| Indicator | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥166.8B | ¥121.6B | +37.2% |
| Operating Income / Operating Profit | ¥10.4B | ¥6.2B | +68.1% |
| Equity-method Investment Income (Loss) | - | - | - |
| Ordinary Income | ¥10.5B | ¥6.9B | +51.8% |
| Net Income / Net Profit | ¥6.6B | ¥6.0B | +9.8% |
| ROE | 1.6% | 1.5% | - |
For FY2026 Q1, Revenue was ¥166.8B (YoY +¥45.2B +37.2%), Operating Income was ¥10.4B (YoY +¥4.2B +68.1%), Ordinary Income was ¥10.5B (YoY +¥3.6B +51.8%), and Net Income was ¥6.6B (YoY +¥0.6B +9.8%). The company achieved substantial operating-level profit growth and nearly 40% revenue growth; however, Net Income growth remained in single digits as tax burden partially offset the operating gains.
[Revenue] Revenue increased significantly to ¥166.8B (YoY +37.2%). By segment, Japan was ¥131.2B (+46.4%) accounting for 78.7% of the total, Asia was ¥33.8B (+17.7%) accounting for 20.3%, and EuropeAndAmerica was ¥17.3B (+6.3%) accounting for 10.4% of the composition (on a basis including intersegment transactions). By product, Apparel-related was ¥97.8B, Product-related ¥51.3B, and Transportation-related ¥16.8B. Year-over-year, the Japan segment led the overall growth driven by significant increases in Product and Apparel-related lines. Asia benefited from Apparel growth, and Europe & America contributed via expansion in Transportation-related.
[Profitability] Cost of goods sold was ¥116.1B, yielding gross profit of ¥50.7B and a gross margin of 30.4% (up +1.4pt from 29.0% prior year). SG&A was ¥40.3B, a SG&A ratio of 24.2% (up +0.3pt from 23.9% prior year), resulting in Operating Income of ¥10.4B (Operating margin 6.2%, up +1.1pt from 5.1% prior year). Non-operating income totaled ¥0.6B (foreign exchange gains ¥0.3B, dividend income ¥0.2B, etc.) and non-operating expenses were ¥0.5B (foreign exchange losses ¥0.2B, interest expense ¥0.1B, etc.), producing Ordinary Income of ¥10.5B (YoY +51.8%). Extraordinary gain/losses: extraordinary gains ¥0.1B (including gain on sale of investment securities ¥1.3B) less extraordinary losses ¥0.0B resulted in Pre-tax Income of ¥10.5B. Corporate taxes and others were ¥3.9B (effective tax rate 37.3%), yielding Net Income of ¥6.6B (YoY +9.8%). In summary, the company achieved revenue and profit growth.
Operating Income was led by Japan at ¥8.6B (YoY +55.5%, margin 6.5%), Asia at ¥2.3B (YoY +46.1%, margin 6.7%) maintained the highest margin, and EuropeAndAmerica at ¥1.0B (YoY +112.8%, margin 5.6%) recorded the highest growth rate. All segments achieved profit increases, confirming geographic breadth. However, Japan’s revenue share remains high at 78.7%, indicating continued domestic market concentration as a structural characteristic.
