| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥8813.2B | ¥8505.0B | +3.6% |
| Operating Income / Operating Profit | ¥260.1B | ¥252.7B | +2.9% |
| Ordinary Income | ¥270.7B | ¥262.1B | +3.3% |
| Net Income / Net Profit | ¥185.2B | ¥176.8B | +4.7% |
| ROE | 11.9% | 12.8% | - |
For the fiscal year ended February 2026, Revenue / Net Sales were ¥8,813.2B (YoY +¥308.3B +3.6%), Operating Income was ¥260.1B (YoY +¥7.4B +2.9%), Ordinary Income was ¥270.7B (YoY +¥8.6B +3.3%), and Net Income attributable to owners of the parent was ¥185.2B (YoY +¥8.3B +4.7%), achieving year-over-year increases at all stages. Revenue increased for the third consecutive year, with top-line expansion driven by steady demand in food retail. Operating margin was 3.0% (prior year 2.97%) essentially flat; gross margin improved by +0.28pt to 30.2% but was offset by a +0.28pt rise in SG&A ratio to 31.0%. Ordinary income margin was 3.07% (prior year 3.08%) down -0.01pt, and net margin was 2.10% (prior year 2.08%) up +0.02pt, both nearly unchanged. Extraordinary gains included gains on sales of investment securities of ¥22.6B and gains on sales of fixed assets of ¥2.4B totaling ¥25.0B, while extraordinary losses including impairment losses of ¥45.4B amounted to ¥46.9B, resulting in a net extraordinary burden of approximately ▲¥21.9B. Operating Cash Flow (OCF) surged to ¥744.8B (YoY +233.7%), Free Cash Flow was ¥632.7B and abundant, highlighting strong cash-generation capability. ROE remained in double digits at 11.9%; despite total asset growth of +9.5% outpacing net income growth of +4.7%, the Equity Ratio improved by +1.2pt to 46.4%, indicating enhanced financial soundness.
Revenue of ¥8,813.2B (+3.6%) was driven by the core Retail Business at ¥8,799.1B (+3.6%), which performed solidly and led overall growth. Gross profit was ¥2,664.7B and gross margin improved by +0.28pt YoY to 30.2%, likely supported by higher average basket and improved category mix. Other businesses (credit card, etc.) generated ¥14.1B (+7.9%)—small but high-growth. Contract-derived revenue from customers was ¥8,767.7B, and other revenue (real estate rental income, etc.) was ¥45.5B, with rental income providing a stable revenue base. SG&A was ¥2,732.2B (SG&A ratio 31.0%), up +4.6% YoY, increasing at a faster pace than sales growth (+3.6%) and restraining Operating Income expansion. Major SG&A items included transportation costs ¥307.4B, rent ¥348.6B, utilities ¥130.3B, retirement benefit expense ¥13.7B, and depreciation ¥167.2B, with logistics and utility cost inflation impacting results. Operating Income of ¥260.1B (Operating margin 3.0%) rose +2.9% YoY, slightly below sales growth. Non-operating income was ¥15.7B, including interest income ¥1.2B, dividend income ¥0.8B, and subsidy income ¥2.0B; non-operating expense was ¥5.1B, mainly interest paid ¥3.8B. Ordinary Income of ¥270.7B (Ordinary margin 3.07%) was roughly at Operating Income level given limited non-operating items. Extraordinary items, as noted, resulted in a net burden of approximately ▲¥21.9B, bringing profit before tax to ¥247.2B, a YoY decline of ▲5.0%. Income taxes were ¥59.0B (effective tax rate 23.9%), about 73% of the prior year amount of ¥8,079M, with deferred tax benefit of ▲¥50.3B contributing significantly. Net Income attributable to owners of the parent was ¥185.2B (+4.7%), with reduced tax burden supporting net income growth and offsetting slower operating-level expansion. In conclusion, revenue and profit increased, but rising SG&A ratio constrained margin improvement at the operating level, and extraordinary items and tax effects materially influenced net income.
The core Retail Business reported Revenue of ¥8,799.1B (YoY +3.6%) and segment profit ¥266.3B (on an Ordinary Income basis, YoY +3.1%), accounting for 99.8% of Revenue and 98.4% of profit. Other businesses (credit card, etc.) produced Revenue of ¥14.1B (+7.9%) and segment profit ¥4.4B (+15.4%), showing high profitability despite small scale. Retail segment profit margin was about 3.0%, roughly in line with operating margin, indicating the core business determines overall profitability. High business concentration means efficiency improvements in retail are key to corporate performance.
