SRS HOLDINGS CO.,LTD. FY0 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥37.21B
• Operating Income: ¥1.61B
• Net Income: ¥987M
• EPS: ¥20.81

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 Analysis (Earnings Presentation)

PDF earnings presentation analyzed by Claude

Summary

SRS Holdings' Q2 FY03/26 achieved record highs with revenue of 37,212 million yen (up 18.2% YoY), operating profit of 1,613 million yen (up 1.0%), and ordinary profit of 1,600 million yen (up 5.9%). Revenue growth was driven by M&A (Amino Sushi), 17 new store openings, and increased customer spending at existing stores. However, rising raw material costs and investments in personnel recruitment and training for store expansion led to increased labor costs, causing the operating profit margin to decline to 4.3% (from 5.1% in the prior year). Progress on directly-operated store openings reached 50.0% against the annual target of 34 stores, while M&A expanded gourmet sushi stores to 108 locations (adding 6 Sushi Benkei stores). Full-year guidance remains unchanged at revenue of 76,000 million yen, operating profit of 3,000 million yen, ordinary profit of 2,800 million yen, and a dividend of 10.0 yen. The new medium-term management plan 'SRS VISION 2030' sets targets for FY03/30 of revenue of 115 billion yen, ordinary profit of 6 billion yen, ROE exceeding 12%, and over 1,100 stores, with key strategies including nationalization of Washoku Sato, becoming the overwhelming No.1 in gourmet sushi, establishing third and fourth profit pillars, and promoting sustainable management.

Key Highlights

• Acquired 6 Sushi Benkei stores through M&A in September 2025, expanding gourmet sushi chain stores to 108 locations (top-class in Japan). Entered new markets in the San-in region
• Strong Q2 standalone performance with ordinary profit of 1,042 million yen (vs. 939 million yen in prior year). Portfolio characteristics show Q2 as peak season compared to Q1
• Same-store sales exceeded 100% YoY for both Washoku Sato and Nigiri Chojiro. Lower-priced brands particularly strong (price-focused strategies effective amid weakening consumer sentiment)
• Successful recruitment with new graduate hires up over 80% YoY and career hires up over 20%. Effects of HR system reforms and enhanced recruitment capabilities becoming visible
• Washoku Sato Okayama Kurashiki Higashitomii store (new market) achieved sales 1.5 times higher than recent new stores during the first 3 months. Advancing dominant area formation plan in Chugoku region
• mottECO (doggy bag) initiative won Ministry of the Environment's 'Food Loss Reduction Promotion Award' for two consecutive years (FY2022 Jury Chairman's Award, FY2023 Minister of the Environment Award). Contributing to social issue resolution through industry-government-academia-public collaboration
• Declared capital cost-conscious management with ROE exceeding 8% sustained (targeting over 12% for FY03/30), ROIC exceeding 5% sustained, and enhanced IR strategy. Basic dividend policy of payout ratio of 20% or higher, with 10.0 yen planned for FY03/26 (projected payout ratio of 25.8%)
• Overseas expansion centered on Thailand and Indonesia with 24 stores. Building new revenue streams by selling frozen bento in approximately 5,900 stores in the Indian market

Business Outlook

Full-year guidance maintained at revenue of 76,000 million yen, operating profit of 3,000 million yen, and ordinary profit of 2,800 million yen. Q2 progress rates exceeded plan at 49.0% for revenue, 53.8% for operating profit, and 57.2% for ordinary profit. Second half expected to be boosted by year-end/New Year peak season and additional new store openings (remaining 17 stores). However, assuming continued raw material price increases including rice and rising labor costs, second half will focus on customer traffic growth initiatives (recovery measures for Nigiri Chojiro) and margin improvement through price/mix optimization. New medium-term plan targets average annual CAGR exceeding 11% for revenue growth, and aims to achieve operating profit margin of 5.2%, ordinary profit margin of 5.2%, and ROE exceeding 12% by FY03/30 through incremental margin improvement (existing store profitability enhancement + fixed cost ratio reduction). M&A including the recent Sushi Benkei acquisition will be actively pursued, with plans to expand to over 1,100 stores by FY03/30 (currently 781 stores).

