| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥2523.3B | ¥2506.0B | +0.7% |
| Operating Income | ¥23.7B | ¥70.1B | -66.2% |
| Ordinary Income | ¥46.6B | ¥76.2B | -38.8% |
| Net Income | ¥8.3B | ¥0.4B | +2081.9% |
| ROE | 0.7% | 0.0% | - |
For the fiscal year ended March 2026, Revenue was ¥2523.3B (YoY +¥17.3B +0.7%), registering only a slight increase, while Operating Income was ¥23.7B (YoY -¥46.4B -66.2%), Ordinary Income was ¥46.6B (YoY -¥29.6B -38.8%), and Net Income attributable to owners of the parent was ¥8.3B (YoY +¥7.9B +2081.9%). Revenue remained broadly flat and gross margin was maintained at 37.7%, but an increase in SG&A ratio to 36.7% reduced the operating margin to 0.9%. At the ordinary income level, foreign exchange gains of ¥12.0B mitigated the decline in profitability, but extraordinary losses of ¥73.7B (impairment ¥36.1B, valuation losses on investment securities ¥7.5B, etc.) weighed heavily, producing a loss before tax of -¥23.2B. The bottom-line improved from ¥0.4B in the prior year to ¥8.3B, driven by tax effects and the impact of non-controlling interests, but underlying earning power remains weak.
[Revenue] Revenue was ¥2523.3B, up +0.7% YoY. The company operates a single retail segment selling sports and outdoor goods through physical stores and e-commerce. The modest revenue increase likely reflects limited traffic recovery at existing stores while EC sales and new store openings contributed partially. Inventories increased from 81,540百万円 to 87,543百万円 (+7.4%), suggesting inventory buildup outpaced demand growth.
[Profitability] Cost of goods sold was ¥1572.4B, yielding gross profit of ¥950.9B (gross margin 37.7%), down 1.2ppt from 38.9% a year earlier. Discount pressure and delayed pass-through of higher procurement costs were likely factors. SG&A rose to ¥927.2B (SG&A ratio 36.7%), +2.1% YoY, composed of personnel expenses ¥272.4B (+3.7% YoY), rent ¥199.7B (+4.1%), advertising ¥64.2B (-6.7%), and depreciation ¥64.9B (+19.3%). Elevated fixed costs and higher depreciation associated with network expansion depressed Operating Income to ¥23.7B (Operating margin 0.9%). Non-operating income totaled ¥34.4B, with foreign exchange gains ¥12.0B (prior year ¥1.9B) making a substantial contribution, resulting in Ordinary Income of ¥46.6B. Extraordinary income was ¥3.9B (gain on negative goodwill ¥0.5B, etc.) against extraordinary losses of ¥73.7B (impairment ¥36.1B, valuation losses on investment securities ¥7.5B, business restructuring losses ¥3.1B, etc.), producing a loss before tax of -¥23.2B. After corporate taxes of ¥1.1B (including tax effect -¥12.2B) and non-controlling interests of -¥2.6B, Net Income attributable to owners of the parent was ¥8.3B. In summary, despite flat revenue, higher SG&A and extraordinary losses drove an effective decline in profitability, though the bottom line improved YoY due to tax effects and the impact of non-controlling interests.
[Profitability] Operating margin 0.9%, Net margin 0.3%, ROE 0.7% remain at low levels. Gross margin 37.7% is typical for retail, but an SG&A ratio of 36.7% consumes most of gross profit, highlighting a structure with limited operating leverage. Personnel expense ratio 10.8% and rent ratio 7.9% reflect heavy fixed-cost burdens, and profitability deteriorated rapidly amid weak top-line growth. [Cash Quality] Operating Cash Flow (OCF) was ¥96.8B versus Net Income ¥8.3B, producing an OCF/Net Income of 11.7x, a large divergence driven by non-cash extraordinary losses of ¥73.7B (impairments etc.) that depressed reported net income. EBITDA was ¥93.2B (Operating Income ¥23.7B + depreciation ¥69.5B), and OCF/EBITDA was 1.04x, indicating solid cash-generating ability. [Investment Efficiency] Total asset turnover was 1.22x, inventory days 203 days, receivables days 24 days, payables days 47 days, resulting in a cash conversion cycle of 180 days, which has lengthened. Rising inventory levels (inventory to sales ratio 34.7%) are straining working capital; improving inventory efficiency is an urgent task. [Financial Soundness] Equity Ratio 57.4% and Current Ratio 182.6% indicate a strong financial base. Interest-bearing debt was ¥27.0B (short-term borrowings ¥9.0B, long-term borrowings ¥18.0B) against cash of ¥158.1B, maintaining a net cash position of ¥131.1B. Debt/EBITDA 0.29x and interest coverage 23.0x suggest limited financial risk.
Operating Cash Flow was ¥96.8B (prior year ¥120.6B, -19.7%). Starting from a loss before income taxes and minority interests of -¥23.2B, non-cash items including depreciation ¥69.5B, impairment ¥36.1B, and valuation losses on investment securities ¥7.5B were added back. In working capital, an increase in inventories of -¥52.1B pressured cash, while decreases in accounts receivable +¥39.9B and increases in accounts payable +¥59.7B provided support. After tax payments of -¥30.5B, OCF amounted to ¥96.8B. Investing Cash Flow was -¥112.6B, driven by capital expenditures -¥73.6B (Capex/Depreciation ratio 1.06x), intangible assets -¥24.3B, and M&A-related payments -¥0.6B. Financing Cash Flow was -¥33.2B, comprising net increase in short-term borrowings +¥4.0B, repayment of long-term borrowings -¥9.6B, dividends paid -¥14.5B, and share buybacks -¥2.6B. Free Cash Flow was -¥15.8B, negative as inventory buildup and growth investments exceeded OCF; however, with cash balance of ¥158.1B and low leverage, liquidity concerns are limited.
