| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥107153.4億 | ¥101348.8億 | +5.7% |
| Operating Income / Operating Profit | ¥2704.6億 | ¥2377.5億 | +13.8% |
| Ordinary Income | ¥2430.3億 | ¥2242.2億 | +8.4% |
| Net Income / Net Profit | ¥249.7億 | ¥402.2億 | -37.9% |
| ROE | 1.1% | 1.9% | - |
For the fiscal year ended February 2026, AEON reported Revenue of 107,153.42億円 (YoY +5,804.65億円 +5.7%), Operating Income of 2,704.59億円 (YoY +327.12億円 +13.8%), Ordinary Income of 2,430.31億円 (YoY +188.09億円 +8.4%), and Net Income attributable to owners of the parent of 726.77億円 (YoY +454.85億円 +167.5%), achieving five consecutive years of revenue growth and the first increase in net income in two years. Operating income increased for the third consecutive year with a CAGR of 11.6%, reaching record highs and continuing profitability improvement well above the growth rate of operating revenues (CAGR 5.3%). Private brand "Topvalu" performed strongly across all segments at 110% of prior-year levels, contributing to gross margin improvement. The Developer business (Operating Income 709.16億円, +33.7%) and Health & Wellness business (Operating Income 523.68億円, +45.4%) recorded record profits. Conversely, Supermarket (-8.2%) and Discount (-9.5%) saw profit declines due to higher personnel costs and price competition, leaving improvement in core retail profitability as a remaining issue. Extraordinary items included impairment losses of 974.86億円 while recognizing step-acquisition gains of 690.86億円 related to Tsuruha HD, resulting in a large increase in parent-company net income (+167.5%) driven substantially by one-off factors. Operating Cash Flow was 11,265.89億円 (YoY +99.0%) at a record high, but the boost from working capital — notably accounts payable increase of 2,163.81億円 — was large, so sustainability into the next fiscal year requires attention.
[Revenue] Top-line grew +5.7% to 107,153.42億円, marking five consecutive years of revenue growth. Major contributors were Health & Wellness business +23.5% (including contribution from consolidation of Tsuruha HD in December), GMS business +4.2%, SC Development +5.4%, Services & Specialty Stores +2.1%, and International business +3.6%, reflecting broad-based segment growth. Private brand "Topvalu" performed at 110% YoY across all segments, and price-focused "Best Price" reached 113%, supporting same-store sales. By region: Domestic +5.8%, ASEAN +9.3%, China -4.3%, with Vietnam specialty-store sales at 117.6% driving International performance, while China suffered from weak consumption and an unusually warm winter that hurt seasonal merchandise.
[Profitability] At the operating stage, gross margin was 24.7% (prior year approx. 25.1%), down ~40bp, but SG&A ratio improved to 33.97% (prior year 34.69%), improving by -72bp, yielding an Operating Margin of 2.52% (prior year 2.35%) — up 17bp. Improved segment mix contributed, with higher-margin SC Development (margin 16.4%), Financial Services (margin 12.5%), and Health & Wellness (margin 3.2%) expanding profit contribution; consolidated operating income rose +13.8%, significantly outpacing revenue growth. Non-operating expenses saw interest expense of 513.76億円 (YoY +82.54億円), increasing interest burden; thus, while Operating Income rose +327.12億円, Ordinary Income only increased by +188.09億円. Extraordinary items included impairment losses 974.86億円, step-acquisition gains 690.86億円, and losses on disposal of fixed assets 47.07億円, resulting in a net extraordinary loss of -355.74億円. Pre-tax income of 2,074.57億円 less income taxes of 829.21億円 and non-controlling interests of 518.58億円 produced Net Income attributable to owners of the parent of 726.77億円 (+167.5%). The divergence between Ordinary Income and Net Income is large (-70.1%), primarily due to offsetting one-off items (impairments vs. step-acquisition gains) and the impact of taxes and non-controlling interests. While core retail (SM/DS) declined, gains in SC Development and H&W drove overall revenue and profit growth.
