| Metric | Current Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥9122.5B | ¥9288.3B | -1.8% |
| Operating Income / Operating Profit | ¥1255.3B | ¥1176.7B | +6.7% |
| Profit Before Tax | ¥1273.6B | ¥1174.5B | +8.4% |
| Net Income / Net Profit | ¥892.7B | ¥825.5B | +8.1% |
| ROE | 9.0% | 9.1% | - |
For the full year ended March 2026, Revenue was ¥9,122.5B (YoY -¥165.8B -1.8%) with a slight decline, while Operating Income was ¥1,255.3B (YoY +¥78.6B +6.7%), Ordinary Income turned to ¥57.6B (YoY +¥196.1B; prior year -¥138.5B), and Net Income was ¥892.7B (YoY +¥67.2B +8.1%), producing increases in the three profit measures. The combination of lower sales and higher profits reflected an improvement in Gross Margin to 53.2% (up +2.2pt from 51.0%) and a rebound reduction in the prior-year large impairment (from ¥139.9B → ¥41.5B, -¥98.5B), which lifted Operating Income. Ordinary Income turned positive due to improvements in equity-method gains/losses and financial results from the prior year. ROE was essentially flat at 9.4% (down -0.1pt from 9.5%), and Operating Margin improved to 13.8% (up +1.1pt).
[Revenue] Revenue was ¥9,122.5B (YoY -1.8%), a slight decline. By segment, the NITORI Business was ¥8,035.5B (YoY -0.8%) with the core business experiencing lower sales, and the SHIMACHU Business was ¥1,087.0B (YoY -8.8%) with a large decline. The NITORI Business accounted for 88.1% of total sales, composed of Store Sales ¥6,777.7B, E-commerce Sales ¥908.5B, and Other ¥270.7B. SHIMACHU Business comprised Store Sales ¥987.1B, E-commerce ¥6.9B, and Other ¥3.3B. Total Store Sales were ¥7,764.8B (prior ¥7,882.2B, -1.5%) and E-commerce Sales were ¥915.5B (YoY -6.2%), both channels declining. Factors for the revenue decline likely include sluggish domestic consumer spending, intensified competition, and underperformance at existing stores.
[Profitability] Cost of Sales decreased substantially to ¥4,268.3B (prior ¥4,549.0B, -6.2%), resulting in Gross Profit of ¥4,854.1B (YoY +2.4%) and a significant Gross Margin improvement to 53.2% (prior 51.0%, +2.2pt). Cost controls, FX hedging effects, and improved product mix likely contributed. SG&A increased to ¥3,637.5B (YoY +4.3%), raising the SG&A ratio to 39.9% (prior 37.5%, +2.4pt), driven mainly by higher logistics, personnel, and store expenses. Operating Income improved to ¥1,255.3B (YoY +6.7%), with an Operating Margin of 13.8% (YoY +1.1pt). Other expenses decreased substantially to ¥53.0B (prior ¥150.0B, -64.6%), with impairment losses shrinking to ¥41.5B (prior ¥139.9B, -70.3%). Financial income was ¥59.8B, financial expenses ¥41.4B, yielding net financial income of ¥18.3B. Equity-method investment gains were ¥42.6B (prior ¥32.7B, +30.5%), supporting profits. Profit Before Tax was ¥1,273.6B (YoY +8.4%), taxes amounted to ¥380.8B, and Net Income was ¥892.7B (YoY +8.1%), improving the Net Profit Margin to 9.8% (prior 8.9%, +0.9pt). In conclusion, the company achieved a lower-revenue, higher-profit outcome.
The NITORI Business reported Revenue of ¥8,035.5B (YoY -0.8%), Operating Income ¥1,183.8B (YoY -0.5%), and a Margin of 14.7% (flat, +0.0pt), maintaining high profitability. The sales decline reflected weaker performance across both store and e-commerce channels, but gross margin improvement sustained the operating margin. Assets stood at ¥13,292.2B, accounting for 84.6% of total assets. The SHIMACHU Business posted Revenue of ¥1,087.0B (YoY -8.8%)—a large decline—but achieved Operating Income of ¥72.1B (prior ¥9.5B, +659.9%), returning to profitability with substantial growth. Margin improved to 6.6% (prior 0.8%, +5.8pt), signaling improved earnings structure. Assets were ¥2,783.4B. The NITORI Business generated the majority of profits (94.3% of Operating Income), while SHIMACHU remains in a phase of exiting losses; the business portfolio is highly concentrated in NITORI.
