| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥545.7B | ¥532.3B | +2.5% |
| Operating Income / Operating Profit | ¥29.1B | ¥27.1B | +7.6% |
| Ordinary Income | ¥29.3B | ¥27.5B | +6.3% |
| Net Income / Net Profit | ¥17.3B | ¥31.7B | -45.4% |
| ROE | 5.5% | 10.4% | - |
For the fiscal year ended March 2026, Revenue was ¥545.7B (YoY +¥13.4B +2.5%), Operating Income was ¥29.1B (YoY +¥2.0B +7.6%), Ordinary Income was ¥29.3B (YoY +¥1.8B +6.3%), and Net Income was ¥17.3B (YoY -¥14.4B -45.4%). The top line achieved growth for the second consecutive year; a gross margin of 68.4% (up +0.3pt from 68.2%) and a SG&A ratio of 63.1% (flat vs. prior year 63.1%) drove an improvement in Operating Margin to 5.3% (up +0.2pt from 5.1%). Profitability up to the ordinary income level grew smoothly, but Net Income declined substantially YoY due to recording Special Losses of ¥3.8B including an impairment loss of ¥2.6B and an increase in the effective tax rate to 36.6% (YoY). Meanwhile, Operating Cash Flow was ¥54.3B (YoY +¥37.9B +278.7%), 3.14x Net Income, and Free Cash Flow was ¥36.2B, indicating a healthy cash-generation profile sufficient to cover dividend payments and capital expenditures.
[Revenue] Revenue was ¥545.7B, up +2.5% YoY. The Group operates effectively as a single segment centered on restaurant operations; same-store customer counts, average spend per customer, and store openings/closings drive revenue. Cost of Sales was ¥172.3B (31.6% of sales), Gross Profit was ¥373.4B, and Gross Margin improved to 68.4% from 68.2% (+0.3pt). Improvements are attributed to price revisions, menu-mix optimization, and yield improvements, demonstrating maintenance/improvement of gross margin amid rising raw material and utility costs. All revenue is domestic; overseas revenue is zero.
[Profitability] SG&A was ¥344.3B (63.1% of sales), up +2.5% YoY, approximately in line with sales growth, leaving the SG&A ratio unchanged at 63.1%. Operating Income was ¥29.1B (Operating Margin 5.3%), up +7.6% YoY; Operating Margin improved +0.2pt from 5.1% the prior year. Non-operating items: Non-operating income ¥1.2B (interest and dividends received ¥0.8B, etc.) less Non-operating expenses ¥1.0B (interest expense ¥0.6B, etc.) resulted in net +¥0.2B, producing Ordinary Income of ¥29.3B (Ordinary Income Margin 5.4%), up +6.3% YoY. Extraordinary items: Extraordinary gains ¥1.8B (gain on sale of fixed assets) less Extraordinary losses ¥3.8B (impairment loss ¥2.6B, loss on disposal of fixed assets ¥1.2B) yielded net -¥2.0B, resulting in Profit Before Income Taxes of ¥27.2B. Income taxes amounted to ¥10.0B (effective tax rate 36.6%), a large increase from prior year -¥7.6B (driven by reversal of deferred tax assets, etc.), resulting in Net Income of ¥17.3B (Net Margin 3.2%), a YoY decline of -45.4%. In summary, despite revenue and operating profit growth, one-off items and tax burden led to a significant reduction in Net Income.
[Profitability] Operating Margin 5.3% (prior 5.1%, +0.2pt), Net Margin 3.2% (prior 5.9%, -2.8pt), ROE 5.5% (prior 10.9%, -5.4pt). Operating-level profitability improved due to gross margin expansion, but Net Margin deteriorated significantly from one-off losses and higher tax rate, halving ROE due to lower net income. [Cash Quality] Operating CF / Net Income = 3.14x, indicating high cash quality; Operating CF / EBITDA (EBITDA = Operating Income + Depreciation = estimated ¥43.9B) = 1.24x, favorable. Non-cash items such as impairment contributed, so cash generation is strong relative to accounting profit. [Investment Efficiency] Total Asset Turnover 1.13x (prior 1.14x). CapEx ¥19.6B is 1.33x Depreciation ¥14.8B, reflecting renewal/growth investment; Tangible Fixed Asset Turnover 3.28x, showing sustained asset efficiency. [Financial Soundness] Equity Ratio 65.1% (prior 64.9%), Current Ratio 150.5%, Quick Ratio 150.3% indicate strong short-term liquidity. Interest-bearing debt ¥70.7B (short-term borrowings ¥70.0B + long-term borrowings ¥0.7B) vs. cash and deposits ¥152.7B, close to net cash. Debt/EBITDA 1.61x, Interest Coverage approximately 47x (Operating CF ¥54.3B / interest paid ¥0.6B ×2 ≈ 45x; EBIT ¥29.1B / interest paid ¥0.6B ≈ 48x), indicating very high debt-servicing ability. Short-term borrowings ratio 99.1% (short-term borrowings ¥70.0B / interest-bearing debt ¥70.7B) concentrates maturities in the short term, but Cash/Short-term Borrowings = 2.18x limits immediate refinancing pressure. Asset retirement obligations ¥13.3B warrant attention as potential exit/restoration costs. Goodwill ¥9.8B equals 3.1% of net assets and 0.22x of EBITDA—conservative levels with low impairment risk.
