| Metric | This Period | Prior Year Same Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1945.3B | ¥1926.9B | +1.0% |
| Operating Income / Operating Profit | ¥169.5B | ¥156.5B | +8.3% |
| Ordinary Income | ¥163.7B | ¥147.8B | +10.7% |
| Net Income / Net Profit | ¥94.7B | ¥95.7B | -1.1% |
| ROE | 6.5% | 6.7% | - |
For the fiscal year ended March 2026, Revenue was ¥1,945.3B (YoY +¥18.4B, +1.0%), Operating Income was ¥169.5B (YoY +¥13.0B, +8.3%), Ordinary Income was ¥163.7B (YoY +¥15.9B, +10.7%), and Net Income attributable to owners of the parent was ¥94.7B (YoY -¥1.0B, -1.1%). Gross margin improved by +0.7pt to 42.6%, and Operating Margin rose by +0.6pt to 8.7% (prior year 8.1%). By segment, Entertainment Business Operating Income improved by +21.3%, Anniversary Bridal Business by +61.6%, while the Fashion Business posted a slight decline but remained at a high level. Although operational performance was solid, recognition of impairment losses of ¥17.1B as an extraordinary loss and an increase in the effective tax rate to 36.8% constrained Net Income growth. Operating Cash Flow was ¥176.4B, Capital Expenditure was ¥109.8B, producing Free Cash Flow of ¥70.7B, sufficient to largely cover dividend payments (¥67.2B). Long-term borrowings were reduced by ¥67.2B, further enhancing financial soundness.
[Revenue] Revenue was ¥1,945.3B (YoY +1.0%), achieving modest growth. By segment, Fashion Business ¥1,028.9B (+0.3%, composition 52.9%), Entertainment Business ¥767.8B (+1.0%, composition 39.5%), Anniversary Bridal Business ¥124.5B (+6.3%, composition 6.4%), Real Estate Leasing Business ¥72.0B (+4.6%, composition 3.7%) — all segments posted revenue increases. In Entertainment, multi-purpose cafes (e.g., Kaikatsu CLUB) grew +2.0% and Fitness grew +9.8%, driven by higher occupancy and improved pricing. Bridal recorded high growth of +6.3% due to demand recovery, and real estate leasing performed steadily on improved occupancy. Fashion was essentially flat at +0.3% but continued to see gross margin improvement. Cost of sales ratio improved to 57.4% from 58.1% last year (-0.7pt), lifting gross margin to 42.6% (prior 41.9%) and driving company-wide profitability.
[Profitability] Operating Income was ¥169.5B (YoY +8.3%), delivering profit growth outpacing revenue growth. By segment, Entertainment Business Operating Income was ¥72.7B (+21.3%, margin 9.5%), Anniversary Bridal Business ¥8.7B (+61.6%, margin 7.0%) — both large increases; Real Estate Leasing Business ¥15.4B (-2.7%, margin 21.5%) slight decline; Fashion Business ¥85.1B (-2.1%, margin 8.3%) small decline but remained at a high level. SG&A was ¥659.3B (SG&A ratio 33.9%), up +1.4% YoY, but gross margin improvement absorbed this increase, lifting Operating Margin by +0.6pt to 8.7%. Non-operating income/expenses were marginal at net -¥5.8B (interest expense ¥2.6B, interest income ¥1.3B, other non-operating expenses ¥5.5B), resulting in Ordinary Income of ¥163.7B (+10.7%). In extraordinary items, special gains totaled ¥3.2B (gain on sale of investment securities ¥1.7B, gain on sale of fixed assets ¥0.2B) against extraordinary losses including impairment losses of ¥17.1B, totaling ¥17.1B. Profit before tax was ¥149.8B (+7.4%); after income taxes of ¥55.1B (effective tax rate 36.8%), Net Income attributable to owners of the parent was ¥94.7B (-1.1%). In summary, despite higher revenue and operating profit, extraordinary losses and a higher tax rate constrained Net Income growth.
Fashion Business Operating Income was ¥85.1B (YoY -2.1%), margin 8.3% — a slight decline but gross margin improvement supports a stable earnings base. Entertainment Business Operating Income was ¥72.7B (+21.3%), margin 9.5% — a substantial improvement driven by higher occupancy and pricing in multi-purpose cafes and fitness. Anniversary Bridal Business Operating Income was ¥8.7B (+61.6%), margin 7.0% — a marked recovery supported by wedding demand recovery and higher utilization. Real Estate Leasing Business Operating Income was ¥15.4B (-2.7%), margin 21.5% — high profitability maintained despite a slight decline, possibly affected by contract renegotiations at some properties. Diversification of segment composition contributed to operational stability, with improvements in Entertainment and Bridal offsetting Fashion’s flat trend.
