| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue | ¥764.2B | ¥674.8B | +13.3% |
| Operating Income | ¥30.5B | ¥26.8B | +13.9% |
| Ordinary Income | ¥29.9B | ¥25.4B | +17.9% |
| Net Income | ¥6.6B | ¥2.4B | +172.3% |
| ROE | 3.6% | 1.4% | - |
The Q2 cumulative results for the fiscal year ending March 2025 recorded Revenue of ¥764.2B (YoY +¥89.4B +13.3%), Operating Income of ¥30.5B (YoY +¥3.7B +13.9%), Ordinary Income of ¥29.9B (YoY +¥4.5B +17.9%), and Net income attributable to owners of parent of ¥16.9B (YoY +¥14.5B +157.1%), marking increases in both sales and profits. Recovery in dining-out demand and expansion of the store network drove revenue, marking the third consecutive period of revenue growth. Operating margin remained flat at 4.0% (prior year 4.0%), as a -40bp deterioration in gross margin to 65.6% (prior year 66.0%) was offset by a -50bp improvement in SG&A ratio to 61.6% (prior year 62.1%). In special gains/losses, gain on sale of investment securities of ¥5.4B and impairment losses of ¥6.1B largely offset, resulting in net special losses of ¥0.7B. After corporate taxes of ¥11.5B, net income increased substantially YoY by +172.3%, improving ROE to 9.2% (prior year 5.7%). Operating Cash Flow (OCF) was ¥48.7B (YoY +32.5%) with strong cash conversion, and Free Cash Flow (FCF) generated ¥21.1B. Progress against the full-year company forecast (Revenue ¥830.0B, Operating Income ¥32.0B, Ordinary Income ¥30.0B) stands at Revenue 92.1%, Operating Income 95.3%, Ordinary Income 99.8%, generally on track while maintaining a trend of revenue and profit growth.
[Revenue] Revenue of ¥764.2B was an increase of ¥89.4B (＋13.3% YoY). Operating in a single dining-out segment, recovery in customer traffic at existing stores and new store openings drove growth. Cost of sales was ¥262.9B (cost ratio 34.4%, prior year 34.0%), up ¥39.4B with a +40bp deterioration in cost ratio. Gross profit was ¥501.3B, with a gross margin of 65.6% (prior year 66.0%), down -40bp. The decline reflects higher raw material prices and changes in store mix. SG&A was ¥470.8B (61.6% of sales, prior year 62.1%), up ¥46.9B, but improved by -50bp as a percentage of sales. Breakdown includes salaries and allowances of ¥219.6B (28.7% of sales, prior year 28.4%) up ¥27.6B, while rental expenses of ¥63.5B (8.3% of sales, prior year 8.8%) were improved through efficiencies. Goodwill amortization of ¥4.7B (＋¥1.6B) reflects prior-year M&A impact. Efficiency in SG&A offset the deterioration in gross margin, keeping operating margin effectively flat.
[Profit & Loss] Operating Income of ¥30.5B (prior year ¥26.8B) increased ¥3.7B (＋13.9%). Non-operating items improved to net -¥0.6B (prior year -¥1.4B). Non-operating income was ¥2.3B (including dividend income ¥0.4B and foreign exchange gains ¥0.3B), and non-operating expenses were ¥2.9B (including interest expense ¥1.6B), effectively neutral. Ordinary Income of ¥29.9B (＋¥4.5B +17.9%) benefited from improvements in non-operating items. Special items comprised special gains ¥5.7B (including gain on sale of investment securities ¥5.4B) and special losses ¥6.4B (impairment losses ¥6.1B, loss on sales of fixed assets ¥0.2B), netting to -¥0.7B. Pre-tax income of ¥29.2B less corporate taxes of ¥11.5B (effective tax rate 39.4%), and after ¥0.8B attributable to non-controlling interests, resulted in Net income attributable to owners of parent of ¥16.9B (YoY +¥14.5B +157.1%). In conclusion, the company achieved revenue and profit growth, with improved cost efficiency and the net effect of special items accelerating growth in net income.
