Nitori Holdings Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥439.11B
• Operating Income: ¥59.86B
• Net Income: ¥41.74B
• EPS: ¥73.87

Income Statement

Balance Sheet

Cash Flow Statement

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

Nitori Holdings (IFRS, consolidated) reported FY2026 Q2 cumulative results with revenue of 4,391.11 (100M JPY), down 1.8% YoY, and operating income of 598.59 (100M JPY), down 6.9% YoY, indicating negative operating leverage in the period. Gross profit was 2,285.79 (100M JPY), yielding a robust gross margin of 52.1%, which remains a core strength of the model. SG&A expenses were 1,662.04 (100M JPY), or 37.9% of sales, pressuring operating margin to 13.6% despite the high gross margin. Profit before tax was 603.60 (100M JPY), slightly above operating income, supported by 15.51 (100M JPY) of equity-method gains. Net income was 417.41 (100M JPY), down 8.1% YoY, with an effective tax rate of 30.9%. DuPont analysis shows net margin of 9.5%, asset turnover of 0.290, and financial leverage of 1.61x, producing an ROE of 4.4% for the period. The equity ratio is strong at 62.1%, with total equity of 9,404.45 (100M JPY) against total assets of 15,139.87 (100M JPY), underscoring balance sheet resilience. Short- and long-term loans total 1,931.38 (100M JPY); with cash and equivalents of 1,360.01 (100M JPY), net debt is modest at roughly 571 (100M JPY). The provided debt-to-equity ratio is 0.66x, but based on disclosed loans the interest-bearing debt-to-equity is closer to ~0.21x; the higher ratio likely reflects broader liabilities (e.g., lease liabilities) not itemized here. Working capital assessment is constrained by unreported current liabilities; only current assets (3,646.90 (100M JPY)) are available. Inventory and receivables are sizable at 1,127.50 and 805.15 (100M JPY), respectively, consistent with a retail-driven operating cycle. Cash flow statements and capex are unreported, limiting free cash flow and coverage analyses. Dividend data are largely unreported; a calculated payout ratio of 208.4% suggests shareholder returns exceeded period earnings, but without DPS/FCF details interpretability is limited. Overall, the quarter reflects strong gross profitability but higher SG&A intensity and soft top-line, resulting in a YoY decline in operating and net income. Balance sheet strength provides flexibility, but near-term operating leverage is adverse. Data gaps (cash flow, DPS, current liabilities) constrain the depth of liquidity and dividend sustainability assessment. Key watchpoints include sales recovery, SG&A control, inventory discipline, and visibility on cash generation in H2.

Profitability Analysis

ROE_decomposition: ROE 4.4% = Net margin 9.5% x Asset turnover 0.290 x Financial leverage 1.61x. Margin is the primary driver; asset turnover is modest and leverage is conservative. margin_quality: Gross margin 52.1% indicates strong merchandise margin and pricing/purchasing power. SG&A ratio at 37.9% constrained operating margin to 13.6%. Net margin at 9.5% reflects limited non-operating drag and a normalized tax rate (~30.9%). operating_leverage: Revenue declined 1.8% YoY while operating income fell 6.9% YoY, implying an adverse degree of operating leverage of roughly 3.8x in the half. This suggests a relatively fixed cost base and/or increased cost investments (stores/logistics/people) amid softer sales.

Growth Assessment

revenue_sustainability: Top-line contracted 1.8% YoY, signaling softer demand or mix effects in the period. With high gross margin intact, the issue appears more volume/mix than pricing. Sustainability hinges on H2 seasonal demand, merchandising, and store traffic. profit_quality: Operating profit fell more than revenue, pointing to SG&A pressure. PBT (603.60) slightly exceeded OI (598.59) due to equity-method income (15.51), supporting overall profit quality; however, the heavier SG&A load weakens earnings scalability. outlook: Without management guidance in the dataset, the near-term outlook depends on sales normalization and SG&A discipline. If sales stabilize, margin recovery is plausible given the gross margin base, but cost rigidity could cap operating margin expansion absent stronger revenue.

Financial Health

liquidity: Current assets are 3,646.90 (100M JPY), but current liabilities are unreported; thus current and quick ratios are not calculable. Cash and equivalents total 1,360.01 (100M JPY), providing a liquidity buffer, though the exact short-term coverage cannot be assessed. solvency: Total equity of 9,404.45 and assets of 15,139.87 yield an equity ratio of 62.1%, indicating a strong capital base. Reported debt-to-equity is 0.66x, but based on disclosed loans (1,931.38) the interest-bearing debt-to-equity is about 0.21x; net debt is ~571, implying low net leverage. capital_structure: Assets funded primarily by equity (62%) with moderate liabilities (38%). The financial leverage factor (1.61x) is conservative, supporting solvency. Potential lease liabilities are not itemized, which could explain the higher reported D/E ratio.

Cash Flow Quality

earnings_quality: PBT exceeds OI on modest non-operating gains (equity-method income), and the tax rate aligns with statutory ranges, supporting earnings quality. However, absent cash flow data, accrual intensity cannot be assessed. FCF_analysis: Operating CF and Investing CF are unreported; capex is unreported. Consequently, free cash flow cannot be calculated, and we cannot judge cash conversion or FCF sufficiency versus distributions. working_capital: Inventories 1,127.50 and AR 805.15 are material. Using period-end balances as a proxy, half-year inventory turnover (~2.0x) annualizes to ~3.9x (indicative only), and DSO is roughly 33–34 days (AR/Revenue scaled to a half-year). AP is 754.59, suggesting some supplier financing, but full cash cycle metrics cannot be derived without average balances.

Dividend Sustainability

payout_ratio_assessment: The calculated payout ratio of 208.4% implies distributions in excess of period earnings; however, DPS and total dividends are unreported, so this metric should be treated with caution. FCF_coverage: Not assessable due to unreported OCF/FCF and capex. Coverage of shareholder returns against cash generation is unknown. policy_outlook: Without disclosed DPS or policy commentary, we cannot infer changes to dividend policy. Balance sheet strength supports optionality, but sustainability depends on H2 earnings and cash flow, which are unreported here.

Risk Assessment

Business Risks:

• Negative operating leverage amid modest sales declines (cost base rigidity).
• Demand softness or unfavorable product mix impacting revenue growth.
• Inventory risk if sales recovery lags, potentially leading to markdowns.
• Competitive pricing pressure in home furnishings and related categories.
• Supply chain and logistics cost fluctuations affecting gross margin.

Financial Risks:

• Limited visibility on cash generation due to unreported OCF and capex.
• Potential lease liabilities not itemized may elevate effective leverage.
• Payout ratio above earnings (as calculated) could strain cash if sustained.
• Interest rate and FX exposures not disclosed; interest coverage uncalculable.

Key Concerns:

• Operating income declining faster than revenue (−6.9% vs −1.8%).
• High SG&A intensity (37.9% of sales) compressing operating margin.
• Data gaps: cash flow statements, current liabilities, and DPS unreported.

Investment Implications

Key Takeaways:

• Revenue down 1.8% YoY; operating income down 6.9% indicates adverse operating leverage.
• Strong gross margin at 52.1% underpins structural profitability.
• Operating margin at 13.6% pressured by SG&A at 37.9% of sales.
• ROE 4.4% driven by 9.5% net margin, 0.290x asset turnover, and 1.61x leverage.
• Equity ratio 62.1% and low net debt (~571) reflect balance sheet strength.
• PBT supported by equity-method income (15.51), with a 30.9% effective tax rate.
• Cash flow and dividend details are unreported, limiting FCF-based assessments.
• Reported D/E 0.66x vs ~0.21x on disclosed loans suggests additional liabilities (e.g., leases).

Metrics to Watch:

• Same-store sales/traffic and total revenue trends in H2.
• SG&A trajectory and cost control initiatives.
• Inventory turns and markdown rates; AR and AP balance trends.
• Operating cash flow, capex, and FCF once disclosed.
• Dividend announcements and total shareholder return outlays.
• Gross margin resilience amid input cost and FX fluctuations.

Relative Positioning: Within domestic retail/home furnishings, Nitori exhibits superior gross margins and a conservative leverage profile, but current-period operating leverage turned negative as SG&A outpaced sales, making near-term performance more sensitive to top-line recovery.

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
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