airCloset,Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥1.21B
• Operating Income: ¥-82M
• Net Income: ¥-78M
• EPS: ¥-9.47

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

For FY2026 Q1, AirCloset reported revenue of ¥1,211 million, up 5.8% year over year, indicating continued topline momentum despite lingering losses. Gross profit was ¥585 million, corresponding to an indicated gross margin of 48.3%, which suggests the core unit economics remain reasonably robust for an apparel subscription model. Operating income was a loss of ¥82 million, with the YoY deterioration (+743.4%) implying that fixed costs and/or customer acquisition expenses outpaced revenue growth. Ordinary income was a loss of ¥84 million, and net income was a loss of ¥78 million, with an EPS of -¥9.47. The DuPont decomposition shows a net margin of -6.44%, asset turnover of 0.406x, and financial leverage of 6.32x, yielding a reported ROE of -16.53%. Leverage is high as implied by assets of ¥2,985 million and equity of ¥472 million (implied equity ratio ~15.8%), leaving limited buffer to absorb prolonged losses. The current ratio is 96.9% and working capital is negative at -¥50.9 million, pointing to tight short-term liquidity. Interest expense was ¥4.76 million and interest coverage calculated at -17.2x reflects insufficient operating earnings to service interest from operations this quarter. No dividends were declared (DPS ¥0.00), which is appropriate given the loss and the likely priority on liquidity preservation. Cash flow statements are undisclosed in this dataset (zeros indicate unreported), limiting assessment of operating cash conversion, capex needs, and funding runway. Despite the lack of cash flow disclosure, the combination of sustained gross margins and revenue growth suggests the potential for operating leverage if scale efficiencies and retention improve. However, the negative operating income and modest revenue growth rate imply that near-term profitability hinges on disciplined cost control, improved cohort economics, and possibly pricing or mix optimization. The absence of inventory disclosure may reflect the accounting treatment of apparel assets (e.g., leasing assets classified outside inventories), but it constrains a full working capital analysis. With high leverage and sub-1.0x current ratio, the balance sheet latitude is constrained; maintaining lender and supplier confidence will be important. Overall, the quarter evidences resilient gross margin but insufficient scale to cover fixed costs, and the financial profile remains sensitive to execution on subscriber growth and cost efficiencies. Data limitations (notably cash flow and per-share base) require caution when extrapolating run-rate metrics.

Profitability Analysis

ROE_decomposition: Net margin -6.44% x Asset turnover 0.406x x Financial leverage 6.32x = ROE -16.53%. The negative margin is the dominant driver of negative ROE; leverage magnifies the loss impact on equity. margin_quality: Gross margin is 48.3%, supportive of unit economics. However, operating margin is -6.8% (approx. -¥82m/¥1,211m), indicating elevated SG&A, marketing, and/or fulfillment costs relative to scale. Effective tax rate is near 0% given losses. operating_leverage: Revenue grew 5.8% YoY but operating loss widened, suggesting negative operating leverage in the quarter. To turn positive leverage, revenue growth must exceed the growth of fixed/semi-fixed costs, or cost structure must be reduced.

Growth Assessment

revenue_sustainability: Topline grew 5.8% YoY to ¥1,211m, indicating continued demand but at a moderate pace for a subscription commerce model. profit_quality: Ordinary loss (¥84m) close to operating loss (¥82m) suggests minimal non-operating drag beyond interest. Interest expense is modest (¥4.76m), but losses indicate insufficient scale and/or elevated customer acquisition spending. outlook: If subscriber cohorts mature with improving retention and lower acquisition costs, the 48.3% gross margin offers a path to operating breakeven. Near term, modest revenue growth may be insufficient without cost discipline; focus on churn reduction, basket/plan optimization, and logistics efficiency will be critical.

Financial Health

liquidity: Current assets ¥1,566.9m vs current liabilities ¥1,617.9m; current ratio 96.9% and working capital -¥50.9m indicate tight liquidity. Quick ratio equals current ratio given no inventory disclosure. solvency: Total liabilities ¥2,198.6m vs equity ¥472.0m implies financial leverage of 6.32x and an implied equity ratio of ~15.8% (computed from totals; reported equity ratio not disclosed). Interest coverage is -17.2x, reflecting inability to cover interest from operations this quarter. capital_structure: Debt-to-equity is 4.66x (as provided), indicating high leverage relative to equity. Preserving covenant headroom and refinancing flexibility will be important if losses persist.

Cash Flow Quality

earnings_quality: OCF is undisclosed this quarter; thus OCF/Net Income cannot be interpreted from the 0.00 figure. With operating losses, cash burn is likely unless working capital releases offset. FCF_analysis: Free cash flow is not disclosed. Without capex/lease cash outflows, true cash burn/runway cannot be quantified. working_capital: Inventories are undisclosed. Negative working capital of -¥50.9m suggests reliance on payables/advance receipts; sensitivity to collection cycles and supplier terms is a consideration.

Dividend Sustainability

payout_ratio_assessment: No dividend (DPS ¥0.00) and losses (net income -¥78m) result in a 0% payout; this is consistent with the need to conserve cash. FCF_coverage: FCF coverage not assessable due to undisclosed cash flows; any dividend would likely not be covered given operating loss. policy_outlook: Given negative earnings, high leverage, and tight liquidity, a conservative stance on shareholder returns is likely to persist until sustained operating profitability and positive OCF are established.

Risk Assessment

Business Risks:

• Slower-than-expected subscriber growth or higher churn in the apparel subscription model
• Marketing efficiency deterioration leading to elevated customer acquisition costs
• Logistics and fulfillment cost inflation impacting gross-to-operating margin conversion
• Merchandise/asset utilization risk given fashion cyclicality and size mix complexity
• Competitive pressure from e-commerce and other rental/subscription platforms

Financial Risks:

• High leverage (assets/equity 6.32x; D/E 4.66x) magnifying earnings volatility
• Tight liquidity (current ratio 96.9%, negative working capital) raising refinancing/rollover risk
• Negative interest coverage (-17.2x) implying reliance on cash reserves or financing for interest service
• Limited visibility on cash flows due to undisclosed OCF/FCF in the quarter

Key Concerns:

• Sustained operating losses despite gross margin strength
• Sub-1.0x current ratio and negative working capital
• Dependence on leverage with a relatively thin equity base (~¥472m)

Investment Implications

Key Takeaways:

• Revenue grew 5.8% YoY to ¥1,211m, but operating loss widened to ¥82m
• Gross margin remains solid at 48.3%, indicating workable unit economics
• High financial leverage (6.32x) and tight liquidity (current ratio 96.9%) constrain flexibility
• Interest coverage is negative (-17.2x), emphasizing the need for operating improvement
• Cash flow data is not disclosed, limiting assessment of cash burn and runway

Metrics to Watch:

• Subscriber growth, churn, and ARPU trends
• SG&A as a percentage of revenue and marketing payback periods
• Operating margin trajectory and breakeven timeline
• Working capital movements (receivables, payables) and liquidity buffers
• Any disclosures on OCF/FCF and capex/lease commitments
• Equity ratio and D/E as indicators of solvency headroom

Relative Positioning: Within Japanese apparel subscription and D2C peers, AirCloset shows competitive gross margins but lags on operating profitability and balance sheet resilience, with higher leverage and tighter liquidity than ideal for a scaling consumer subscription business.

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
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis