GINZA RENOIR (9853) FY2026 Q3 Earnings Report

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Executive Summary

This was a financial period in which Operating Income increased substantially, as Revenue growth exceeded the increase in SG&A expenses. Revenue was ¥62.5B (+7.3% YoY), Operating Income was ¥1.9B (+181.2%), Ordinary Income was ¥2.3B (+125.8%), and Net Income was ¥2.1B (+169.6%). As the rate of increase in SG&A expenses remained below Revenue growth, operating leverage took effect, improving both the Operating Income margin and Net Income margin from the previous year.

Factors Affecting Earnings

【Revenue】Revenue increased 7.3% YoY to ¥62.5B. Gross profit was ¥50.7B, and the gross margin improved slightly from the previous year to 81.1%, demonstrating that the Company has maintained the high-gross-margin structure characteristic of its store-based service business.

【Profit and Loss】SG&A expenses increased 5.2% YoY to ¥48.8B, remaining below the rate of Revenue growth, which reduced the SG&A ratio to 78.1%. As a result, Operating Income increased substantially by 181.2% YoY to ¥1.9B. Ordinary Income was ¥2.3B, exceeding Operating Income, because non-operating income of ¥0.7B exceeded non-operating expenses of ¥0.3B. Net Income was ¥2.1B, also benefiting from the low effective tax rate. Extraordinary gains and losses were limited, with losses on the disposal of fixed assets and other items remaining small, and their impact on current-period profit was limited. Overall, the Company achieved higher Revenue and higher earnings, with the primary driver of earnings growth being the realization of operating leverage through SG&A expense control.

Key Financial Indicators

【Profitability】The Operating Income margin improved to 3.0% from 1.2% in the same period of the previous year, but remains below the general profitability benchmark of 5%. The Net Income margin increased to 3.3% from 1.3% in the previous year.【Cash Flow Quality】Ordinary Income exceeded Operating Income by ¥0.4B, indicating a contribution from non-operating income and expenses that warrants attention. The effective tax rate was low at 9.2%, and the light tax burden boosted the Net Income margin.【Investment Efficiency】ROE (annualized) was 8.4%, reflecting improvements in the total asset turnover ratio and Equity Ratio.【Financial Soundness】The Equity Ratio improved to 55.9% from 52.9% in the previous year (calculated based on previous-year net assets of ¥31.1B / total assets of ¥58.9B). Interest-bearing debt was ¥16.9B, the majority of which consisted of short-term borrowings; the high short-term debt ratio is a point requiring attention in terms of the financing structure.

Cash Flow Analysis

Although direct data from the cash flow statement were not provided, fund movements can be confirmed from changes in the balance sheet. Cash and deposits were ¥18.8B, slightly below ¥19.6B in the same period of the previous year, but remained above current liabilities of ¥19.2B. Interest-bearing debt totaled ¥16.9B, comprising short-term borrowings of ¥13.5B and long-term borrowings of ¥3.4B, and decreased from the same period of the previous year, indicating reduced reliance on borrowings. Inventories were ¥0.5B and accounts receivable were ¥2.7B, both showing slight increases, indicating an accumulation of working capital accompanying Revenue expansion. However, accounts payable also increased to ¥1.6B, with the increase in trade payables partially offsetting the funding burden. Retained earnings were ¥15.4B, increasing from the previous year, and the accumulation of internal reserves is supporting the financial foundation.

Quality of Earnings

Ordinary Income of ¥2.3B exceeded Operating Income of ¥1.9B by ¥0.4B, supported by non-operating income of ¥0.7B (1.1% of Revenue). Interest and dividend income accounted for only a negligible portion of non-operating income, which was primarily composed of other non-operating income. Extraordinary gains and losses consisted only of a ¥0.03B loss on the disposal of fixed assets, with extraordinary income virtually zero; accordingly, the impact of one-time factors on current-period profit was limited. The effective tax rate was low at 9.2%, and when the tax burden returns to a normalized level, Net Income growth may lag Operating Income growth. This point should be considered when evaluating earnings quality. Comprehensive income was ¥2.1B, of which ¥2.0B was attributable to owners of the parent. The difference from Net Income of ¥2.1B was attributable to a slight negative valuation difference on securities, and no significant divergence was observed.