Profitability: ROE was 11.9%, well above the industry median of 5.9%, and maintained near the estimated three-year average (~12%), indicating high efficiency. Operating margin of 3.0% is ▲1.6pt below the industry median of 4.6%, placing the company mid-to-lower within the industry. Net margin of 2.1% is ▲1.2pt below the industry median of 3.3%, confirming relatively lower profitability. Subtracting SG&A ratio 31.0% from gross margin 30.2% yields an approximate operating margin of ▲0.8%, but other revenue included in operating revenue (rental income, etc.) lifts reported operating income. Total asset turnover was 2.63x (Revenue ¥8,813.2B ÷ average total assets ¥3,353B), well above the industry median of 1.17x, highlighting high asset efficiency. Financial leverage was 2.16x (Total assets ¥3,352.5B ÷ Net assets ¥1,555.3B), above the industry median of 1.88x, indicating moderate leverage usage.
Cash quality: Operating Cash Flow ¥744.8B is 4.02x Net Income ¥185.2B, with a cash conversion rate far exceeding the industry median 1.57, demonstrating very high quality. OCF/EBITDA (EBITDA = Operating Income ¥260.1B + Depreciation ¥168.2B = ¥428.3B) was 1.74x, also showing robust cash generation on an EBITDA basis. The accrual ratio was ▲16.6% (accrual including working capital changes is materially negative vs. net income), indicating strong cash backing for earnings.
Investment efficiency: Capital expenditures were ¥112.9B, 0.67x Depreciation ¥168.2B, well below the industry median 1.16x, indicating a conservative investment stance. At this level, spending appears limited to maintenance and renewal of existing assets, with potential constraints on new store openings or large renovations. Free Cash Flow was ¥632.7B (OCF ¥744.8B − Investing CF ¥112.1B), ample and providing capacity for growth investment. Inventory turnover days were about 13.2 days (Inventory ¥318.0B ÷ Revenue ¥8,813.2B × 365), far below the industry median 65.7 days, indicating exceptional inventory efficiency. Accounts receivable turnover days were about 8.7 days (Accounts receivable ¥211.0B ÷ Revenue ¥8,813.2B × 365), much shorter than the industry median 21.1 days, showing a very short collection cycle. Accounts payable turnover days were about 49.9 days (Accounts payable ¥795.4B ÷ Cost of sales ¥5,821.0B × 365), longer than the industry median 39.4 days, indicating favorable working capital management through extended payment terms.
Financial soundness: Equity Ratio was 46.4%, ▲3.8pt below the industry median 50.2% but nearly comparable; financial safety is standard. Current ratio was 84.2% (Current assets ¥1,215.3B ÷ Current liabilities ¥1,443.6B), well below the industry median 184%, indicating weak short-term liquidity. Liquidity assets combining cash & deposits ¥105.9B and short-term investment securities ¥160.0B totaled ¥265.9B, which is ¥▲59.1B short of short-term borrowings ¥325.0B, posing immediate liquidity risk. Net Debt/EBITDA ((Short-term borrowings ¥325.0B + Long-term borrowings ¥188.3B − Cash ¥105.9B) ÷ ¥428.3B) ≈ 0.95x, compared with the industry median −0.59x (net cash), indicating a net debt position but at a low level below 1x, so financial burden is limited. Interest coverage was about 68.4x (Operating Income ¥260.1B ÷ Interest paid ¥3.8B), indicating a strong ability to service interest.