Management Guidance

Management assessed that 'steady food service demand due to external environment, customer spending increases from product strategies, revenue contribution from prior year M&A, and new store openings significantly boosted sales.' Meanwhile, they explained that 'while raw material price increases and labor cost increases associated with personnel recruitment and training enhancement for store expansion occurred, operating and ordinary profit exceeded prior year results due to improved existing store profitability from initiatives implemented last year and strong sales.' Going forward, they stated they will 'execute four key strategies (nationalization of Washoku Sato, becoming overwhelming No.1 in gourmet sushi, establishing third and fourth profit pillars, strengthening group functions and sustainable management) to achieve increases in revenue and profit, and improvements in profit margins and capital profitability.' Dividend policy is 'flexibly determined based on business performance and growth investment needs, using a consolidated payout ratio of 20% or higher as a guideline,' with 10.0 yen planned for FY03/26 (up 33% from 7.5 yen in prior year). For capital cost consciousness, they set targets of 'sustaining ROE exceeding 8% (over 12% for FY03/30), sustaining ROIC exceeding 5%, and increasing IR initiatives.'

Strategic Initiatives

• Nationalization of Washoku Sato brand: Accelerating store openings in Chugoku region including Okayama and Hiroshima (opened 2 stores in Kurashiki, Hiroshima opening planned). Early profitability in new markets through special promotional strategies and optimal location development
• Overwhelming No.1 in gourmet sushi chains: Total of 108 stores including Nigiri Chojiro 72 stores, Umai Sushikan 26 stores, Sushi Benkei 6 stores, and Marukuni 4 stores. Planning entry into new markets in Gunma, Wakayama, Shiga Kohoku, Koto, Gifu, and Mie, aiming for No.1 in quality, store count, coverage area, and sales scale
• Establishing third and fourth profit pillars: Aggressive store openings across multiple businesses including Tokutoku (Wakayama Naka store Feb 2026), Himawari (Ecole Izumi Jul 2025, Solio Takarazuka Nov 2025), Gyunofu (Uehonmachi YUFURA Dec 2025). Diversifying revenue sources through first openings in 6 years and entry into new markets
• M&A advancement: Integrated Sushi Benkei into group in September 2025. Top-class gourmet sushi chain in San-in region with high productivity of approximately 300 million yen average annual sales per store and approximately 400 customers per day. Continuing active consideration of companies with expected synergies
• Recruitment and human resource development enhancement: New graduate hires up over 80% YoY, career hires up over 20%. Securing personnel necessary for store expansion through HR system reforms (improved compensation), recruitment process refinement, and expansion of recruitment systems and methods. Strengthening training systems to improve retention rates
• Sustainable management: Continuing mottECO (doggy bag) awareness activities, food bank donations, CO2 emission reductions (1% YoY reduction target for energy consumption intensity), conversion of waste cooking oil to SAF fuel, SDD campaign, cooperation with disaster evacuation support stations, and corporate governance strengthening
• Enhanced IR strategy: Continuing integrated report publication, expanded English disclosure scope, earnings presentations (for institutional investors and analysts), IR meetings, and sponsored research reports (Shared Research). Aiming to improve market valuation through clarification of capital cost consciousness

Risk Factors

• Risk of margin compression from continued raw material price increases (especially rice)
• Risk of increased SG&A expense ratio from rising labor costs (normalized wage increases, expanded social insurance coverage)
• Risk of customer traffic fluctuations due to weather, natural disasters, and infectious diseases
• Risk of extended investment payback periods due to new store location selection and increased opening costs
• Risk of market share decline from intensified competition (price competition, brand competition)
• Risk of stable food ingredient procurement due to supply chain disruptions
• Foreign exchange fluctuations and geopolitical risks in overseas operations (Thailand, Indonesia, etc.)
• Risk of decreased operating cash flow in second half due to seasonal factors (concentration of bonus and tax payments)

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
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