[Profitability] Operating Margin improved to 13.8% (prior 12.7%, +1.1pt), Net Profit Margin to 9.8% (prior 8.9%, +0.9pt). Gross Margin rose to 53.2% (prior 51.0%, +2.2pt) due to product-mix improvements and FX hedging effects, while SG&A Ratio worsened to 39.9% (prior 37.5%, +2.4pt) because of higher logistics and labor costs, limiting operating leverage. ROE was 9.4% (prior 9.5%, -0.1pt), essentially flat; the 3-year average is unknown, making long-term trend assessment difficult. [Cash Quality] Operating Cash Flow / Net Income was 1.67x, indicating good quality. OCF/EBITDA was 0.76x, somewhat restrained by inventory increases and accounts payable decreases. From Operating CF subtotal ¥1,891.9B, tax payments ¥413.4B and lease payments ¥360.7B were main cash outflows. [Investment Efficiency] Total Asset Turnover was 0.58x (prior 0.61x, down), and Inventory Days were 104 days (calculated as Cost of Sales / Inventory), indicating inventory efficiency challenges. Capital Expenditures were ¥438.4B and Depreciation ¥695.1B, with a Capex/D&A ratio of 0.63x, showing restrained investment. [Financial Soundness] Equity Ratio was 62.9% (prior 59.2%, +3.7pt), Debt/EBITDA was 0.82x (Interest-bearing debt ¥1,600B / EBITDA ¥1,950.3B), conservative. Short-term borrowings were ¥1,500B and long-term borrowings ¥100B (prior ¥200B, -50.0%), making short-term debt 94% of total, but cash of ¥1,450.1B provides a buffer. Interest Coverage was 30.3x (Operating Income / Financial Expenses), indicating minimal interest burden.
Operating Cash Flow was ¥1,489.1B (YoY +3.1%), 1.67x of Net Income, reflecting high quality. From Operating CF subtotal ¥1,891.9B, tax payments ¥413.4B and lease payments ¥360.7B were primary reductions. Working capital movements—Inventory increase ¥84.0B and Accounts Payable decrease ¥80.3B—worked in a cash outflow direction, suppressing OCF/EBITDA to 0.76x. Investing CF was -¥551.0B, led by Capex ¥438.4B (tangible fixed assets & investment property ¥414.1B + intangible assets ¥30.0B). Net withdrawals from time deposits were ¥114.0B (Deposits ¥976.4B - Withdrawals ¥862.4B) representing cash outflow. YoY, Investing CF improved by ¥727.6B from -¥1,278.6B to -¥551.0B, reflecting restraint after prior large-scale investment (¥1,214.3B). Free Cash Flow was ¥938.1B (prior -¥1,134.7B, improvement ¥2,072.8B), sufficiently covering dividends ¥172.8B and Capex. Financing CF was -¥865.0B, driven by net reduction in short-term borrowings ¥200.0B, long-term borrowings repayment ¥100.0B, lease liability repayments ¥360.7B, and dividend payments ¥172.8B. Cash and equivalents increased to ¥145.0B (prior ¥136.0B, +¥9.0B).
Earnings quality is broadly high. Operating Income ¥1,255.3B is primarily recurring income from furniture and interior sales, supported by Operating CF / Operating Income of 1.19x. One-off factors include current-period impairment losses of ¥41.5B (prior ¥139.9B, -¥98.5B), where the reversal effect of prior large impairment boosted Operating Income; next fiscal year normalization of impairments may limit reproducibility. Non-operating income ¥49.1B is 0.5% of Revenue, indicating low structural dependence. Financial income ¥59.8B includes interest and dividend income ¥25.0B. Comprehensive Income was ¥1,039.2B versus Net Income ¥892.7B, a difference of ¥146.5B comprising FX translation differences ¥61.3B, cash flow hedges ¥49.9B, financial asset valuation ¥32.4B, etc. Accumulated OCI increased Other Equity components to ¥207.0B (prior ¥101.3B, +¥105.7B). The Accrual Ratio ((Net Income - Operating CF) / Total Assets) was -3.8%, indicating healthy accruals and high earnings quality.