Operating CF was ¥54.3B, improving from ¥14.3B a year earlier (+¥37.9B +278.7%), and was 3.14x Net Income, demonstrating high-quality cash generation. Subtotal of operating CF (before working capital changes) was ¥59.4B; working capital contributed via inventory decrease +¥7.2B, trade receivables decrease +¥0.7B, and trade payables increase +¥4.1B, while corporate tax payments -¥5.3B were cash outflows, yielding net Operating CF of ¥54.3B. Non-cash add-backs included impairment loss ¥2.6B. Investing CF was -¥18.1B, mainly CapEx -¥19.6B (new stores, renovations, maintenance/renewals), net acquisitions/disposals of investment securities, and proceeds from sales of tangible fixed assets ¥2.5B; redemption proceeds of investment securities ¥5.0B also provided inflow. Financing CF was -¥17.4B: net change in short-term borrowings was zero (prior year net increase ¥30.0B), long-term borrowings repayment -¥2.9B, lease liabilities repayment -¥1.0B, and dividend payments -¥13.5B were cash outflows. Free Cash Flow (Operating CF + Investing CF) was ¥36.2B, covering dividends ¥13.5B and share buybacks ¥0.0B by 2.68x, and cash increased by ¥18.8B. Year-end cash was ¥152.7B, representing 31.5% of total assets and indicating very high financial flexibility.
Recurring income consists of Revenue ¥545.7B and Non-operating income ¥1.2B, most of which is interest and dividends received ¥0.8B, indicating low dependency on non-operating items and revenue primarily from core operations. One-off items: Extraordinary gains ¥1.8B (gain on sale of fixed assets) and Extraordinary losses ¥3.8B (impairment loss ¥2.6B, loss on disposal of fixed assets ¥1.2B), net -¥2.0B which depressed Net Income. Ordinary Income ¥29.3B vs. Net Income ¥17.3B shows a -41% gap, mainly due to extraordinary losses and a high effective tax rate of 36.6%. Prior year’s effective tax rate was an anomalous -31.8% due to reversal of deferred tax assets; the current 36.6% partly reflects a rebound. On an accrual basis, Operating CF is 3.14x Net Income, indicating strong cash backing. Operating CF / EBITDA 1.24x is healthy, helped by non-cash impairment and working capital improvements. Comprehensive income was ¥26.0B, ¥8.7B above Net Income ¥17.3B, largely due to valuation gains on investment securities of ¥8.8B (OCI from fair value increases), reflecting unrealized gains on held equities. Goodwill amortization under JGAAP of ¥1.4B is about 3% of EBITDA, causing only a minor distortion when comparing with IFRS peers. Overall, recurring income quality is high; Net Income volatility is driven by one-offs and tax-rate fluctuations, while cash-generation capability is sustainable.
Full Year forecast: Revenue ¥550.0B, Operating Income ¥32.0B, Ordinary Income ¥32.5B, Net Income ¥21.0B. Achievement rates vs. forecasts were: Revenue 99.2%, Operating Income 91.0%, Ordinary Income 90.1%, Net Income 82.3%. Revenue nearly met the plan, while Operating/Ordinary were short by ~9–10% and Net Income missed by ~18%. The shortfall was mainly due to Extraordinary losses ¥3.8B including impairment loss ¥2.6B and an overshoot of the effective tax rate to 36.6%; operating strength up to the ordinary income level achieved ~90% of plan, which is within an acceptable range. Forecast assumptions are described in the attached management performance overview; as deviations stemmed chiefly from one-offs, next fiscal year’s forecast assumes normalization of extraordinary losses and tax rates. Forecast EPS is 74.57円 vs. actual EPS 61.36円 (+21.5%). Dividend forecast 15円 (annual) contrasts with actual dividend of 30円 (interim 15円 + year-end 15円); the stated 15円 in forecasts may refer to a semiannual amount. Going forward, recovery in same-store traffic, stabilization of raw material and utility costs, and optimization of the store portfolio will be key to stabilizing and improving margins.