[Profitability] Operating Margin 8.7% (prior 8.1%), Net Profit Margin 4.9% (prior 5.0%). Gross Margin improved to 42.6% (prior 41.9%) (+0.7pt), absorbing a slight increase in SG&A ratio to 33.9% (prior 33.8%) and improving operating profitability. ROE was 6.5% (prior 6.9%), slightly down due to higher effective tax rate and reduced leverage. ROA remained steady at 4.1% (prior 4.1%). [Cash Quality] Operating Cash Flow / Net Income was 1.86x, high quality, but OCF / EBITDA was 0.65x (EBITDA = Operating Income ¥169.5B + Depreciation ¥101.98B = ¥271.5B), somewhat weak due to working capital absorption (accounts payable -¥31.1B, bonus reserves -¥14.0B). Accruals showed Operating Income ¥169.5B vs Operating Cash Flow ¥176.4B, indicating a positive conversion and solid cash generation at the operating level. [Investment Efficiency] CapEx ¥109.8B was 1.08x depreciation ¥101.98B, reflecting a balance of maintenance and growth investment. Total Asset Turnover was 0.86x (prior 0.83x) slightly improved; Inventory Days were 76 days (Inventory ¥233.7B ÷ Annual Cost of Sales ¥1,116.5B × 365 days) remaining elevated, so inventory efficiency improvement is key to capital efficiency. [Financial Soundness] Equity Ratio 64.4% (prior 60.9%), Current Ratio 154.0% (prior 157.7%), Quick Ratio 103.0% (prior 112.7%) — high levels of soundness. Debt/Equity 0.14x (interest-bearing debt ¥190.6B / Net Assets ¥1,452.1B), Debt/EBITDA 0.70x, Interest Coverage about 66x (Operating Income ¥169.5B / Interest Expense ¥2.6B) — financial capacity is extremely strong.
Operating Cash Flow was ¥176.4B (YoY -18.9%), maintaining high quality at 1.86x Net Income ¥94.7B, but decreased YoY. Operating cash flow subtotal (before working capital changes) was ¥217.6B, including non-cash expenses such as Depreciation ¥101.98B and Impairment Losses ¥17.1B. Working capital changes caused cash outflows: inventories increased by -¥6.3B, trade receivables decreased by +¥3.8B, trade payables decreased by -¥31.1B, and bonus reserves decreased by -¥14.0B, totaling approximately -¥47.6B cash outflow. After payment of income taxes ¥40.2B, Operating Cash Flow totaled ¥176.4B. Investing Cash Flow was -¥105.6B, primarily CapEx -¥109.8B, acquisition of intangible fixed assets -¥13.5B, and proceeds from sale of tangible fixed assets ¥12.7B. Free Cash Flow was ¥70.7B (prior ¥98.7B) and remained positive, largely covering dividend payments ¥67.2B. Financing Cash Flow was -¥149.4B, including long-term borrowings repayment -¥120.2B (new borrowings +¥50.0B), short-term borrowings +¥10.0B, lease liabilities repayment -¥22.0B, and dividend payments -¥67.2B. Cash and deposits decreased from ¥348.8B to ¥270.1B (-¥78.7B), though liquidity remains ample. OCF/EBITDA at 0.65x suggests room to improve working capital efficiency; optimizing inventory turnover and accounts payable terms is key to enhancing cash generation.
Against Ordinary Income of ¥163.7B, extraordinary losses of ¥17.1B (mostly impairment losses ¥17.1B) were recorded, leaving Profit Before Tax of ¥149.8B. Special gains of ¥3.2B (gain on sale of investment securities ¥1.7B, gain on sale of fixed assets ¥0.2B) were minor, resulting in a net one-off loss of -¥13.9B that pressured Net Income. The effective tax rate rose to 36.8% (prior 31.3%), suggesting utilization of deferred tax assets and increased tax burden. Non-operating items were net -¥5.8B, with interest income ¥1.3B vs interest expense ¥2.6B, and other non-operating expenses ¥5.5B. From Operating Income ¥169.5B to Ordinary Income ¥163.7B to Net Income ¥94.7B, operating earnings are solid, but one-off losses and tax burden have constrained Net Income. Comprehensive Income was ¥96.9B, slightly above Net Income by +¥2.2B (actuarial gains on retirement benefits +¥3.7B offset by valuation differences on available-for-sale securities -¥1.4B). Accruals show Operating Cash Flow ¥176.4B exceeded Operating Income ¥169.5B, supporting operating cash generation. Earnings quality is strong at the ordinary level, but recurring extraordinary losses and a higher tax rate are key drivers of Net Income volatility; smoothing these would be essential to Net Income growth.
