Goldwin Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥55.59B
• Operating Income: ¥6.96B
• Net Income: ¥6.82B
• EPS: ¥49.56

Income Statement

Balance Sheet

Cash Flow Statement

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

Verdict: Solid top-line and operating profit performance with clear operating margin expansion, but bottom-line declined YoY and cash conversion was weak, warranting caution on earnings quality. Revenue rose to 555.9 (100M JPY, +4.2% YoY), while operating income climbed to 69.6 (+33.5% YoY), indicating strong operating leverage. Ordinary income fell to 90.9 (-8.3% YoY) and net income decreased to 68.0 (-13.6% YoY), implying adverse non-operating and/or tax effects versus last year. Operating margin improved to 12.5% this quarter from an estimated 9.8% in the prior-year period, a c. +275 bps expansion. Ordinary income margin compressed to 16.4% from an estimated 18.6% (-223 bps), and net margin declined to 12.2% from an estimated 14.7% (-251 bps). Gross profit margin remained robust at 51.4%, reflecting premium product mix and pricing power, though YoY comparables are not disclosed. Non-operating income was 22.2, with dividends of 0.5 and interest income of 0.3; this partially offset but did not reverse the YoY decline in ordinary income. Effective tax rate was 26.1%, broadly in a normal range. Cash flow quality was weak: operating cash flow was 16.7 versus net income of 68.0 (OCF/NI 0.25x), pointing to a sizable working capital drag in the half. The balance sheet remains very strong with cash and deposits of 444.3, current ratio 305%, quick ratio 237%, and modest leverage (D/E 0.29x; interest coverage 224x). Equity increased to 1,159.1 with retained earnings of 1,147.1, underscoring financial resilience. ROE calculated at 5.9% (Net Margin 12.2% × Asset Turnover 0.372 × Leverage 1.29x) is moderate for a branded apparel company and below potential given the low leverage. ROIC is estimated at 7.1%, in-line with typical management targets for quality consumer names, but not yet in the excellent zone. Financing cash flow was -63.1, including share repurchases of -12.2, funded comfortably by cash on hand. Forward-looking, operating momentum appears healthy, but sustained improvement will depend on normalizing working capital, maintaining pricing, and stabilizing non-operating swings.

Profitability Analysis

ROE decomposition (DuPont): ROE 5.9% = Net Profit Margin 12.2% × Asset Turnover 0.372 × Financial Leverage 1.29x. Component change focus: operating margin expanded materially YoY (estimated +275 bps to 12.5%), but net margin compressed ~251 bps as ordinary income and bottom-line declined YoY, implying non-operating headwinds and/or higher tax burden vs prior year. Business drivers: stronger operating profit likely from mix and cost control (SG&A discipline relative to gross profit), while the YoY decline in ordinary income suggests last year benefited from larger non-operating gains (e.g., FX/investment-related) not repeated this year. Sustainability: operating margin improvement appears more durable given high gross margin (51.4%) and brand strength; non-operating swings are by nature volatile and not a reliable earnings source. Watchpoints: SG&A grew to 215.9; while we lack YoY SG&A detail, the divergence—revenue +4.2% vs operating income +33.5%—indicates positive operating leverage this period rather than SG&A overshoot. Asset turnover at 0.372 is low, typical for cash-rich, inventory-heavy apparel mid-year; improving inventory turns would lift ROE more sustainably than adding leverage. Net margin compression and reliance on non-operating income (non-op income/operating income ~32%) are the key quality flags.

Growth Assessment

Revenue growth of +4.2% YoY to 555.9 was modest but healthy amid a premium mix (gross margin 51.4%). Operating income growth of +33.5% demonstrates substantial operating leverage, likely driven by pricing/mix and cost efficiency. However, ordinary income (-8.3%) and net income (-13.6%) indicate growth at the operating line did not translate to bottom-line due to weaker non-operating gains and/or timing items. The operating margin improved to 12.5%, suggesting the core franchise is executing, but earnings quality is diluted by low cash conversion (OCF/NI 0.25x). Given seasonality in outerwear and fall/winter sell-in, some working capital build is expected in H1; normalization in H2 will be critical to validate earnings quality. Outlook hinges on inventory normalization, FX cost pass-through for imported goods, and weather-sensitive demand (cold winter). With ROIC at 7.1%, incremental gains could come from better inventory turns and supply chain efficiency rather than further SG&A cuts. Near-term growth visibility is reasonable, but bottom-line volatility from non-operating items could persist.