This period’s dividend is Interim 15円 & Year-end 15円, annual 30円 (prior year Interim 6円 & Year-end 6円 annual 12円; note prior year year-end included ordinary dividend 18円 + special dividend 15円 totaling 33円—estimated prior year total ~21円), indicating a dividend-upward trend. Payout Ratio is 49.6% (total dividends ¥13.5B / Net Income ¥17.3B; XBRL shows 40.0% elsewhere, indicating discrepancies between declared policy and reported figures). At normal profit levels this is not excessive. Share buybacks were ¥0.1B, immaterial; Total Return Ratio approximately 50%, indicating dividend-focused shareholder returns. Free Cash Flow ¥36.2B covers dividends ¥13.5B by 2.68x; combined with cash ¥152.7B, dividend sustainability is high. DOE (total dividends / net assets) is 4.4%, not an excessive capital return from a capital-efficiency perspective, and represents a balanced level. If Net Income normalizes after one-off impacts, there is room for dividend increases within a payout ratio range of 40–50%. The dividend forecast of 15円 (whether annual or semiannual requires confirmation; if annual, it would be -50% YoY vs. prior 30円) will be decided based on next fiscal year profit levels.
Risk of sustained high raw material and utility costs: Although Gross Margin improved to 68.4% (+0.3pt YoY), continued upward pressure on food and utility prices may prevent full pass-through or cost absorption, reversing and deteriorating gross margin and compressing operating margin.
Fixed-cost leverage risk from labor and SG&A: SG&A ratio at 63.1% is high; if labor shortages push labor costs up or rents/utilities rise faster than sales growth, operating leverage can reverse and operating margin decline. Under a high fixed-cost structure, stagnation in same-store sales could rapidly erode profitability.
Risk of recurring store impairments and one-off losses: The company recorded impairment losses ¥2.6B this period, which pressured Net Income. If unprofitable stores persist, closures and impairments may recur, increasing Net Income volatility. Asset retirement obligations ¥13.3B (8.0% of liabilities) represent potential one-off cash outflows upon store exits.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 5.3% | 4.6% (1.7%–8.2%) | +0.7pt |
| Net Margin | 3.2% | 3.3% (0.9%–5.8%) | -0.2pt |
Operating Margin outperforms the industry median by +0.7pt and ranks relatively high, while Net Margin falls below the median due to one-off losses.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 2.5% | 4.3% (2.2%–13.0%) | -1.8pt |
Revenue growth lags the industry median by -1.8pt, placing the company at a somewhat slower growth position within the dining-out sector.
※ Source: Company compilation
Improvement in operating-level profitability and strong cash generation: Gross Margin 68.4% and Operating Margin 5.3% improved YoY; Operating CF is 3.14x Net Income and Free CF ¥36.2B demonstrates a strong cash-generation profile. Cash ¥152.7B, Debt/EBITDA 1.61x, and Interest Coverage ≈47x provide financial resilience to support both dividends and growth investment. CapEx at 1.33x Depreciation indicates proactive mid-term investment for store network expansion/renewal; improving same-store performance and store-opening efficiency are keys to growth.
One-off volatility in Net Income and expectation of normalization next year: Net Income ¥17.3B decreased -45.4% YoY due to impairment ¥2.6B and an effective tax rate of 36.6%, but Ordinary Income rose +6.3%, indicating core operating strength remains. Extraordinary losses related to store selection/closures are transient, and the tax rate increase is partly a rebound from the prior year anomaly; Net Income recovery can be expected next year as one-offs fade and tax rates normalize. Forecasts achieved ~90% for Operating/Ordinary Income but only 82% for Net Income due to one-offs; confirmation of an earnings-uptrend in next year’s guidance will be important.
Focus on short-term debt concentration and persistently high SG&A ratio: 99.1% of interest-bearing debt is short-term borrowings ¥70.0B, creating maturity-concentration risk. Cash balances are 2.18x short-term borrowings, providing liquidity, but interest-rate changes or adverse refinancing conditions warrant attention. SG&A ratio at 63.1% remains high; continued upward pressure on labor, rent, and utilities could lead to reversed operating leverage and rapid deterioration in profitability if sales momentum weakens. Monitoring same-store customer counts and average spend, raw material and utility price trends, and optimization of the store portfolio (including recurrence of impairments) will be critical.
This report is an AI-generated earnings analysis document produced by 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 public financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.