Full Year guidance forecasts Revenue ¥2,000.0B (YoY +2.8%), Operating Income ¥180.0B (+6.2%), Ordinary Income ¥175.0B (+6.9%), Net Income ¥100.0B (+5.6%), EPS ¥118.82. The cumulative results through Q3 (9 months) are Revenue ¥1,945.3B, Operating Income ¥169.5B, Ordinary Income ¥163.7B — representing progress rates of 97.3% for Revenue, 94.2% for Operating Income, and 93.5% for Ordinary Income relative to the full-year forecast, all high levels. The remaining Q4 (3 months) requires additional approximately Revenue ¥54.7B, Operating Income ¥10.5B, Ordinary Income ¥11.3B, which is judged achievable given typical Q4 seasonality. Dividend guidance is annual ¥30 per share (interim actual ¥20 + year-end forecast ¥10), but note that dividends of ¥80 per share (interim actual ¥20, estimated year-end ¥60) appear to have been paid already; confirmation of dividend consistency is desirable. Forecast Operating Margin 9.0% (actual 8.7%), Net Profit Margin forecast 5.0% (actual 4.9%) — modest improvements expected contingent on curbing extraordinary losses and stabilizing tax rate. Continued improvements in Entertainment and Bridal and uplifts in Fashion profitability are key to achieving the full-year targets.
Annual dividend per share is ¥80 (interim ¥20, year-end ¥60), with a Payout Ratio of 73.3% (total dividends ¥67.3B ÷ Net Income ¥94.7B; EPS-based calculation approx. 71.1%) — a high level. With FCF ¥70.7B vs dividend payments ¥67.2B, FCF coverage is about 1.05x, meaning dividends were almost fully covered by FCF but with a thin cushion. Prior year dividend was annual ¥15, so this year represents a substantial increase (+¥65), indicating a policy of stronger shareholder returns. No share buybacks were conducted (CF effect -¥0.0B), so total returns were dividends only. With Debt/EBITDA 0.70x and Equity Ratio 64.4%, financial strength is robust and there is capacity for additional returns. However, stabilizing FCF via inventory efficiency improvement is a prerequisite for sustainably maintaining high dividends. If next year’s guidance Net Income ¥100.0B is achieved and extraordinary losses normalize, dividend sustainability would be further enhanced. No explicit dividend policy target (e.g., Payout Ratio target) is disclosed; improved disclosure is desirable.
Inventory efficiency deterioration risk: Inventory Days are elevated at 76 days (Inventory ¥233.7B; annual Cost of Sales ¥1,116.5B), posing obsolescence and markdown risk, particularly in the Fashion Business. Inventory/Revenue ratio 12.0% (prior 11.8%) rose slightly, suggesting downside pressure on gross margin and potential cash flow deterioration. Improving inventory turnover is key to enhancing profitability and capital efficiency.
Recurrence of one-off losses risk: Extraordinary losses including impairment losses ¥17.1B have occurred two consecutive periods, suggesting structural issues in store or fixed asset profitability. Effective tax rate rose to 36.8% (prior 31.3%), indicating possible utilization of deferred tax assets or increased taxable income raising tax burden. Normalizing extraordinary losses and stabilizing tax rate are prerequisites for Net Income growth.
Segment concentration risk: The Fashion Business accounts for 52.9% of Revenue, so its performance materially influences the company. Although Entertainment is 39.5% and Bridal 6.4%, deceleration in same-store sales growth or intensified competition in Fashion could materially affect consolidated earnings. Bridal demand seasonality and sensitivity to economic conditions are additional risks.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 8.7% | 4.6% (1.7%–8.2%) | +4.1pt |
| Net Profit Margin | 4.9% | 3.3% (0.9%–5.8%) | +1.5pt |
Profitability ranks high within the industry, with both Operating and Net Profit Margins materially above the median.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 1.0% | 4.3% (2.2%–13.0%) | -3.3pt |
Revenue growth lags the industry median, placing the company in the lower-to-middle range for growth — reflecting a conservative growth strategy prioritizing profitability.
※ Source: Company compilation
Noticeable improvement at the operating level: Gross margin +0.7pt, Operating Margin +0.6pt — recovery in Entertainment and Bridal profitability and mix improvements in Fashion raised consolidated margins. Achieving an industry-high Operating Margin of 8.7% demonstrates both stability from segment diversification and strong profitability. Further tightening SG&A and improving inventory efficiency are potential levers for additional margin expansion.
Net Income stage constrained by extraordinary losses and higher tax rate: Continued impairment losses of ¥17.1B and an effective tax rate of 36.8% limited Net Income growth to -1.1%. If extraordinary losses normalize and tax burden stabilizes, operating improvements should flow through to Net Income, enabling ROE improvement and sustainable profit growth. Next year’s guidance anticipates Net Income +5.6% on the assumption of curtailed extraordinary losses; achievement is key to shareholder value enhancement.
Financial soundness and return capacity are robust but inventory efficiency remains a persistent issue: Debt/EBITDA 0.70x, Equity Ratio 64.4%, Current Ratio 154% — financials are very healthy, supporting both investment and returns. FCF ¥70.7B almost covered dividends ¥67.2B, but Inventory Days at 76 remain elevated; improving working capital efficiency is essential for stabilizing FCF and sustaining returns. Normalizing inventory turnover and raising OCF/EBITDA (current 0.65x) above 0.9x would be the principal levers for mid-term capital efficiency improvement and ROE uplift.
This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are company-compiled reference information based on public financial statements. Investment decisions are your responsibility; consult professionals as needed before acting.