| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue | ¥1980.3B | ¥2014.0B | -1.7% |
| Operating Income | ¥3.9B | ¥19.0B | -79.4% |
| Ordinary Income | ¥5.1B | ¥23.3B | -78.2% |
| Net Income | ¥0.7B | ¥11.5B | -93.9% |
| ROE | 0.0% | 0.5% | - |
Q1 of the fiscal year ending March 2026 reported declines in both revenue and profit. Revenue was ¥1980.3B (YoY -¥33.7B -1.7%), Operating Income ¥3.9B (YoY -¥15.1B -79.4%), Ordinary Income ¥5.1B (YoY -¥18.2B -78.2%), and Net Income ¥0.7B (YoY -¥10.8B -93.9%). While revenue fell only slightly, a gross margin of 26.1% was outweighed by an SG&A ratio of 29.5%, producing a negative spread and compressing the operating margin to 0.2%. This is a 0.7pt deterioration from 0.9% in the prior-year period. Special losses of ¥3.3B, including closure losses of ¥2.1B, further pressured net income. EPS was ¥0.77 (prior year ¥13.32) representing a significant decline, and progress toward the full-year plan Operating Income of ¥170.0B was only 2.3%, a large shortfall. The burden of fixed retail overheads has become apparent, making structural reforms and inventory correction urgent.
Revenue: Revenue of ¥1980.3B (YoY -1.7%) was slightly down. Gross margin was maintained at 26.1%, securing Gross Profit of ¥516.5B, but Selling, General & Administrative expenses were ¥584.5B (SG&A ratio 29.5%), exceeding gross margin by 3.4pt and severely compressing operating-stage profitability. Segment information is not disclosed because the company reports a single segment. Accounts receivable of ¥150.4B (YoY +51.6%) suggests looser credit control and longer collection terms, creating working capital absorption pressure. Inventory of ¥358.2B was up +2.5% YoY, with days inventory outstanding at 94 days indicating increased stock build-up and potential markdown/disposal loss risk.
Profitability: Operating Income ¥3.9B (-79.4%) reflects maintained gross margin but heavy fixed SG&A burden, dropping the operating margin to 0.2% (worsened by 0.7pt from 0.9% prior). Non-operating income was ¥2.8B (including dividend income ¥1.1B and equity-method investment income ¥3.1B), and non-operating expenses were ¥1.6B (including interest expense ¥0.9B), yielding Ordinary Income ¥5.1B (-78.2%). Extraordinary gains were ¥0.9B (primarily gain on sale of available-for-sale securities ¥9.1B) and extraordinary losses ¥3.3B (closure losses ¥2.1B, loss on disposal of fixed assets ¥1.1B), reducing profit before tax to ¥2.7B. After corporate taxes of ¥2.0B (an abnormally high effective tax rate of 73.5%), Net Income was ¥0.7B (-93.9%). Profit attributable to owners of parent was ¥0.7B (non-controlling interests ¥0.0B), yielding a net margin of 0.0%. Closure-related costs and high tax burden compressed earnings, resulting in the overall revenue and profit decline.
Profitability: Operating margin 0.2% (prior 0.9%), Net margin 0.0% (prior 0.6%) — both substantially deteriorated. Gross margin 26.1% decreased 0.7pt from 26.8% prior; SG&A ratio 29.5% was roughly flat vs. 29.6% prior, but revenue decline plus fixed cost burden caused operating leverage to reverse. ROE 0.0% (prior 0.5%) driven mainly by the sharp fall in net margin. EBIT Margin 0.2%, effective tax rate 73.5%—an abnormal tax burden that materially diluted after-tax earnings.
Cash Quality: Net working capital -¥405B (Accounts Payable ¥778.6B > Inventory ¥358.2B + Accounts Receivable ¥150.4B), reflecting a retail-typical working capital-light model, but accounts receivable surged +51.6% YoY, necessitating attention to credit and collection management. Days inventory outstanding 94 days (prior 91 days) shows further stock stagnation with markdown/disposal risk and pressure on gross margin. Contract liabilities ¥61.3B act as a cash-relieving element as deferred revenue.
