| Metric | Current Period | Prior Period | YoY |
|---|---|---|---|
| Revenue | ¥2782.0B | ¥2667.4B | +4.3% |
| Operating Income | ¥64.7B | ¥68.2B | -5.2% |
| Ordinary Income | ¥75.6B | ¥80.0B | -5.5% |
| Net Income | ¥51.4B | ¥52.2B | -1.7% |
| ROE | 5.6% | 6.2% | - |
For the fiscal year ending February 2026, Revenue was ¥2782.0B (YoY +¥114.6B +4.3%), Operating Income was ¥64.7B (YoY -¥3.5B -5.2%), Ordinary Income was ¥75.6B (YoY -¥4.4B -5.5%), and Net Income was ¥51.4B (YoY -¥0.8B -1.7%). While the resilience of existing stores and new openings drove top-line growth, increases in utility costs and depreciation pushed up the SG&A ratio to 24.3% (approximately +0.27pt), offsetting a modest gross margin improvement (+0.10pt). The operating margin contracted to 2.3% from 2.6% a year earlier (a decline of 0.23pt), indicating a slight softening in profitability. Comprehensive income was ¥89.0B, 1.7x Net Income, aided by ¥36.6B of valuation gains on securities. Operating Cash Flow (OCF) was ¥96.3B (YoY +9.0%), generating 1.9x Net Income; Free Cash Flow (FCF) was ¥29.9B, covering total dividends of ¥18.9B by 1.6x.
[Revenue] Revenue from the Supermarket Business was ¥2772.9B (composition 99.7%), up +4.3% YoY and driving consolidated Revenue of ¥2782.0B (+4.3%). Other businesses (insurance agency, fitness clubs, food manufacturing, etc.) were ¥9.1B (composition 0.3%), small in scale but expanded +11.3% YoY. Gross profit was ¥642.1B with a gross margin of 23.1%, a ~0.10pt improvement from 23.0% a year ago, reflecting mix improvement and procurement efficiency gains. Progress against the full-year forecast of ¥2885.0B was 96.4%, broadly on track but slightly short, implying remaining cost pressures.
[Profitability] SG&A amounted to ¥676.5B (YoY +5.5%), increasing at a faster pace than Revenue growth (+4.3%), raising the SG&A ratio to 24.3% from 24.0% a year ago (approximately +0.27pt). Notable increases were utility costs ¥53.2B (YoY +5.8%) and depreciation ¥42.1B (YoY +4.0%), with energy costs and store asset renewal weighing on profitability. As a result, Operating Income decreased to ¥64.7B (-5.2%) and the operating margin narrowed by approximately 0.23pt to 2.3%. Non-operating income totaled ¥12.5B (including dividend income ¥3.4B) and Ordinary Income was ¥75.6B (-5.5%), a modest decline. Extraordinary gains were ¥4.5B (gain on sale of investment securities ¥3.5B, negative goodwill ¥0.2B, etc.), while extraordinary losses were ¥7.8B (impairment loss ¥6.7B, disaster loss ¥0.4B, etc.), resulting in profit before tax of ¥72.3B (-5.1%). After deducting income taxes of ¥20.9B (effective tax rate 28.9%), Net Income was ¥51.4B (-1.7%). In summary, despite revenue growth, cost increases and net one-off losses led to revenue-up, profit-down.
The Supermarket Business reported Revenue ¥2772.9B (YoY +4.3%), Operating Income ¥68.5B (YoY -4.3%), and a margin of 2.5%, becoming less profitable despite being the core business. Revenue benefited from resilient same-store sales and new openings, but increased utility and depreciation costs reduced the margin from 2.6% a year earlier by ~0.10pt. Other businesses (insurance agency, fitness clubs, food manufacturing, etc.) recorded Revenue ¥9.1B (+11.3%), Operating Income ¥1.4B (+22.8%), and a margin of 15.4%, small but highly profitable and growing. After allocating corporate costs (group overheads) of ¥5.2B, consolidated Operating Income was ¥64.7B. With 99.7% of operations concentrated in supermarkets, improving cost efficiency in that segment is key to restoring consolidated profitability.
[Profitability] The operating margin of 2.3% contracted by 0.23pt from 2.6% a year earlier, with the modest gross margin improvement (+0.10pt) offset by a rise in the SG&A ratio (+0.27pt). ROE was 5.6%; DuPont decomposition indicates Net Profit Margin 1.9% × Total Asset Turnover 2.04 × Financial Leverage 1.49x, with the decline driven mainly by lower Net Profit Margin (down from 6.3% previously). [Cash Quality] OCF was ¥96.3B, generating 1.9x Net Income, and the cash conversion ratio (OCF/EBITDA) was 90.0%, a high level. The accrual ratio was -3.3%, indicating favorable earnings quality. [Investment Efficiency] Total Asset Turnover was 2.04x, slightly down from 2.10x but within a solid range. Capital expenditures were ¥58.3B, 1.37x depreciation ¥42.6B, indicating an expansionary phase and investments aimed at future efficiency improvements and revenue growth. [Financial Soundness] Equity Ratio was 67.3%, Debt/EBITDA was 1.09x, and Interest Coverage Ratio was approximately 60x, reflecting a very strong financial position. Current Ratio was 119.8% and Quick Ratio 92.6%, showing generally good short-term liquidity, though the short-term liabilities ratio was relatively high at 57.8%. Cash and deposits stood at ¥258.6B and are sufficiently coverable by OCF generation.
OCF was ¥96.3B (YoY +9.0%), strong; from operating cash subtotal ¥114.9B, taxes paid ¥21.2B were deducted to absorb working capital movements. Working capital changes included an increase in inventories of ¥6.2B (stock buildup associated with higher sales) and an increase in trade receivables of ¥3.5B, which were partially offset by an increase in trade payables of ¥4.6B. Investing cash flow was -¥66.4B, primarily due to capital expenditures ¥58.3B (existing store refurbishments and new openings) and purchases of investment securities ¥2.1B. Capex was 1.37x depreciation ¥42.6B, oriented toward growth investment, and a net increase in time deposits of ¥5.8B indicates cash retention. Financing cash flow was -¥21.9B: financing included long-term borrowings of ¥20.5B, while repayments of long-term borrowings ¥20.4B, bond redemptions ¥5.0B, and dividend payments ¥18.9B were executed, resulting in net cash outflow. FCF was ¥29.9B (OCF ¥96.3B + Investing CF -¥66.4B), covering total dividends ¥18.9B by 1.6x, a sustainable level. EBITDA, adding depreciation ¥42.6B to operating income, was ¥107.0B; OCF/EBITDA coverage was 90.0%, indicating high quality of cash flow.
Operating Income of ¥64.7B was supplemented by ¥10.9B to reach Ordinary Income ¥75.6B, largely due to non-operating income of ¥12.5B (dividend income ¥3.4B, other ¥5.3B). Non-operating expenses were minor at ¥1.6B (interest expense ¥1.1B, etc.), indicating that non-core income is recurring and stable. Extraordinary items were net -¥3.3B (extraordinary gains ¥4.5B - extraordinary losses ¥7.8B); the principal extraordinary loss, impairment loss ¥6.7B, is considered a temporary factor. Extraordinary gains such as gain on sale of investment securities ¥3.5B and negative goodwill ¥0.2B are non-recurring, but Comprehensive Income of ¥89.0B exceeded Net Income ¥51.4B by ¥37.6B, with Other Securities Valuation Differences ¥36.6B and Remeasurements of Defined Benefit Plans ¥1.0B contributing positively. The divergence between Comprehensive Income and Net Income is mainly due to unrealized gains from market valuation of investment securities and represents a source of volatility from future market movements. OCF ¥96.3B generated 1.9x Net Income ¥51.4B, demonstrating solid cash backing for earnings and high earnings quality.
