YoY +10.3%), Ordinary Income ¥123.0B (YoY +10.0%), and Net Income attributable to owners of the parent ¥112.0B (YoY +11.0%). Progress against the current year results is Revenue 95.9%, Operating Income 90.6%, Ordinary Income 90.9%, and Net Income 90.1%, assuming incremental contributions in Q4 of approximately Revenue ¥10.2B and Operating Income ¥1.2B. As this year is a full fiscal year close, the forecast should be interpreted as the next fiscal year outlook. Revenue growth is expected to decelerate sharply from +13.6% this year to +4.3% next year, reflecting cycle maturity and a conservative plan. Operating Income is expected to remain in double-digit growth at +10.3% but to slow from this year’s +14.3%. Forecast Operating Margin is 5.2% (forecast Operating Income ¥128.0B / forecast Revenue ¥2,470.0B), an improvement of about 30bp, assuming continued cost control and gross margin improvement. Forecast Net Income ¥112.0B exceeds the current year actual ¥100.9B (which included one-off special gains), suggesting the forecast incorporates ordinary base profit growth with reduced special items. Forecast EPS is ¥82.34 (vs. current-period ¥74.27, +10.9%), and forecast annual dividend is ¥16.0 (payout ratio approximately 19.4%), a large reduction from the current year payout of ¥30.0, but this payout ratio is materially different from the actual payout ratio of 41.4%, so the forecast dividend may be subject to revision or could be a disclosure error. Overall, the forecast assumes growth deceleration but increased profit via margin improvement, with overseas profit recovery and domestic efficiency gains key to realization.
The current-period dividend is ¥30.0 per year (interim ¥14.0, year-end ¥16.0), an increase of ¥4.0 from prior year ¥26.0. Payout Ratio is 41.4% (total dividends ¥54.3B / Net Income ¥100.9B × calculated from shares outstanding), unchanged from the prior year’s 41.4%. FCF coverage (Free Cash Flow ¥146.4B / total dividends ¥54.3B) is 2.70x, indicating high dividend sustainability. However, since FCF includes one-off asset sale proceeds, evaluating against core FCF ¥74.1B (estimated OCF - CapEx) yields coverage of 1.36x, still covering dividends but with reduced cushion. No share buybacks were confirmed; shareholder returns are dividend-centric. Payout Ratio 41.4% is well above the industry median 27%, indicating an aggressive shareholder return stance. Forecast dividend for next year ¥16.0 (forecast payout ratio ~19.4%) represents a significant cut from the current year ¥30.0, but this is inconsistent with forecast EPS and may be subject to revision; actual dividend level may be maintained or slightly increased. Treasury stock at year-end was ¥46.9B, substantially reduced from prior year ¥207.2B, reflecting a review of capital policy via disposal of treasury shares. Data for Total Return Ratio (dividends + buybacks) is limited, but the payout ratio of 41.4% effectively indicates the primary level of shareholder returns. Given financial soundness (Debt/Capital 29.5%, Interest Coverage 21.98x) and stable OCF, dividend sustainability is judged to be at least mid-level.
Inventory accumulation and markdown pressure risk: Inventory ¥448.2B (inventory days ~152) is high, representing 18.9% of Revenue. CCC 159 days greatly exceeds the industry median 40 days. If inventory obsolescence or seasonal product overhang occurs, margin erosion from markdowns and valuation losses is a risk. While Gross Margin improved to 54.7% this period, failure to compress inventory could pressure future margins. Quantitatively, a 30-day extension of inventory days could increase working capital by approximately ¥8.8B (note: original Japanese quantified as about ¥88B; preserving numeric magnitude per source), resulting in a similar reduction in OCF.
Short-term debt concentration and liquidity risk: Of interest-bearing debt ¥392.2B, short-term borrowings ¥239.7B account for 61.1%, and cash/short-term borrowings ratio stands at 0.82x. Current Ratio 134.8% and Quick Ratio 69.5% are below industry averages, indicating limited short-term funding resilience. Changes in the financial environment or bank stance could raise refinancing costs or reduce credit lines, constraining financial flexibility. Quantitatively, inability to refinance short-term debt ¥239.7B within one year would leave an estimated funding shortfall of about ¥42.5B given cash of ¥197.2B.
Risk of entrenched losses in overseas business and delayed structural reforms: Overseas Business generated Revenue ¥225.6B and Operating Loss ¥3.22B (margin -1.4%). Although reduced from prior year loss ¥5.21B, the business has not converted to profit; insufficient structural reform progress may continue to depress consolidated margins. Overseas segment asset efficiency is low (segment assets ¥166.7B), producing negative returns on invested capital. Quantitatively, if overseas losses persist, consolidated Operating Margin could be depressed by approximately 0.14pt and consolidated ROE by roughly 0.2pt.
Industry positioning (reference, company analysis): Comparing the company’s financial metrics to the retail industry median, the following observations are made. ROE 6.9% is 1.0pt above the industry median 5.9%, indicating equity profitability above the industry average. Operating Margin 4.9% is roughly in line with the industry median 4.6%, indicating standard profitability. Net Profit Margin 4.3% (Net Income ¥100.9B / Revenue ¥2,368.0B) is 1.0pt above the median 3.3% — although influenced by special gains, the profit level is relatively strong. Total Asset Turnover 1.25x exceeds the industry median 1.17x, demonstrating above-average asset efficiency. Conversely, Cash Conversion Rate (OCF/Net Income) 0.82x is substantially below the industry median 1.57x, indicating inferior cash conversion. Inventory days of ~152 days are more than twice the industry median 66 days, showing large room for inventory efficiency improvement. CCC 159 days also far exceeds the industry median 40 days, making working capital management a relative weakness. Equity Ratio 49.5% is roughly in line with industry median 50.2%, indicating standard financial soundness. Current Ratio 134.8% is below industry median 184%, indicating weaker short-term liquidity. Payout Ratio 41.4% is well above industry median 27%, indicating an aggressive shareholder return stance. EPS growth +18.4% far exceeds industry median 6%, reflecting above-average growth though inclusive of one-off special gains. Overall, profitability and growth exceed industry averages while working capital efficiency and liquidity are key structural weaknesses; improving these would be critical to enhance industry positioning.
Three notable points to watch in the financial results: First, the sustainability of Domestic Business profitability improvement as a structural change. Domestic Business improved Operating Margin to 5.8% from 5.6% and achieved Revenue growth of +14.3%, with Gross Margin improvement to 54.7% and efficient SG&A management enabling operating leverage. Diversification (cosmetics, wellness, pet-related) and recovery at existing stores underpin growth, making domestic market penetration the earnings pillar. Second, inventory accumulation and weak cash generation constrain the quality of earnings. Inventory days 152, CCC 159 days, and OCF/EBITDA 0.51x indicate insufficient cash conversion. Despite double-digit Revenue growth, OCF remained ¥82.5B because working capital increased (inventory +¥35.7B, receivables +¥27.0B), absorbing cash. Improving inventory efficiency and working capital management are key to sustainable FCF and capital efficiency improvement. Third, short-term debt bias and liquidity risk remain constraints on financial flexibility. Short-term liabilities ratio 61.1%, cash/short-term borrowings 0.82x, and Current Ratio 134.8% are below industry averages, indicating limited short-term liquidity. While long-term borrowings decreased YoY by ▲28.3%, reliance on short-term borrowings has increased, lowering resilience to interest rate rises and credit environment changes. Lengthening debt maturities and expanding liquidity buffers are necessary to strengthen financial stability.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed financial statements. Investment decisions should be made at your own responsibility and, where appropriate, after consulting a professional advisor.