Operating Cash Flow was ¥744.8B, a sharp increase of +233.7% YoY, generating 3.01x cash relative to profit before tax ¥247.2B. OCF subtotal (before working capital changes) was ¥834.9B, primarily reflecting add-backs of non-cash expenses such as Depreciation ¥168.2B and Impairment losses ¥45.4B, retirement benefit expense ¥3.2B, provisions increase ¥12.0B, interest & dividend receipts ▲¥2.0B, interest paid ¥3.7B, gain on sales of tangible fixed assets ▲¥2.4B, gain on sales of investment securities ▲¥22.6B, and profit before income taxes ¥247.2B. Working capital changes included a major cash inflow from an increase in accounts payable of ¥334.7B, offset by increases in inventories ▲¥16.7B, increases in trade receivables ▲¥25.2B, a decrease in other current assets ¥31.4B, and an increase in other current liabilities ¥48.3B. After payments of income taxes ▲¥87.3B, interest & dividend receipts ¥0.9B, and interest paid ▲¥3.7B, OCF reached ¥744.8B. The large increase in accounts payable likely reflects payment timing and increased purchasing volumes; attention is needed to potential cash outflows in the following period when payables reverse. Investing Cash Flow was ▲¥112.1B, mainly due to acquisitions of tangible fixed assets ▲¥112.9B and intangible fixed assets ▲¥13.2B, partially offset by proceeds from sales of tangible fixed assets ¥7.3B, sales of investment securities ¥29.7B, and withdrawal of time deposits ¥8.0B. CapEx ¥112.9B was 0.67x Depreciation ¥168.2B, indicating restraint and maintenance-level investment. Free Cash Flow was a very healthy ¥632.7B (OCF ¥744.8B + Investing CF ▲¥112.1B). Financing Cash Flow was ▲¥450.4B, with principal items including net reduction in short-term borrowings ▲¥325.0B, proceeds from long-term borrowings ¥40.0B, repayment of long-term borrowings ▲¥99.5B, lease liability repayments ▲¥11.9B, and dividend payments ▲¥54.1B. Large reduction in short-term borrowings reduced interest-bearing debt and improved financial soundness. Cash and cash equivalents rose ¥182.2B from ¥83.7B at the beginning of the period to ¥265.9B at the end, reflecting strong OCF and financing adjustments. Overall, OCF generation is excellent, investment is restrained, and financing shows balanced allocation toward debt reduction and shareholder returns.
Earnings quality centers on recurring operating profit, with non-operating income ¥15.7B accounting for only 0.18% of Revenue and comprising low-variability items such as interest income ¥1.2B, dividend income ¥0.8B, and subsidy income ¥2.0B. Extraordinary gains totaled ¥25.0B (gain on sales of investment securities ¥22.6B and gain on sales of fixed assets ¥2.4B), representing about 13.5% of Net Income ¥185.2B and exerting some impact, but extraordinary losses of ¥46.9B (mainly impairment losses ¥45.4B) exceeded these gains, resulting in a net burden of approximately ▲¥21.9B. Adjusting for extraordinary items, pro forma profit before tax is about ¥269B (¥247.2B + ¥21.9B), broadly consistent with Ordinary Income ¥270.7B. The temporary items equated to approximately ▲11.8% of Net Income (▲¥21.9B ÷ ¥185.2B), and compared with prior year temporary items (prior year extraordinary gains ¥2.4B − extraordinary losses ¥4.2B = ▲¥1.8B), volatility widened this period due to impairment recognition. Accrual quality is very high: OCF ¥744.8B ÷ Net Income ¥185.2B = 4.02x, and the accrual ratio ((Net Income ¥185.2B − OCF ¥744.8B) ÷ Net Income ¥185.2B) = ▲3.02x, indicating cash generation substantially exceeds accounting profit and earnings quality is very robust. The gap between Ordinary Income ¥270.7B and Net Income ¥185.2B (▲¥85.5B) is largely explained by net extraordinary losses ▲¥21.9B and income taxes ¥59.0B; considering the transitory nature of extraordinary items, recurring earning power appears sustainable.
Full Year guidance is Revenue ¥9,225.0B (104.7% of actual ¥8,813.2B), Operating Income ¥270.0B (103.8% of actual ¥260.1B), Ordinary Income ¥280.0B (103.4% of actual ¥270.7B), Net Income attributable to owners of the parent ¥186.8B (100.9% of actual ¥185.2B), and EPS forecast ¥219.61 (actual ¥217.56), representing a conservative plan assuming modest increases from current results. Progress rates are high: Revenue 95.5%, Operating Income 96.3%, Ordinary Income 96.7%, Net Income 99.1%, suggesting a high probability of achieving full-year targets. However, Net Income may fluctuate due to extraordinary item volatility (additional impairment losses or presence/absence of gains on sales of securities). At the operating level, controlling SG&A ratio and maintaining gross margin are key to achieving guidance. Forecast dividend is ¥35.00 (actual ¥65.5 was pre-stock-split level; split-adjusted equivalent is ¥32.75), implying a modest increase in practice.