[Profitability] Operating margin of 6.2% improved +1.1pt from 5.1% year-ago; gross margin 30.4% improved +1.4pt from 29.0%, reflecting combined effects of price, mix, and fixed-cost absorption. SG&A ratio rose to 24.2% from 23.9% (+0.3pt), but operating leverage from revenue expansion absorbed this, and operating margin improved steadily. ROE stood at 1.6% at Q1, composed of Net Profit Margin 4.0%, Total Asset Turnover 0.292x, and Financial Leverage 1.41x. Although Net Profit Margin improved, low asset turnover constrains capital efficiency. [Cash Quality] Days Sales Outstanding (DSO) 202 days, Days Inventory Outstanding (DIO) 245 days, Cash Conversion Cycle (CCC) 299 days indicate deterioration in working capital efficiency, with receivables and inventory stagnation delaying conversion into Operating Cash Flow (OCF). [Investment Efficiency] Return on Assets (ROA) is low at 1.2% on Net Income basis and 1.8% on Operating Income basis. Asset accumulation (Accounts receivable ¥92.4B, Inventory ¥78.0B) suppresses turnover efficiency. [Balance Sheet Soundness] Equity Ratio 70.8%, Current Ratio 288.7%, Quick Ratio 217.0% are extremely solid. Interest-bearing debt is ¥20.5B (short-term borrowings ¥11.0B, long-term borrowings ¥9.5B, bonds ¥6.0B) versus cash and deposits of ¥95.0B, yielding net cash of ¥74.5B. D/E ratio 0.41x and Debt/Capital ratio 4.8% indicate low leverage, and Interest Coverage 126.9x (Operating Income / Interest Expense) shows very high interest resilience. Short-term debt ratio 53.6% is somewhat high, but Cash / Short-term Debt multiple 8.63x limits practical maturity mismatch risk.
Direct Operating Cash Flow (OCF) data are not disclosed, but balance sheet movements indicate that increases in Accounts receivable and Inventory are pressuring working capital. Accounts receivable ¥92.4B (virtually flat vs. prior ¥92.5B) despite Revenue growing 37.2% suggests some collection improvement, but DSO at 202 days remains high, leaving collection risk. Inventory ¥78.0B (prior ¥71.3B, +¥6.7B +9.4%) appears to reflect inventory build ahead of sales growth, with DIO 245 days indicating deteriorating inventory efficiency. Accounts payable ¥47.1B (prior ¥42.1B, +¥5.0B) rose in line with increased purchases with no material change in payment terms. CCC at 299 days offsets operating profit improvement in cash conversion, making working capital compression essential for Free Cash Flow generation. Investing Cash Flow was driven mainly by an increase in investment securities of ¥13.7B, likely reflecting market-driven valuation increases or strategic investments. Financing Cash Flow showed both an increase in short-term borrowings of ¥5.0B and treasury stock acquisition ¥5.5B, indicating concurrent working capital financing and shareholder returns.
Of Net Income ¥6.6B, starting from Operating Income ¥10.4B, non-operating items contributed +¥0.1B (foreign exchange gains ¥0.3B and dividend income ¥0.2B less foreign exchange losses ¥0.2B and interest expense ¥0.1B), and extraordinary items contributed +¥0.1B (primarily gain on sale of investment securities ¥1.3B), before subtracting tax expense ¥3.9B. Operating activities are the main earnings driver; non-operating income accounts for only 0.3% of Revenue, indicating limited dependency. A one-time gain on sale of investment securities ¥1.3B was recorded, but the gap between Ordinary Income and Extraordinary items is small, indicating core recurring earnings. The divergence between Ordinary Income ¥10.5B and Net Income ¥6.6B is mainly due to tax burden (effective tax rate 37.3%); the impact of extraordinary items is minor. Comprehensive Income ¥22.1B greatly exceeds Net Income ¥6.6B, supported by Other Comprehensive Income ¥15.5B (driven by foreign currency translation adjustments ¥6.5B and valuation differences on available-for-sale securities ¥9.3B). These are valuation gains on investment securities and currency translation increases that may not convert directly into future Net Income but strengthen book equity and potential shareholder value. On an accrual basis, increases in Accounts receivable and Inventory suggest a short-term risk of lower cash conversion rates.
Full-year guidance: Revenue ¥630.0B (YoY +10.8%), Operating Income ¥35.0B (YoY +5.0%), Ordinary Income ¥37.0B (YoY +2.1%), Net Income ¥30.0B (EPS forecast ¥117.21). Q1 progress rates versus full-year guidance are: Revenue 26.5% (standard 25% +1.5pt), Operating Income 29.7% (standard +4.7pt), Ordinary Income 28.3% (standard +3.3pt), Net Income 22.0% (standard -3.0pt). Revenue, Operating Income, and Ordinary Income all show a stronger-than-standard start, while Net Income lags standard progress, likely due to heavy tax burden (effective tax rate 37.3%) and fluctuations in non-operating items. If promotional and integration costs peak out and inventory adjustments progress in H2, there is room to recover Net Income progress. No revisions to earnings forecasts or dividend forecasts were made this quarter.