Of consolidated Operating Income of 2,704.59億円, the largest contributor was the Developer business (SC Development) with Operating Income of 709.16億円 (26.2% share), margin 16.4%, up +33.7% YoY. Next were Comprehensive Financial Services 608.71億円 (22.5% share, margin 12.5%, -0.5%), and Health & Wellness 523.68億円 (19.4% share, margin 3.2%, +45.4%) as high-profit segments. In core retail, Supermarket 298.70億円 (11.0%, margin 1.0%, -8.2%), GMS 214.30億円 (7.9%, margin 0.6%, +31.0%), and Discount 72.33億円 (2.7%, margin 1.7%, -9.5%) showed a split performance. International 102.28億円 (3.8%, margin 1.8%, +7.7%) and Services & Specialty Stores 270.02億円 (10.0%, margin 5.1%, +15.7%) continued to grow profitably. Other businesses recorded a loss of -141.34億円 but are small in revenue scale. Key drivers of revenue and profit growth included domestic existing specialty-store sales in SC Development at 105.7%, increased footfall driven by enhanced experiential content and cool-share proposals, and high contract occupancy rates; in H&W the consolidation of Tsuruha HD (December) plus strengthening of in-store dispensing at Welcia and food offerings contributed. Profit declines were driven by higher personnel and facility costs at U.S.M.H in SM, one-off costs from growth investments in DS, and the absence of prior-year gains from receivable securitization in Financial Services. The margin gap between segments is about 10–15 percentage points between SC Development (16.4%) and core retail (SM 1.0%, DS 1.7%, GMS 0.6%), making expansion of high-margin segments key to company-wide margin improvement.
Profitability: ROE 3.3% (prior year 1.1%), Operating Margin 2.5% (prior year 2.3%), EBITDA Margin 5.9% (prior year 5.4%), Net Profit Margin 0.7% (prior year 0.3%). ROE composition: Net Profit Margin 0.7%, Total Asset Turnover 0.697x, Financial Leverage 6.97x. ROE has trended up over the past three years (2024: 2.2%, 2025: 1.1%, 2026: 3.3%) but remains low within the industry. Operating Margin improved +17bp, aided by segment mix changes. Cash Quality: Operating Cash Flow / Net Income 15.5x, Free Cash Flow 379.24億円 (prior year -478.81億円) showing large improvement. Operating CF / EBITDA 1.78x indicates strong cash generation, but the contribution from working capital — accounts payable +2,163.81億円 — is significant; Accrual Ratio -6.9% is healthy but sustainability of working capital effects should be watched. Investment Efficiency: CAPEX / Depreciation 1.46x (Tangible & Intangible additions 5,285.36億円 / Depreciation 3,629.45億円), indicating a growth investment phase. ROIC 3.3% (prior year approx. 2.5%) improving. Financial Soundness: Equity Ratio 14.3% (prior year 15.4%) declined, Current Ratio 104.2% (prior year 103.0%) at a marginal level. D/E 5.97x (prior year 5.47x) indicating increased leverage, Debt/EBITDA 3.50x outside investment-grade range, EBITDA Interest Coverage 12.33x showing interest-payment capacity for the time being. Efficiency: Total Asset Turnover 0.697x, Inventory Turnover Days 28 days, Receivables Collection Days 64 days, Payables Days 50 days, CCC 42 days. Total Asset Turnover is standard for a mixed retail-real-estate model. DSO at 64 days improved from 66 days but remains well above the industry median of 21 days, indicating room to strengthen receivables management.
Operating Cash Flow: 11,265.89億円 (YoY +99.0%), 15.5x net income, indicating extremely strong cash backing. Breakdown: Operating CF subtotal 12,636.08億円; working capital movements included decrease in trade receivables 1,075.62億円, increase in accounts payable 2,163.81億円, increase in inventories -192.61億円, making working capital a net source. Income taxes paid -1,022.54億円, interest received 135.72億円, interest paid -483.36億円 are included. Operating CF / EBITDA 1.78x is high, but excluding one-off boosts such as increases in accounts payable and deposits, the underlying figure may be lower. Investing Cash Flow: -10,886.65億円, including tangible and intangible fixed asset additions -5,285.36億円, acquisition of investment securities -49.52億円, proceeds from sales 140.71億円, cash outflows related to changes in consolidation scope -268.20億円, proceeds from sales 70百万円, net increase in short-term investment securities -773.10億円, etc. Annual investment of 5,285.36億円 significantly exceeds depreciation of 3,629.45億円, reflecting continued growth investment. Financing Cash Flow: 400.89億円, with long-term borrowings 7,831.95億円, repayments -4,581.42億円, bond issuance 3,089.80億円, redemptions -1,918.71億円, dividends -356.83億円, share buybacks -8.44億円, cash outflows due to changes in subsidiary ownership -1,067.54億円 and inflows 44.37億円, among others. Net positive flows amid large financing activity helped secure liquidity. FCF: 379.24億円 (approximate simple calculation: Operating CF 11,265.89億円 - Tangible and Intangible additions 5,285.36億円), turning positive from -478.81億円 prior year. Against dividends of 356.83億円, FCF coverage is 1.06x, nearly fully covered, but excluding working capital effects the cushion is limited. Cash generation assessment: Operating CF is strong, but monitoring of working capital sustainability is required.
Ordinary Income of 2,430.31億円 versus Net Income of 249.72億円 shows a large divergence (-89.7%). The main causes are net extraordinary loss of -355.74億円 (impairment losses 974.86億円, step-acquisition gains 690.86億円, loss on disposal of fixed assets 47.07億円, etc.) and non-controlling interests of 518.58億円. Ordinary-stage results reflect recurring business earnings, but final profit is volatile due to one-time positive factors (step-acquisition gains) and one-time negative factors (impairments). Non-operating income of 375.77億円 (0.35% of Revenue) comprises interest received 54.51億円, dividend income 35.13億円, equity-method investment gains 91.43億円, and investment partnership returns 28.68億円, and because it is below 5% it is of standard quality. Non-operating expenses 650.05億円 are mainly interest expense 513.76億円 (YoY +82.54億円), and increased interest burden is compressing the pass-through from operating income to ordinary income. Accrual quality: Operating CF 11,265.89億円 far exceeds Net Income 249.72億円, Accrual Ratio -6.9%, indicating strong cash backing, but given the sizable contribution from working capital increases, sustainability needs attention. The divergence between Ordinary Income and Net Income is driven by one-off items and non-controlling interests; the quality of net income is therefore influenced by temporary factors relative to ordinary earning power.
Progress against full-year forecast: This period is assessed on a full-year basis. For the fiscal year ending February 2027, management plans Revenue 12.0兆円 (YoY +12.0%), Operating Income 3,400億円 (+25.7%), Ordinary Income 2,900億円 (+19.3%), and Net Income attributable to owners of the parent 730億円 (+0.4%). This implies Operating Income increase of +695.41億円, Ordinary Income +469.69億円, Net Income +3.23億円 from the current fiscal results. The plan assumes profit margin improvement as Operating Income growth (+25.7%) outpaces Revenue growth (12.0%). Achieving Revenue of 12.0兆円 requires expansion of H&W (Tsuruha PMI integration and Welcia food strengthening), further rollout of My Basket stores, continued high growth in Vietnam, and activation of domestic retail same-store sales. Reaching Operating Income 3,400億円 assumes high occupancy maintenance and new developments in SC Development, synergy realization in H&W, and profit-structure reforms in SM & DS (raising PB ratio, joint procurement, utilization of process centers, and DX promotion). Progress risks include continued personnel cost and price-competition pressures in core retail, interest rate rises increasing interest expense, prolonged weak consumption in China, and recurrence of one-off costs. The introduction of a consolidated tax group system (from fiscal 2026) is expected to offer tax optimization effects that will contribute to future net income, but priority remains on improving operating and ordinary-stage underlying performance. No order backlog data was disclosed, but tenant contract occupancy rates for SC Development remain stably high, providing a certain short-term revenue visibility.