Full-year guidance: Revenue ¥2885.0B, Operating Income ¥68.0B (YoY +5.1%), Ordinary Income ¥77.0B (YoY +1.9%), Net Income ¥53.5B, EPS ¥124.62, Dividend ¥20.00. Progress against guidance: Revenue 96.4%, Operating Income 95.1%, Ordinary Income 98.2%, Net Income 96.0% — broadly on plan but slightly short on Operating Income and Net Income. Operating Income missed the forecast by ¥2.0B, likely due to SG&A ratio exceeding assumptions. The full-year Operating Income forecast of ¥68.0B is roughly flat versus last year’s ¥68.2B, suggesting persistent cost pressures. Ordinary Income and Net Income are generally progressing in line, supported by stable non-operating income and extraordinary losses falling within expectations. The dividend forecast was ¥20 per year (¥10 interim / ¥10 year-end), but actual dividends were ¥40 per year (¥20 interim / ¥20 year-end), representing a significantly stronger shareholder return.
Annual dividend was ¥40 per share (interim ¥20 / year-end ¥20), with a Payout Ratio of 31.2%, within a sustainable range. This is a substantial increase from last year’s ¥14 (YoY +185.7%), indicating a strengthened shareholder return stance. FCF of ¥29.9B covers total dividends ¥18.9B by 1.6x, showing a good balance between retained earnings and dividends. No share buybacks were executed; shareholder returns are concentrated on dividends. Given ROE 5.6% and Equity Ratio 67.3%, there is room for gradual dividend increases in the future, conditional on establishing a consistent track record of profit growth.
Energy cost escalation risk: Utility costs ¥53.2B (YoY +5.8%) were a major driver of SG&A increases; further rises in energy prices could further compress operating margins. If gross margin improvements and price pass-through do not progress, the operating margin of 2.3% risks moving further into the low-2% range.
High concentration of short-term liabilities risk: Of current liabilities ¥343.7B, short-term borrowings are ¥67.7B and scheduled long-term borrowings maturing within one year are ¥19.9B, resulting in a short-term liabilities ratio of 57.8%, which is high and presents refinancing risk. While cash ¥258.6B and OCF generation can sufficiently cover these, rapid changes in the financial environment would require agile measures to secure liquidity.
Market value volatility of investment securities: Investment securities totaled ¥169.5B (12.4% of total assets, YoY +40.3%), with Other Securities Valuation Differences ¥36.6B recognized in OCI. Market deterioration could trigger valuation losses and reduce shareholders’ equity, impacting the Equity Ratio and ROE.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 2.3% | 4.6% (1.7%–8.2%) | -2.3pt |
| Net Profit Margin | 1.8% | 3.3% (0.9%–5.8%) | -1.5pt |
Profitability metrics are well below industry medians, attributable to the structurally low-margin nature of the supermarket format and elevated SG&A ratio.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 4.3% | 4.3% (2.2%–13.0%) | -0.0pt |
Revenue growth aligns with the industry median, with resilient same-store sales and new openings delivering a standard growth pace.
※ Source: Company aggregation
Progress on cost-efficiency improvements: Although Operating Income margin contracted to 2.3% due to higher utilities and depreciation, the effect of store efficiency and labor-saving measures from ¥58.3B in capital expenditures (1.37x depreciation) will be key to margin recovery. Gross margin improved by +0.10pt, and continued mix improvement and procurement efficiency are expected.
Significant dividend increase and stronger shareholder return stance: Dividends were raised materially from ¥14 to ¥40 (+185.7%), with a Payout Ratio of 31.2% and FCF coverage of 1.6x, indicating high sustainability. This signals a clear shift toward prioritizing shareholder returns, with room for gradual dividend increases tied to profit growth and cash generation.
Expansion of investment securities and capital volatility risk: Investment securities increased to ¥169.5B (+40.3%), and Other Securities Valuation Differences ¥36.6B boosted Comprehensive Income. This raises the risk of valuation losses and increased P&L and equity volatility under adverse market conditions; transparency in holding policy and risk management is required.
This report is an earnings analysis automatically generated by AI based on XBRL financial statement disclosures. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions are your responsibility; consult a professional adviser as needed.