The company’s annual dividend plan is ¥36.00 per share, implying a Payout Ratio of approximately 31% against the company EPS forecast of ¥117.21. This is an increase of ¥3.00 from prior DPS ¥33.00. With cash and deposits of ¥95.0B and interest-bearing debt ¥20.5B, net cash ¥74.5B supports dividend sustainability. Treasury stock book value increased from -¥9.6B prior year to -¥15.2B this period, a ¥5.5B increase suggesting share buybacks. Total Return Ratio (dividend plus buybacks) is not disclosed, but the pace of treasury stock accumulation indicates an active stance on shareholder returns. Improvement in working capital efficiency and stabilization of Free Cash Flow generation will determine the sustainability of dividends and scope for additional returns.
Working capital efficiency deterioration risk: DSO 202 days, DIO 245 days, CCC 299 days show significant receivables and inventory stagnation delaying conversion to OCF. While inventory increase rate (+9.4%) is relatively restrained against Revenue growth (+37.2%), absolute Inventory at ¥78.0B represents 13.6% of total assets. Whether inventory buildup is temporary due to demand surge or a structural stagnation will be judged by next quarter trends. Continued extension of collection terms or inventory buildup during demand slowdown would pressure OCF and reduce earnings quality.
Geographic concentration risk: Japan segment accounts for 78.7% of revenue, creating high sensitivity to domestic demand and customer trends. A domestic economic slowdown or demand adjustments in Apparel/Product lines could concentrate adverse impacts on revenue and profit. Although Asia and Europe/America are growing, their absolute scale is small and reducing Japan dependence will take time.
FX risk: Non-operating items included FX gains ¥0.3B and FX losses ¥0.2B, a small net positive. Meanwhile, foreign currency translation adjustments of ¥6.5B contributed to Comprehensive Income, boosting book equity. Sudden USD/JPY moves could increase volatility in non-operating income, inventory valuation, and yen-converted performance of overseas subsidiaries, widening swings in Net Income and Comprehensive Income.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.2% | – | – |
| Net Profit Margin | 4.0% | 7.4% (6.8%–7.9%) | -3.4pt |
Operating margin cannot be benchmarked due to lack of industry data, but Net Profit Margin 4.0% is -3.4pt below the industry median 7.4%, likely due to heavy tax burden and low asset turnover.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 37.2% | 3.8% (0.9%–6.4%) | +33.4pt |
Revenue growth 37.2% far exceeds the industry median 3.8%, driven by Japan-led demand recovery and price/mix improvements. The company shows an outstanding growth pace within the industry.
※Source: Company compilation
Significant operating improvement and solid progress against full-year guidance: Operating margin improved from 5.1% to 6.2% (+1.1pt), and Operating Income progress rate 29.7% exceeds the standard 25%. Gross margin improvement of +1.4pt reflects combined effects of price correction, mix improvement, and fixed-cost absorption, supporting sustainable profitability improvement. However, Net Income progress at 22.0% lags, making tax burden and non-operating item management key issues for H2.
Correcting working capital efficiency is key to improving capital efficiency: DSO 202 days, DIO 245 days, CCC 299 days show notable working capital stagnation and operating profit improvement has not fully translated into cash generation. ROE 1.6% and Total Asset Turnover 0.292x are low; accelerating receivables collection and compressing inventory are essential to improve capital efficiency. Next quarter working capital trends will be pivotal for OCF normalization and ROE improvement feasibility.
This report was automatically generated by AI analyzing XBRL financial statement data. It is not a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the company from public financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.