Annual dividend was ¥65.5 (interim ¥32.5, year-end ¥33.0), with payout ratio 28.2% (using XBRL data 28.2%; recalculated dividend payout from total dividends ¥49.5B ÷ Net Income ¥185.2B yields ~26.7%), at a healthy level. With Free Cash Flow ¥632.7B and dividend payments ¥54.1B, dividend FCF coverage is 11.7x, indicating extremely high sustainability of dividends. No share buybacks were executed this period; shareholder returns were dividend-only, with Total Return Ratio = payout ratio 28.2%. Next fiscal year forecast dividend ¥35.00 is adjusted for the stock split (1 share → 2 shares effective March 1, 2025); on a pre-split basis this equals ¥70.00, representing an effective modest increase. Payout ratio 28.2% is close to industry median 27%, confirming a stable dividend policy in line with earnings growth. With ROE 11.9% and payout ratio 28.2%, the retention ratio is 71.8%, implying an internal growth rate of ROE 11.9% × 71.8% ≈ 8.5% in equity, suggesting a good balance between sustainable growth and shareholder returns.
Short-term liquidity risk (quantified: Current ratio 84.2%, Cash ¥105.9B vs. Short-term borrowings ¥325.0B resulting in a shortfall of ▲¥219.1B): There is a short-term funding gap of ▲¥228.3B between current liabilities ¥1,443.6B and current assets ¥1,215.3B, and if repayment/payment timings concentrate for short-term borrowings ¥325.0B or accounts payable ¥795.4B, liquidity could be strained. Although OCF is strong at ¥744.8B, working capital volatility (especially reversal of accounts payable) could increase short-term funding needs.
Margin compression risk from SG&A inflation (quantified: SG&A ratio 31.0%, YoY +0.28pt): Increases in logistics costs (transportation ¥307.4B) and utilities ¥130.3B have driven SG&A growth +4.6%, outpacing sales growth +3.6%. While gross margin improvement (+0.28pt) offset this this period, continued cost inflation or limits to price pass-through could lower operating margins. Operating margin 3.0% is ▲1.6pt below industry median 4.6%, indicating limited room for profitability improvement.
Continued impairment loss risk (quantified: Impairment losses ¥45.4B, equivalent to 24.5% of Net Income): This period recorded impairment losses of ¥45.4B, a large increase from ¥3.3B in the prior year. Ongoing store network rationalization or closures of unprofitable stores could lead to continued impairment risk, causing volatility in extraordinary items and destabilizing Net Income. The conservative CapEx/Depreciation ratio 0.67x also implies restrained investment, which may raise the risk of asset obsolescence and future impairments.
Industry position (reference information, company analysis) Compared with the 2025 fiscal year medians for the retail industry (n=47), the company’s total asset turnover of 2.63x far exceeds the industry median 1.17x, placing asset efficiency among the top in the industry. Cash conversion rate 4.02x (OCF/Net Income) far exceeds the industry median 1.57x, showing exceptional cash generation. Conversely, Operating margin 3.0% is ▲1.6pt below the industry median 4.6%, and Net margin 2.1% is ▲1.2pt below the median 3.3%, placing profitability mid-to-lower in the industry. ROE 11.9% greatly exceeds the industry median 5.9%, with high asset turnover and moderate leverage (financial leverage 2.16x vs. industry median 1.88x) compensating for lower margins to boost equity efficiency. Current ratio 84.2% is well below the industry median 184%, indicating relatively weaker short-term liquidity. Inventory days 13.2 days is far below the industry median 65.7 days, indicating top-tier inventory efficiency. CapEx/Depreciation ratio 0.67x is well below the industry median 1.16x, placing investment stance among the most conservative in the industry. Net Debt/EBITDA 0.95x is net-debt (vs. industry median −0.59x net cash) but remains below 1x, so financial burden is light. Overall, characteristics are high turnover, high cash generation, and high ROE, but low profitability, low liquidity, and low investment—an efficiency-focused management style stands out in the industry.
Three key points from the results: First, extremely strong cash generation with OCF ¥744.8B (4.02x Net Income), largely supported by working capital optimization (accounts payable increase ¥334.7B). Free Cash Flow ¥632.7B covers dividends and debt repayments and secures financial flexibility. Second, Operating margin stayed flat at 3.0%; gross margin improvement (+0.28pt) was offset by SG&A ratio increase (+0.28pt), putting a brake on profitability improvement. With continued cost inflation in logistics and utilities, SG&A efficiency (labor saving, logistics reform) is key to margin improvement. Third, a conservative investment stance with CapEx/Depreciation ratio 0.67x limits spending to maintenance of existing assets. Ample Free Cash Flow provides room to allocate to growth investments (new stores, renovations, DX), so reviewing investment pace is necessary for medium-to-long-term growth. Short-term liquidity risk from Current ratio 84.2% is practically covered by strong OCF but requires ongoing monitoring of working capital volatility.
This report was automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions should be made at your own responsibility and, if necessary, after consulting a professional advisor.
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