[Profitability] Operating margin remained flat at 4.0% (prior year 4.0%). Gross margin of 65.6% worsened by -40bp from 66.0% prior year, but SG&A ratio improved by -50bp to 61.6% (prior year 62.1%), offsetting the decline. Net margin improved to 2.2% from 1.4% prior year (+80bp). ROE rose to 9.2% (prior year 5.7%), driven mainly by net margin improvement. [Cash Quality] Operating CF / Net Income is 2.88x, OCF / EBITDA is 0.92x, indicating high-quality cash generation. Accrual ratio is -6.7%, which is favorable. [Investment Efficiency] Total asset turnover improved to 1.62x (prior year 1.47x). Capex / Depreciation ratio is 1.31x, indicating continued growth investment. Goodwill of ¥53.9B / Net assets ¥184.4B equals 29.2%; Goodwill / EBITDA (pre-goodwill amortization) is 1.02x, placing M&A risk within acceptable range. [Financial Soundness] Equity Ratio is 39.1% (prior year 37.0%), current ratio 160.2%, quick ratio 159.7%, indicating ample liquidity. Debt / EBITDA is 1.04x, interest coverage 19.3x, Debt / Capital 23.0%, showing sufficient debt capacity. Cash and deposits ¥132.9B vs. interest-bearing debt ¥134.0B is effectively neutral. Asset retirement obligations ¥15.1B (5.3% of liabilities) warrant monitoring as future store-related expenditures.
Operating CF was ¥48.7B (prior year ¥36.8B, +32.5%), 2.88x net income ¥16.9B, indicating high quality. OCF before working capital changes totaled ¥56.0B, after adding back non-cash expenses such as depreciation ¥22.4B and goodwill amortization ¥4.7B. Working capital movements were modest: trade receivables -¥2.4B, inventories -¥1.0B, trade payables +¥1.3B, with no signs of manipulation. After corporate tax payments -¥6.7B, OCF accumulated healthily. Investing CF was -¥27.6B, including capex -¥29.4B (1.31x depreciation), reflecting continued growth investment. Proceeds from sale of investment securities ¥6.3B and acquisition of subsidiary shares -¥3.1B were included. FCF was ¥21.1B (OCF + Investing CF), providing ample cover over dividend payments of ¥3.1B. Financing CF was -¥14.0B, with long-term borrowings raised ¥20.0B against repayments -¥17.9B, bond redemptions -¥10.9B, and bond issuance +¥64.5B, indicating refinancing activity. Including lease liability repayments -¥1.9B, net funding was effectively neutral. Ending cash and deposits increased by ¥7.2B to ¥132.9B (prior year ¥125.7B), providing strong liquidity. OCF / EBITDA 0.92x and accrual ratio -6.7% further confirm high-quality metrics and superior cash conversion for the dining-out industry.
Of Ordinary Income ¥29.9B, Operating Income ¥30.5B represents core business earnings, and non-operating items were net -¥0.6B, neutral. Special items were net -¥0.7B (gain on sale of investment securities ¥5.4B nearly offset by impairment losses ¥6.1B), limiting one-off impacts. Pre-tax income ¥29.2B less corporate taxes ¥11.5B (effective tax rate 39.4%) indicates a relatively heavy tax burden. Net income ¥16.9B and OCF at 2.88x reflect adjustments for depreciation, goodwill amortization and healthy working capital. Comprehensive income was ¥17.3B, roughly aligned with net income ¥16.9B; other comprehensive income was net -¥0.4B (valuation difference on securities -¥1.5B, deferred hedge gains/losses +¥1.1B, etc.), a minor impact. Accrual ratio -6.7% indicates healthy fluctuations in receivables and inventories and high earnings quality. Goodwill amortization ¥4.7B is a continuing JGAAP-driven profit reduction factor; on a pre-goodwill amortization EBITDA basis, cash generation is ¥57.6B. Overall, despite low absolute operating margins, cash generation and transparency are strong and the sustainability of ordinary earnings is high.
The full-year company forecast is Revenue ¥830.0B (YoY +8.6%), Operating Income ¥32.0B (YoY +4.9%), Ordinary Income ¥30.0B (YoY +0.2%), and Net income attributable to owners of parent ¥18.0B. Progress through the Q2 cumulative period is Revenue 92.1%, Operating Income 95.3%, Ordinary Income 99.8%, Net Income 94.1%, generally on track. While revenue is somewhat below the full-year target, profit progress is strong. The company assumes a slowdown with second-half Revenue increase of ¥65.8B (vs. first-half increase ¥89.4B), Operating Income increase ¥1.5B (vs. first-half ¥3.7B), and Ordinary Income essentially flat with a ¥0.1B increase. Net income is forecast at ¥18.0B for the full year versus ¥16.9B in the first half, implying a modest second-half increase of ¥1.1B. This reflects volatility in special items (first-half impairment ¥6.1B) and potential tax burden variation, but core business is expected to sustain modest revenue and profit increases. Dividend forecast is currently ¥0 for the year; given the present payout ratio of 24.5% (year-end dividend ¥10 / EPS 40.98), no decision has been made regarding additional dividends for the full year.