Investment Efficiency: Total asset turnover 0.47x (prior 0.49x) at retail standard levels. Goodwill ¥212.3B (9.4% of equity) is within tolerable range with limited impairment risk. Asset retirement obligations ¥124.9B represent 6.4% of liabilities and signal potential future cash outflows in store restructuring.
Financial Soundness: Equity Ratio 53.6% (prior 54.7%) maintains thickness. Interest-bearing debt ¥163.4B is restrained, Debt/Capital 6.8%, Interest Coverage 4.3x, indicating a degree of financial resilience. Current ratio 72.0% (prior 74.2%), Quick ratio 46.7% (prior 49.4%) show tightening short-term liquidity, requiring attention to maturity management of Accounts Payable ¥778.6B. Cash and deposits ¥391.7B exceed interest-bearing debt, making net interest-bearing debt effectively negative.
Cash flow statement data are not disclosed, but balance sheet movements were used to analyze cash trends. Cash and deposits ¥391.7B were essentially flat YoY (+0.6%). Operating-stage profitability (EBIT Margin 0.2%) is thin, and lengthening days inventory (94 days) plus +51.6% rise in accounts receivable have absorbed working capital, lowering the quality of cash generation. Contract liabilities ¥61.3B (prior ¥65.3B) provide some cash relief as deferred revenue, but low profit levels limit sources of operating cash flow. In investing activities, tangible fixed assets ¥2323.1B were nearly flat YoY (+0.0%), and intangible fixed assets including goodwill amounted to ¥263.4B, showing restraint. Investment securities decreased to ¥151.1B (prior ¥158.5B), with partial disposals (gain on sale ¥9.1B) providing cash inflows. In financing activities, long-term borrowings were reduced to ¥163.2B (prior ¥201.2B), continuing to compress interest-bearing debt. Retained earnings ¥517.5B declined from ¥529.9B prior, reflecting dividend payments and lower profits. Deterioration in working capital and weak operating efficiency constrain overall cash flow generation.
Analysis of earnings quality shows extremely weak operating profit generation, with non-operating and extraordinary items having a relatively large impact. Against Operating Income of ¥3.9B, non-operating income such as equity-method investment income ¥3.1B and dividend income ¥1.1B contributed ¥2.8B. Of Ordinary Income ¥5.1B, approximately 30% dependence is on non-operating income, but relative to revenue this is minimal and not structurally dependent. At the extraordinary stage, gain on sale of available-for-sale securities ¥9.1B funded extraordinary gains of ¥0.9B, while extraordinary losses ¥3.3B including closure losses ¥2.1B and loss on disposal of fixed assets ¥1.1B significantly compressed Net Income. The gap between Ordinary Income ¥5.1B and profit before tax ¥2.7B is due to extraordinary items, with one-off costs from store reorganization depressing results. The effective tax rate of 73.5% is extremely high; the tax burden coefficient 0.246 greatly diluted after-tax earnings. Comprehensive Income was -¥4.7B, below Net Income of ¥0.7B, with valuation difference on available-for-sale securities -¥4.6B and actuarial differences related to retirement benefits -¥0.8B among other comprehensive losses of -¥5.4B. While most Ordinary Income is derived from core operations, the weakness of operating profitability, extraordinary losses, high tax burden, and deterioration in OCI have severely reduced the quality of final and comprehensive earnings.
The full-year plan remains unchanged: Revenue ¥8250.0B, Operating Income ¥170.0B (YoY +51.5%), Ordinary Income ¥172.0B (YoY +37.3%), Net Income ¥70.0B, EPS ¥80.78. Progress through Q1 is 24.0% for Revenue (near the standard 25%), but severely lagging for profit items: Operating Income 2.3%, Ordinary Income 3.0%, Net Income 0.9%. The Operating Income progress rate of 2.3% reflects front-loaded recording of closure and restructuring costs and the fixed-cost burden of SG&A, implying a strong back-half weighting. To achieve the full-year target requires inventory correction to improve gross margin, increased flexibility in SG&A, and restoration of same-store productivity through better selling space productivity. With only 2.3% of company-wide Operating Income booked in Q1, the company would need roughly ¥56.0B per quarter on average in subsequent quarters (about 14x Q1) to meet the full-year plan. Cost efficiency in the back half and revenue recovery are key to achieving the plan.