Financial Health

Liquidity is very strong: current ratio 304.6% and quick ratio 237.2% well above benchmarks. No warning on current ratio (<1.0) or D/E (>2.0); D/E is a conservative 0.29x and interest coverage is 224x. Cash and deposits of 444.3 exceed current liabilities of 295.0, indicating minimal maturity mismatch risk even if short-term loans are unreported. Accounts receivable (170.0) and inventories (198.9) also provide coverage alongside cash; payables are 72.3. Long-term loans are modest at 14.5; noncurrent liabilities are only 41.3. Investment securities are sizable at 337.2, implying some market valuation risk but also additional liquidity potential depending on classification. No off-balance sheet obligations were disclosed in the provided data. Overall solvency and liquidity profiles are robust.

Cash Flow Quality

OCF was 16.7 against net income of 68.0, yielding OCF/NI of 0.25x, which is a quality flag (<0.8 benchmark). Likely drivers include working capital build (inventories and receivables typical in H1 for seasonal apparel), though exact YoY deltas are not disclosed. Free cash flow is unreported, limiting precision on cash coverage of shareholder returns and capex. Financing CF was -63.1, including share repurchases of -12.2, which were readily funded by large opening cash balances. Sustainability: if H2 converts earnings to cash as inventory sells through, the full-year OCF/NI should improve; if not, repeated low cash conversion would be a concern. No clear signs of working capital manipulation are evident from the limited snapshot, but the combination of high inventories vs payables could temporarily depress OCF.

Dividend Sustainability

Dividend data are largely unreported; the calculated payout ratio of 341.3% suggests an elevated distribution relative to earnings, potentially influenced by special distributions or methodology differences. Without FCF and DPS figures, we cannot conclusively assess coverage. Balance sheet strength (cash 444.3; low leverage) provides near-term flexibility to maintain shareholder returns even with weak cash conversion in H1. Medium-term sustainability will depend on normalizing OCF and prudent capex; if payout truly exceeds 100% on a sustained basis, policy recalibration or reliance on cash reserves would be implied. We refrain from definitive conclusions given missing DPS/FCF details.

Risk Assessment

Business Risks:

• Weather sensitivity: warm winter could depress outerwear sell-through and trigger markdowns
• Demand volatility in discretionary premium apparel categories
• Brand/license concentration risk (e.g., key global outdoor brands) and potential license renegotiation risk
• Channel inventory risk across wholesale/retail partners
• FX volatility affecting import costs and pricing

Financial Risks:

• Low cash conversion in H1 (OCF/NI 0.25x) raising earnings quality concerns
• Bottom-line reliance on non-operating items leading to YoY volatility in ordinary income
• Market risk on investment securities holdings (337.2) impacting comprehensive income
• Potential inventory write-down risk if demand weakens

Key Concerns:

• Net margin compression (~-251 bps YoY) despite stronger operating profits
• Ordinary income down 8.3% YoY, signaling less supportive non-operating environment
• Working capital drag depressing OCF, with limited disclosure on capex and dividends
• Headline payout ratio appears elevated (>300%), though details are unreported

Investment Implications

Key Takeaways:

• Core operations are improving: operating margin expanded ~+275 bps on modest sales growth
• Bottom-line fell YoY due to non-operating factors, not core weakness
• Cash conversion is the main watchpoint; H2 should show normalization if inventory sells through
• Balance sheet strength (net cash position and high liquidity) provides resilience and flexibility
• ROIC at 7.1% is in-line with quality targets but leaves room for operational efficiency gains

Metrics to Watch:

• OCF/NI ratio trajectory in H2 and full-year
• Inventory levels and turnover, markdown rates in winter season
• Operating margin sustainability amid FX and cost pressures
• Non-operating income components (FX gains/losses, investment-related items)
• Payout policy disclosures (DPS, buybacks) and FCF coverage

Relative Positioning: Versus domestic premium apparel peers, Goldwin maintains superior gross margins and a stronger balance sheet with low leverage. However, current-period cash conversion lagged and bottom-line volatility from non-operating items tempered the otherwise strong operating performance.

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