This period’s dividend comprises an interim dividend of ¥20 (ordinary ¥18 + commemorative ¥2) and a year-end dividend of ¥7 (post-split; equivalent to ¥21 on a pre-split basis), totaling ¥27 (equivalent to ¥41 on a pre-split basis). Dividend Payout Ratio (dividends only / Net Income attributable to owners of the parent) is 103.4%, exceeding net income level; considering the temporary net income uplift from step-acquisition gains, the payout is high on an underlying basis. Share buybacks were small at -8.44億円, and the Total Return Ratio is approximately 103.8%, dividend-centric. For FY2027, dividend forecast is ¥15 per year (post-split: interim ¥7.5 + year-end ¥7.5, including commemorative ¥0.5 each; approximately ¥45 pre-split), representing an increase equivalent to ¥4 on a pre-split basis. Against FCF of 379.24億円, dividends of 356.83億円 yield FCF coverage of 1.06x and payment capacity is supported by strong Operating CF. However, excluding working-capital effects FCF is compressed, so medium-term sustainability of dividends depends on improved retail core profitability and containment of interest burden to expand underlying FCF. Cash and deposits of 13,500.37億円 and short-term investment securities 12,891.02億円 provide ample liquidity enabling dividend continuation, but a dividend payout ratio above 100% raises sustainability concerns.
[Short-term (within 1 year)] Early progress on PMI and synergy realization for Tsuruha and Welcia (procurement integration, inter-store coordination, system unification); further expansion of My Basket stores from 1,323 locations and profit improvements through process center utilization; expansion of AEON Retail store DX (RegiGo from 294 stores → further expansion, electronic shelf labels 288 stores, introduction of AI order & AI pricing); continued increase in PB "Topvalu" mix (overall growth 110%) and gross-margin improvement; maintenance of domestic SC existing specialty-store sales at 105.7% and enhancement of experiential content; continuation of Vietnam specialty-store sales growth at 117.6% and new SC developments; realization of tax optimization effects from consolidated tax group system. [Long-term (over 2 years)] Profit-structure reforms in SM & DS (joint procurement, full implementation of process centers, labor productivity improvement) leading to margin expansion; substantial expansion of Vietnam business and sustained high growth driven by urbanization; improved ROI from utilization and renewal investment of domestic SC assets; expansion of retail media business within Comprehensive Financial Services and deeper AEON Pay penetration (member base 12.08 million and further growth); establishment of business bases and expanded profit contribution in ASEAN; absorption of rising personnel and facility costs through price pass-through and entrenchment of DX benefits.
[Industry Position] (Reference information — company analysis) Profitability: ROE 3.3% (industry median 5.9%, 2025-FY, retail n=47) is below peers. Operating Margin 2.5% (industry median 4.6%) is also below, though improved +17bp over three years. Net Profit Margin 0.7% (industry median 3.3%) lags significantly, driven by reliance on one-off items. Efficiency: Total Asset Turnover 0.697x (industry median 1.17x) is lower but reflects the asset-intensity of the combined retail-finance-real-estate model. Inventory turnover days 28 days (industry median 65.68 days) is excellent; receivables days 64 days (industry median 21.05 days) underperforms. Payables days 50 days (industry median 39.35 days) indicate strong procurement power. Solvency: Equity Ratio 14.3% (industry median 50.2%), Current Ratio 104.2% (industry median 184%) are substantially weaker; Financial Leverage 6.97x (industry median 1.88x) is among the highest in the industry, increasing interest-rate sensitivity. Net Debt / EBITDA 3.50x (industry median -0.59x) shows pronounced debt dependence. Growth: Revenue growth +5.7% (industry median 4.3%) is upper-tier; EPS growth +154.2% (industry median 6%) is inflated by step-acquisition gains and should be interpreted cautiously. Cash: FCF yield (market cap data unavailable), Cash Conversion Rate 1.78x (Operating CF / EBITDA, industry median 1.57x) is strong, and even excluding working-capital effects cash generation appears above standard. Investment: CAPEX / Depreciation 1.46x (industry median 1.16x) indicates a growth investment phase expected to contribute to future revenue expansion. Overall comparison: The company ranks highly on growth and cash generation but lags materially on capital efficiency and financial soundness. Improving segment mix and core retail margins is key to enhancing industry positioning. Industry: retail (47 companies), comparison period: 2025-FY results, source: company-compiled reference data
This report was auto-generated by AI through integrated analysis of XBRL statutory filings and PDF earnings presentation materials. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions are your responsibility; please consult professionals as needed before making any investment choices.