Annual dividend is planned at ¥15, unchanged at Q1. The payout ratio versus full-year EPS forecast ¥80.78 is 18.6%, which is conservative. Short-term progress is weak relative to Q1 EPS ¥0.77, but if the full-year plan is achieved the dividend sustainability is high. No share buyback has been disclosed; shareholder returns are dividend-focused. Cash and deposits ¥391.7B and effectively negative net interest-bearing debt indicate ample financial flexibility, but the achievability of full-year Net Income ¥70.0B underpins dividend stability. Historical continuity of payout ratio is unclear, but maintaining the dividend forecast signals management confidence in profit recovery.
Inventory efficiency deterioration risk: Days inventory outstanding 94 days (prior 91 days) indicates growing stock stagnation, with Inventory ¥358.2B up +2.5% YoY. Inventory expansion during a revenue decline may force markdowns/disposal losses, further pressuring gross margin 26.1% (down 0.7pt from 26.8%). Inventory/Revenue ratio 18.1% remains elevated; delayed clearance of seasonal inventory could lead to sustained margin deterioration.
Short-term liquidity risk: Current ratio 72.0%, Quick ratio 46.7% show tightening short-term liquidity. Current liabilities ¥1449.5B vs. Current assets ¥1044.2B reflect strong working capital absorption pressure. Maturity management of Accounts Payable ¥778.6B and collection risks from Accounts Receivable ¥150.4B (YoY +51.6%) could create cash flow friction. Contract liabilities ¥61.3B offer some relief, but weak operating cash flow generation makes securing short-term liquidity a challenge.
Restructuring costs and tax burden risk: Extraordinary losses ¥3.3B including closure losses ¥2.1B indicate progress in structural reforms, but one-off costs during a weak profit environment heavily erode Net Income. The effective tax rate of 73.5% is abnormally high and may reflect special tax factors; if such tax burdens persist, recovery of after-tax profits will be delayed. Asset retirement obligations ¥124.9B (6.4% of liabilities) should also be considered as potential medium-term cash outflows related to store reorganization.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 0.2% | 3.4% (0.8%–7.7%) | -3.2pt |
| Net Margin | 0.0% | 2.2% (0.5%–6.2%) | -2.2pt |
Profitability is well below the industry median, placing the company among the lower ranks of the retail sector for both operating and net margins.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -1.7% | 7.7% (0.8%–14.6%) | -9.4pt |
Revenue growth lags the industry median by 9.4pt, indicating weaker top-line expansion versus sector averages.
※ Source: Company compilation
Rapid deterioration in operating efficiency and high hurdle to achieve full-year plan: Operating margin 0.2% worsened 0.7pt from 0.9% prior, and Q1 progress toward full-year Operating Income ¥170.0B is 2.3%, a significant shortfall. This implies a required average of roughly ¥56.0B in operating profit per quarter in the back half, making inventory correction, SG&A flexibility, and improvements in same-store productivity critical to meeting targets. Early booking of restructuring costs including closure losses is intended to enable mid-term efficiency gains but is a near-term earnings headwind.
Worsening working capital and tightening short-term liquidity: Accounts Receivable ¥150.4B (YoY +51.6%) and lengthening days inventory 94 days increase working capital absorption and push the current ratio to a warning level at 72.0%. Maturity mismatch with Accounts Payable ¥778.6B requires close monitoring, and in a period of weak operating cash flow, funding risks could surface. Net interest-bearing debt is effectively negative, so financial resilience exists, but cash flow management becomes more important.
This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference data compiled by the Company based on public financial statements. Investment decisions are your own responsibility; consult a professional if necessary before making investment decisions.