Laox Holdings CO.,LTD. FY2025 Q3 Earnings Report

Financial Highlights

• Net Sales: ¥39.47B
• Operating Income: ¥-1.15B
• Net Income: ¥-452M
• EPS: ¥-16.45

Income Statement

Balance Sheet

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 Financial Analysis

Executive Summary

Laox Holdings Co., Ltd. (TSE: 82020) reported FY2025 Q3 (cumulative) consolidated results under JGAAP showing weaker topline but improved operating loss. Revenue was ¥39.47bn, down 8.3% YoY, indicating a soft demand environment and/or portfolio contraction. Gross profit was ¥14.261bn, with a solid gross margin of 36.1%, suggesting pricing discipline or mix benefits despite lower sales. Operating income was a loss of ¥1.154bn; while negative, the YoY change (+342.6%) signals a substantial narrowing of operating losses versus the prior year period. Ordinary income and net income were losses of ¥1.276bn and ¥1.503bn respectively, with a net margin of −3.81%, reflecting ongoing structural profitability challenges. The DuPont-bridged ROE is −7.05%, driven by a negative net margin, moderate asset turnover of 1.022x, and financial leverage of 1.81x. Liquidity appears comfortable with a current ratio of 195.5% and quick ratio of 157.5%, aided by ¥16.221bn in working capital and comparatively low financial leverage (Liabilities/Equity ≈ 0.99x). Inventories stand at ¥6.458bn, suggesting manageable stock levels relative to revenue and current assets. Interest expense is modest at ¥8mn, but negative EBIT results in an unfavorable interest coverage of −144x, underlining sensitivity to profitability rather than to financing cost. Reported equity ratio shows as 0.0% due to disclosure limitations; computed equity/asset ratio is approximately 55.2%, indicating a relatively solid capital buffer. Cash flow statement items, depreciation and amortization, and cash and equivalents are unreported (zero placeholders), materially limiting assessment of cash generation and earnings quality. EPS is −¥16.45 and the company paid no dividends during the period, consistent with loss-making status. EBITDA is not calculable due to unreported D&A, but operating trends suggest cost actions are taking hold even as revenue declines. Overall, Laox exhibits improved operating efficiency but remains loss-making, with stable balance sheet strength partially offsetting earnings risk. The near-term outlook hinges on sustaining gross margin, further operating cost reductions, and revenue stabilization, particularly in discretionary/inbound-sensitive categories. Data gaps (cash flows, D&A, share data granularity) require caution in interpreting cash conversion and capital intensity.

Profitability Analysis

roe_decomposition: ROE of −7.05% is explained by Net Profit Margin (−3.81%) × Asset Turnover (1.022x) × Financial Leverage (1.81x). The dominant drag is the negative margin; turnover is reasonable for a retail/commerce mix, and leverage is moderate, amplifying losses but not excessively. margin_quality: Gross margin is 36.1% (¥14.261bn/¥39.47bn), solid given revenue contraction, implying improved mix/pricing or procurement. Operating margin is −2.93% (−¥1.154bn/¥39.47bn), showing narrowed losses YoY. Ordinary margin is −3.23%; net margin is −3.81%, indicating non-operating items and taxes had limited incremental impact (interest expense only ¥8mn; taxes negligible). operating_leverage: With revenue down 8.3% YoY but operating loss narrowing, fixed cost reductions and/or productivity gains are evident. However, the persistence of an operating loss indicates that the current revenue base is still below break-even. Further scale recovery or additional fixed cost cutting is needed to achieve durable positive EBIT.

Growth Assessment

revenue_sustainability: Revenue of ¥39.47bn declined 8.3% YoY, suggesting continued headwinds in core channels and/or strategic downsizing. The topline trajectory indicates limited momentum into Q4 absent seasonal uplift or new growth vectors. profit_quality: Gross margin resilience points to potentially sustainable unit economics, but negative operating income implies that margin gains are not yet sufficient to offset fixed costs. Ordinary and net losses closely track operating loss, indicating limited reliance on financial or extraordinary items. outlook: Near-term growth hinges on stabilization in consumer/inbound demand, execution on portfolio restructuring, and maintaining gross margin. Given the improved but still negative operating margin, management focus likely remains on cost base alignment and selective growth initiatives. Without disclosed cash flow data, visibility on reinvestment capacity is limited.