Earnings quality is significantly affected by temporary factors and requires careful assessment. Operating Income of ¥23.7B reflects recurring earning power, but Ordinary Income of ¥46.6B is supported by non-operating income of ¥34.4B, including foreign exchange gains of ¥12.0B, exposing earnings to FX volatility. Extraordinary items produced a net loss of -¥69.7B (extraordinary losses ¥73.7B - extraordinary gains ¥3.9B), including an impairment of ¥36.1B, valuation losses on investment securities ¥7.5B, and business restructuring losses ¥3.1B. These are largely one-off in nature, so EBITDA of ¥93.2B (EBITDA margin 3.7%) should be emphasized when assessing core earning power. The fact that OCF substantially exceeds Net Income (OCF/Net Income 11.7x) indicates non-cash one-off losses distorted the profit figure, and cash-based earning generation remains intact. Comprehensive income was -¥21.0B, including foreign currency translation adjustments -¥5.8B, valuation difference on available-for-sale securities +¥2.2B, and retirement benefit adjustments +¥6.8B. Comprehensive income attributable to owners of the parent was -¥18.4B, and the difference of -¥26.7B from Net Income ¥8.3B stems from deterioration in other comprehensive income, somewhat affecting financial flexibility.
Full Year plan forecasts Revenue ¥2646.0B (YoY +4.9%), Operating Income ¥70.0B (YoY +195.2%), Ordinary Income ¥71.0B (YoY +52.4%), and Net Income attributable to owners of the parent ¥75.0B. Relative to first-half results (Revenue ¥2523.3B, Operating Income ¥23.7B), the second half assumes incremental Revenue of ¥122.7B (+4.9% growth) and an increase in Operating Income of ¥46.3B (a V-shaped recovery of +195%). Achieving this assumes inventory reduction to improve turnover, normalization of gross margin (easing of discount pressure), and strict control of SG&A (efficiency in personnel and rent, selective advertising investment). Progress rates are Revenue 95.4%, Operating Income 33.9%, Ordinary Income 65.6%, indicating operating profit recovery is significantly lagging. Monitoring whether store restructuring effects and inventory optimization will deliver gross margin improvement in the second half is important.
Annual dividend is planned at ¥35.0 per share (interim ¥17.5, year-end ¥17.5 forecast). The dividend payout ratio relative to current period Net Income ¥8.3B (EPS ¥19.96) is 175.3%, a high level; total dividends ¥14.5B exceed Free Cash Flow -¥15.8B, resulting in FCF coverage of -0.92x. Nevertheless, with cash balance ¥158.1B and low leverage (Debt/EBITDA 0.29x), short-term payment capacity is sufficient. The full-year forecast payout ratio against EPS ¥174.54 is 10.0%, returning to a normalized level, suggesting dividend policy sustainability contingent on earnings recovery. Share buybacks were modest at ¥2.6B, and total returns are dividend-focused. If core profits and FCF recover next fiscal year (through inventory reduction and restrained investment), the sustainability of shareholder returns should improve.
Inventory obsolescence risk: Inventories ¥875.4B (inventory-to-sales ratio 34.7%) and inventory days 203 remain high. Inventory obsolescence or carryover of seasonal items could intensify discount pressure and further depress gross margin. A prolonged cash conversion cycle of 180 days constrains working capital and limits FCF generation.
Operating leverage risk from elevated fixed costs: Personnel expenses ¥272.4B (10.8% of sales) and rent ¥199.7B (7.9% of sales) impose heavy fixed-cost burdens, making operating margin vulnerable if sales falter. Slow recovery in existing store traffic could sustain elevated SG&A ratio and prolong poor profitability.
Recurrence risk of one-off losses: This period recorded extraordinary losses of ¥73.7B including impairment ¥36.1B and valuation losses on investment securities ¥7.5B. As store network restructuring and unprofitable business exits proceed, additional impairments or restructuring losses may occur. Asset retirement obligations of ¥80.5B (9.2% of liabilities) also pose cash outflow and expense recognition risk upon store closures.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 0.9% | 4.6% (1.7%–8.2%) | -3.7pt |
| Net Margin | 0.3% | 3.3% (0.9%–5.8%) | -3.0pt |
Company profitability is well below the retail median; while gross margin is maintained, elevated SG&A is the main driver of profit compression.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 0.7% | 4.3% (2.2%–13.0%) | -3.6pt |
Revenue growth lags the industry median, with sluggish comparable-store performance and poor inventory efficiency constraining growth.
※Source: Company aggregation
Restoring the revenue-profit structure is the top priority: With Operating Margin 0.9% and ROE 0.7%, profitability is substantially below industry averages, and SG&A ratio 36.7% remains high despite maintaining gross margin 37.7%. Compressing inventory days from 203 and improving gross margin (easing discount pressure, improving product mix), along with normalizing fixed costs (personnel and rent efficiency), are key to profit recovery. Achieving the next fiscal year's Operating Income target of ¥70.0B depends on substantial second-half improvement, so monitoring progress is critical.
Financial base is strong but inventory management must improve: Equity Ratio 57.4% and net cash ¥131.1B indicate strong financial health and limited short-term liquidity risk. However, rising inventory (+7.4%) and a prolonged cash conversion cycle (180 days) present structural constraints on FCF generation. Inventory reduction and working capital management are prerequisites for sustainable cash generation and shareholder returns.
This report is an earnings analysis document automatically generated by AI based on XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information aggregated by the firm from public financial statements. Investment decisions are your own responsibility; consult a professional advisor as appropriate.