A year-end dividend of ¥10 was implemented (interim dividend ¥0). With an annual dividend of ¥10 and EPS of ¥40.98, the payout ratio is 24.5%. Total dividends ¥3.1B versus FCF ¥21.1B yields FCF coverage of 6.8x, indicating ample capacity. Prior year interim and year-end dividends were ¥0, so this level suggests a resumption of dividends this period, but the full-year company forecast reflects a ¥0 annual dividend and second-half dividend policy remains undecided. Retained earnings increased to ¥27.1B (prior year ¥13.2B) up +104.6%, strengthening internal reserves and enhancing capacity for stable future dividends. No share buyback has been disclosed, so the concept of Total Return Ratio is not applicable. Although no explicit dividend policy is provided, on a pre-goodwill amortization EBITDA basis, cash generation of ¥57.6B supports the feasibility of sustained dividends alongside growth investment.
Risk of EBIT margin decline from continued increases in personnel and rental costs: Salaries and allowances ¥219.6B (28.7% of sales) and rental expenses ¥63.5B (8.3% of sales) represent heavy fixed-cost burdens; if revenue growth slows, the already low operating margin of 4.0% could be further pressured. Wage and rent inflation in a cost-inflation environment require ongoing monitoring.
Downward pressure on gross margin from raw material price volatility and slowdown in existing-store sales: Gross margin 65.6% worsened -40bp from 66.0% prior year, reflecting higher raw material prices and store-mix effects. If customer counts or average spend at existing stores slow due to weather or weaker consumer sentiment, the sustainability of revenue growth is at risk. Inventories of ¥0.5B are minimal with high turnover but are exposed to rising procurement costs.
Future cash outflows and store restructuring risk associated with asset retirement obligations ¥15.1B (5.3% of liabilities): Ongoing impairment losses related to store scrap-and-build (impairment ¥6.1B, prior year ¥7.7B) and asset retirement obligation payments ¥0.3B will continue. Future store closures may cause temporary cash outflows and profit pressure. The high effective tax rate of 39.4% further constrains net income growth.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.0% | 4.6% (1.7%–8.2%) | -0.6pt |
| Net Margin | 0.9% | 3.3% (0.9%–5.8%) | -2.5pt |
Operating margin is slightly below the retail industry median but has been maintained through SG&A efficiency. Net margin trails the median due to high effective tax rate and special items, though cash generation is strong.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 13.3% | 4.3% (2.2%–13.0%) | +9.0pt |
Revenue growth substantially exceeds the industry median, placing the company in the upper cohort due to recovery in dining-out demand and new store openings. Continued growth investment and reinforcement of the existing store base support sustained revenue growth.
※ Source: Company compilation
Combination of revenue/profit growth and strong cash generation: Revenue +13.3%, Operating Income +13.9%, with OCF ¥48.7B (2.88x net income) and FCF ¥21.1B, demonstrating solid cash conversion. Pre-goodwill amortization EBITDA ¥57.6B sufficiently covers growth investment and dividends. Progress vs. full-year guidance is Revenue 92.1%, Operating Income 95.3%, Ordinary Income 99.8%, generally on track, and growth is expected to continue in the second half.
Improved financial soundness and increased investment capacity: Equity Ratio 39.1% (prior year 37.0%), current ratio 160.2%, Debt / EBITDA 1.04x, interest coverage 19.3x indicate substantial debt capacity, leaving room for additional growth investment or increased dividends. Retained earnings rose to ¥27.1B (+104.6%), enhancing internal reserves and improving dividend sustainability. Asset retirement obligations ¥15.1B (5.3% of liabilities) require monitoring as potential cash outflow in future store reorganizations, but cash deposits ¥132.9B ensure strong liquidity.
Challenges of low absolute margin levels and sustained high tax burden: Operating margin 4.0% and EBIT margin 4.0% are below the industry median 4.6%, and fixed-cost burdens such as salaries 28.7% and rent 8.3% are heavy. Effective tax rate 39.4% (tax burden factor 0.58) increases tax cost and constrains net margin expansion. Under cost inflation, resurgence in personnel and rent costs poses risk; sustained SG&A efficiency and margin expansion execution will be key inflection points for valuation.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are company-compiled reference information based on public financial statement data. Investment decisions should be made at your own responsibility and, if necessary, in consultation with a professional advisor.