Financial Health

liquidity: Current ratio 195.5% (¥33.206bn/¥16.985bn) and quick ratio 157.5% ((¥33.206bn−¥6.458bn)/¥16.985bn) indicate strong short-term coverage. Working capital of ¥16.221bn provides a sizable liquidity buffer. solvency: Total liabilities of ¥21.07bn versus equity of ¥21.311bn implies liabilities/equity of ~0.99x. Computed equity ratio is ~55.2% (¥21.311bn/¥38.611bn), despite a reported 0.0% placeholder. Interest burden is minimal (¥8mn), reducing refinancing risk contingent on maintaining access to liquidity. capital_structure: Financial leverage (assets/equity) of 1.81x is moderate. With negative EBIT, leverage does not currently strain coverage, but sustained losses could erode equity over time, tightening headroom.

Cash Flow Quality

earnings_quality: Cash flow data are unreported (zeros are placeholders), preventing direct assessment of cash conversion, OCF/NI, and accrual intensity. Given negative operating income and modest interest expense, cash burn likely mirrors operating losses absent large working capital releases. fcf_analysis: Free cash flow cannot be computed due to missing OCF and capex data. Inventory of ¥6.458bn and strong current asset base suggest potential working capital levers, but magnitude and timing are unclear. working_capital: Inventories are ~19.4% of current assets and ~16.4% of revenue, not excessive for the sector. The quick ratio of 1.58x indicates limited reliance on inventory for liquidity. Movement trends are undisclosed, so we cannot judge turnover improvements.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is ¥0.00 with a payout ratio of 0.0%, consistent with a net loss (EPS −¥16.45). Distributions are currently unsupported by earnings. fcf_coverage: FCF data are unreported; hence, coverage cannot be assessed. Given negative operating income, internal coverage of dividends would likely be inadequate even if FCF were modestly positive due to working capital changes. policy_outlook: Given ongoing losses and focus on turnaround, capital allocation likely prioritizes balance sheet stability and business reinvestment over shareholder distributions until profitability normalizes.

Risk Assessment

Business Risks:

• Demand volatility in retail/consumer and inbound tourism exposure affecting sales volumes.
• Product/category mix risk impacting gross margin sustainability.
• Execution risk in cost restructuring needed to reach break-even.
• Supply chain and procurement price fluctuations affecting COGS.
• Competitive intensity in domestic retail and e-commerce channels.
• Potential sensitivity to China-related sourcing or customer flows.

Financial Risks:

• Sustained operating losses could erode equity despite currently moderate leverage.
• Limited visibility on cash generation due to unreported OCF/FCF data.
• Negative EBIT results in poor interest coverage, increasing vulnerability if rates or borrowings rise.
• Working capital swings could pressure liquidity if sales weaken further.

Key Concerns:

• Topline decline of 8.3% YoY without clear recovery signal.
• Operating loss of ¥1.154bn despite healthy gross margin, indicating insufficient scale.
• Absence of cash flow disclosure, hindering assessment of turnaround durability.

Investment Implications

Key Takeaways:

• Revenue down 8.3% YoY to ¥39.47bn; scale remains a headwind.
• Gross margin strong at 36.1%, but EBIT margin −2.93% indicates ongoing fixed cost burden.
• ROE −7.05% driven by negative margins; asset turnover and leverage moderate.
• Liquidity solid (current ratio 195.5%, quick 157.5%); liabilities/equity ~0.99x.
• Ordinary and net losses close to operating loss; minimal non-operating drag (interest ¥8mn).
• Cash flow data unreported, limiting visibility on cash conversion and FCF.

Metrics to Watch:

• Quarterly revenue trajectory and same-store/segment growth indicators.
• Operating margin progression and cost-to-sales ratio.
• Gross margin stability by category/mix.
• Inventory turnover and days on hand (when disclosed).
• Operating cash flow and capex trends (upon disclosure).
• Equity ratio and net debt changes.

Relative Positioning: Compared with domestic retail peers, Laox exhibits stronger gross margin but weaker operating profitability and visibility due to missing cash flow disclosure; balance sheet leverage is moderate with above-average liquidity, positioning the company to continue restructuring if topline stabilizes.

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
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis