AOYAMA TRADING Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥81.97B
• Operating Income: ¥77M
• Net Income: ¥-559M
• EPS: ¥-17.65

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

Aoyama Shoji Co., Ltd. (8219) reported FY2026 Q2 consolidated results under JGAAP with revenue of ¥81.973bn, down 3.0% YoY, indicating continued softness in demand and/or a slower recovery in formalwear. Operating income fell sharply to ¥0.077bn (-88% YoY), evidencing significant negative operating leverage as modest top-line pressure translated into a steep profit contraction. Ordinary income was ¥0.297bn, implying meaningful non-operating support (net), offset by interest expense of ¥0.251bn. The company recorded a net loss of ¥0.856bn (EPS -¥17.65), slightly narrower YoY (+1.1% YoY improvement), but still loss-making at the bottom line. Reported gross profit was ¥42.360bn against cost of sales of ¥42.144bn; the implied gross margin of 51.7% is high for an apparel specialist and suggests classification effects and/or inclusion of other operating items—management disclosure will be key to interpret this line. DuPont metrics point to a net margin of -1.04%, asset turnover of 0.269x, and financial leverage of 1.72x, resulting in a calculated ROE of -0.48%, consistent with the reported figure. Liquidity appears robust with a current ratio of 282.2% and a quick ratio of 219.7%, supported by sizable working capital of ¥125.166bn. Balance sheet strength is also evident: using disclosed totals, equity/asset ratio is approximately 58.2% (¥177.074bn/¥304.250bn), though the reported equity ratio figure was not disclosed in XBRL (shown as 0%). Interest coverage is weak at 0.3x (OI/interest), highlighting sensitivity to any further profit pressure. Inventories of ¥42.946bn represent a material component of current assets, and inventory discipline will be important given the negative operating leverage. Cash flow statements were not disclosed (shown as zeros), limiting assessment of operating cash generation and capex discipline this quarter. Dividend per share is currently ¥0, with payout and FCF coverage shown as 0 due to non-disclosure of cash flows and the net loss; this aligns with a conservative stance while profitability normalizes. Overall, the quarter reflects a company with strong liquidity and an equity-rich balance sheet but weak near-term profitability and fragile interest coverage. Management’s ability to improve sell-through, control SG&A, and stabilize gross margin quality will determine earnings recovery. Data limitations (cash flows, D&A, share count details) constrain precision; the analysis below focuses on the available, non-zero data points and derived calculations.

Profitability Analysis

ROE_decomposition:

• net_profit_margin: -0.0104
• asset_turnover: 0.269
• financial_leverage: 1.72
• calculated_ROE: -0.0048
• commentary: Negative margin is the primary driver of the negative ROE; low asset turnover for a retailer also depresses returns, while moderate leverage amplifies losses slightly. margin_quality: Reported gross margin is 51.7%, unusually high for apparel retail, suggesting classification effects (e.g., other operating income included) or timing effects. Operating margin compressed to 0.09% (¥0.077bn OI / ¥81.973bn sales), reflecting elevated fixed costs and/or promotional activity. Ordinary margin of 0.36% benefited from non-operating items that offset ¥0.251bn in interest expense. Net margin at -1.04% indicates below-the-line charges (notably taxes despite a loss) and finance costs outweighing meager operating profits. operating_leverage: YoY revenue declined 3.0% while operating income fell 88.0%, indicating pronounced negative operating leverage. Fixed SG&A burden appears high relative to sales; small revenue fluctuations are having outsized profit effects. Improving store productivity and SG&A flexibility are critical to reduce earnings volatility.

Growth Assessment

revenue_sustainability: Revenue of ¥81.973bn (-3.0% YoY) points to ongoing demand normalization challenges in core formalwear and possibly slower traffic. Without segment disclosure, sustainability is uncertain; stabilization hinges on merchandising mix adjustments and store optimization. profit_quality: Operating income is minimal and supported at the ordinary level by non-operating items; interest expense of ¥0.251bn weighs on earnings. The presence of tax expense (¥0.791bn) despite a net loss suggests non-cash tax effects (e.g., valuation allowance changes), diluting earnings quality. outlook: Near-term outlook is cautious given negative operating leverage, inventory risk, and higher financing burden relative to operating income. If gross margin normalization and SG&A efficiencies are achieved, modest profit recovery is possible; otherwise, further top-line softness could keep earnings under pressure. Data gaps (cash flow, D&A) limit visibility on underlying trend durability.

Financial Health

liquidity: Current ratio 282.2% and quick ratio 219.7% indicate strong short-term liquidity. Working capital stands at ¥125.166bn, providing a substantial buffer. Cash and equivalents were not disclosed this quarter. solvency: Using disclosed totals, equity ratio is approximately 58.2% (computed) despite the undisclosed reported value. Debt-to-equity of 0.77x suggests moderate leverage. Interest coverage of 0.3x is weak; profitability needs to improve to comfortably service interest. capital_structure: Total assets ¥304.250bn, total equity ¥177.074bn, total liabilities ¥136.915bn. Balance sheet is equity-heavy, which supports solvency, but the earnings base is currently insufficient relative to interest costs. No breakdown of interest-bearing debt maturities was provided.

Cash Flow Quality

earnings_quality: OCF, investing CF, and financing CF were not disclosed (zeros indicate unreported). As such, accruals, cash conversion, and OCF/NI cannot be assessed. The presence of tax expense alongside a net loss suggests non-cash tax adjustments, impacting comparability. FCF_analysis: Free cash flow is not computable due to absent OCF and capex data. With minimal operating income and non-disclosed D&A, EBITDA and maintenance capex cannot be inferred. working_capital: Inventories of ¥42.946bn are sizable; without inventory turnover data, cash tie-up risk cannot be quantified. Working capital of ¥125.166bn provides cushion but could consume cash if sell-through slows and markdowns rise.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is ¥0.00 and payout ratio is shown as 0.0% due to the net loss and/or policy suspension. With negative net income, a cash dividend would not be supported by earnings. FCF_coverage: FCF coverage cannot be assessed because cash flows were not disclosed. Given weak profitability and interest coverage, maintaining a conservative dividend stance is consistent with financial prudence. policy_outlook: Resumption of dividends likely depends on restoring consistent operating profitability and demonstrating cash generation (OCF) visibility. Management may prioritize balance sheet resilience and inventory normalization ahead of distributions.

Risk Assessment

Business Risks:

• Structural demand shifts away from formalwear reducing core category volumes
• Negative operating leverage from high fixed SG&A base
• Inventory obsolescence and markdown risk amid soft traffic
• Competitive pricing pressure in apparel specialty retail
• Execution risk in merchandising mix shift and store optimization

Financial Risks:

• Weak interest coverage at 0.3x leaves limited cushion against rate or profit shocks
• Potential cash flow strain if sales weaken and working capital expands
• Tax expense despite net loss indicates P&L volatility from non-cash adjustments
• Moderate leverage (D/E 0.77x) with low earnings base increases refinancing sensitivity

Key Concerns:

• Sustained negative operating leverage despite modest revenue decline
• Reliance on non-operating items to support ordinary income
• Lack of disclosed cash flow data impeding assessment of cash generation and FCF

Investment Implications

Key Takeaways:

• Top line contracted 3.0% YoY; operating income dropped 88.0%, highlighting high operating leverage
• Ordinary income positive due to non-operating support, but net loss of ¥0.856bn persisted
• Interest coverage only 0.3x; profitability must improve to de-risk financing costs
• Liquidity strong (current ratio 282%, quick ratio 220%); computed equity ratio ~58%
• Cash flow and D&A undisclosed; earnings quality assessment constrained

Metrics to Watch:

• Same-store sales and traffic trends to gauge demand recovery
• Gross margin drivers (mix, markdowns) and SG&A ratio trajectory
• Inventory level and turnover to monitor cash tie-up and markdown risk
• Operating income vs. interest expense to track coverage improvements
• Disclosure of OCF and capex for FCF visibility
• Ordinary income composition (recurring vs. one-off non-operating items)

Relative Positioning: Within Japanese apparel specialty retailers, Aoyama Shoji shows stronger balance sheet liquidity but weaker profitability and interest coverage versus peers with higher scale and casualwear exposure; earnings normalization and cash generation clarity are needed to narrow the gap.

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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