Full-year forecast: Revenue ¥9,570.0B, Operating Income ¥1,303.0B (YoY +3.8%), Net Income ¥910.0B (YoY +1.9%). Against the plan, progress rates were Revenue 95.3%, Operating Income 96.3%, Net Income 98.1%, landing nearly on plan. Revenue shortfall is likely due to inventory efficiency and weak comparable-store trends, but profit performance absorbed the gap via improved gross margins and reduced impairments. Forecast EPS is ¥161.05 versus actual ¥157.98 (achievement rate 98.1%). Dividend forecast ¥16.00 (post-stock-split) remains as planned. Disclosure of order backlog and contract liabilities is limited; Contract Liabilities were ¥294.2B (prior ¥305.1B, -¥10.9B), showing no buildup of advanced orders.
Dividends are annualized at ¥154.00 (pre-stock-split equivalent), with dividend payments of ¥172.8B. Payout Ratio is 20.8%, a conservative level. FCF coverage was 1.77x (FCF ¥938.1B / Dividends ¥172.8B), indicating ample capacity. Share buybacks were negligible (¥0.2M), so Total Return Ratio essentially matches the Payout Ratio. With cash and deposits ¥1,450.1B and Operating CF ¥1,489.1B, liquidity supports sustainable dividends. A stock split (1:5, implemented October 2025) improved liquidity. Medium-term, if inventory efficiency improvements create additional cash, increases in dividends or buybacks could be considered.
Inventory Efficiency Risk: Inventory was ¥1,221.7B (YoY +8.4%), and Inventory Days are elevated at 104 days, leaving risks of markdowns and valuation losses. Inventory increase ¥84.0B was a cash outflow and lowered Total Asset Turnover to 0.58x. Delays in inventory optimization could keep ROE around the 9% level and constrain cash generation.
Short-term Funding Dependence Risk: Short-term borrowings ¥1,500B account for 94% of interest-bearing debt, creating high refinancing dependence. In a rising interest-rate environment or deteriorating market conditions, funding costs could rise and refinancing could become difficult. Cash ¥1,450.1B and strong Operating CF provide buffer, but the short-term debt mismatch (Current Ratio 1.23x) requires ongoing monitoring.
SG&A Inflation Risk: SG&A Ratio rose to 39.9% (prior 37.5%, +2.4pt), increasing fixed cost pressure from logistics and personnel. With Revenue growth at -1.8% while SG&A rose +4.3%, operating leverage failed to materialize. Continued rises in labor and logistics costs could limit further expansion of Operating Margin despite gross margin improvements.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| ROE | 9.4% | 5.9% (2.6%–12.0%) | +3.5pt |
| Operating Margin | 13.8% | 4.6% (1.7%–8.2%) | +9.2pt |
| Net Profit Margin | 9.8% | 3.3% (0.9%–5.8%) | +6.4pt |
Profitability is top-tier in the retail sector; ROE, Operating Margin, and Net Profit Margin all substantially exceed industry medians.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | -1.8% | 4.3% (2.2%–13.0%) | -6.1pt |
Revenue growth lags the industry median by 6.1pt, indicating a relative weakness in a declining-sales trend.
※ Source: Company aggregation
Structural advantage from 53.2% Gross Margin: Gross Margin improved +2.2pt to 53.2%, ranking among the highest in retail. Private brands, vertical integration, and FX hedges are effective, providing ongoing cost competitiveness and margin advantage. Although SG&A Ratio is rising, Gross Margin improvement secured Operating Margin of 13.8% and ROE of 9.4%, exceeding industry median by +3.5pt.
Inventory efficiency and investment allocation are keys to mid-term ROE improvement: Elevated Inventory Days of 104 suppress Total Asset Turnover to 0.58x, keeping ROE near 9%. With Capex/D&A at 0.63x indicating restrained investment, allocation to logistics and digital growth investments will determine medium-term competitiveness. If inventory optimization and efficient investment proceed, there is scope to exceed ROE of 10%.
Financial soundness and sustainability of shareholder returns: Equity Ratio 62.9% and Debt/EBITDA 0.82x are conservative, with Payout Ratio 20.8% and FCF Coverage 1.77x indicating sufficient return capacity. The short-term debt concentration (94%) warrants monitoring, but Operating CF ¥1,489B and Cash ¥1,450B serve as buffers, leaving room for stable dividends and additional returns.
This report was automatically generated by AI analyzing XBRL financial statement data to create an earnings analysis. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your responsibility—please consult a professional advisor as needed.