Earnings Outlook and Guidance

Progress for the cumulative Q3 period against the full-year Company forecasts was 74.3% for Revenue, 79.4% for Operating Income, 78.6% for Ordinary Income, and 69.7% for Net Income. While Revenue progress was broadly in line with the standard 75% benchmark, Operating Income and Ordinary Income exceeded that level, indicating relatively comfortable progress on the earnings front against the full-year plan. Net Income progress was the lowest among the earnings indicators, requiring a meaningful accumulation of earnings in Q4. The full-year forecast calls for higher Revenue and earnings, with Revenue of +7.8%, Operating Income of +190.1%, and Ordinary Income of +128.5%, assuming that a high earnings growth rate will be maintained in Q4.

Shareholder Returns

The full-year dividend forecast is ¥3.00 per share. The Q2 dividend was ¥0, indicating an anticipated dividend policy concentrated on the year-end dividend. The Payout Ratio against the full-year EPS forecast of ¥48.25 is approximately 6.2% (dividends only), indicating a low dividend burden relative to the earnings level. Retained earnings were ¥15.4B, increasing +13.8% YoY, and the accumulation of funds available for dividends is also progressing. As no data concerning share repurchases could be confirmed, only the Payout Ratio is presented here.

Risk Factors

1. Short-term Funding Risk: The short-term debt ratio is high at 79.9%, and refinancing needs exist primarily for short-term borrowings of ¥13.5B. Cash and deposits of ¥18.8B exceed short-term liabilities, and near-term payment capacity is secured with a current ratio of 124.3% and a quick ratio of 121.8%; however, higher interest rates or tighter lending conditions could affect funding costs.

2. Operating Income Margin Risk: Although the Operating Income margin improved to 3.0%, it remains below the general profitability benchmark of 5%. If fixed and semi-fixed costs, including personnel expenses, rent, and raw material costs, increase, the Company’s capacity to absorb costs may become limited.

3. Risk Related to Earnings Composition: Ordinary Income exceeded Operating Income by ¥0.4B (22.2%), indicating some reliance on non-operating income and expenses. In addition, the effective tax rate of 9.2% is low, and if the tax burden normalizes, Net Income growth may fall below Operating Income growth.

Industry Benchmark (For Reference; Company Analysis)

Industry Benchmark (retail)

Profitability and Returns

The Operating Income margin is slightly below the industry median, while the Net Income margin is above the industry median.

Growth and Capital Efficiency

The Revenue growth rate is above the industry median and is positioned in the upper range of the IQR.

※Source: Company analysis

Key Points from the Financial Results

1. While Revenue increased +7.3%, SG&A expenses increased only +5.2%, resulting in a substantial +181.2% increase in Operating Income. The realization of operating leverage through a lower SG&A ratio was the central feature of these financial results.

2. Full-year progress was above the standard 75% benchmark for Operating Income at 79.4% and Ordinary Income at 78.6%, while Net Income progress remained at 69.7%. The tax burden and trends in non-operating gains and losses in Q4 will determine the achievement of the full-year Net Income forecast.

3. The high short-term debt ratio of 79.9% and the short-term nature of interest-bearing debt remain points for ongoing monitoring when assessing financial soundness. The Equity Ratio improved to 55.9%, indicating an overall stable capital structure.

Theoretical Stock Price (Reference Value)

Sensitivity: ¥500–¥530 at ±1% for the Cost of Equity, and ¥514–¥515 at ±0.1 for ω.

Notes:

• As forecast ROE is below the Cost of Equity, the theoretical value is below Book Value per Share.
• Net assets as of the quarter-end are used (there is a timing difference from the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Calculation model: Residual Income Model (Ohlson-type, explicit 5-year fade) / Interest rate reference month: 2026-07 / This is a mechanically calculated value based solely on publicly disclosed data and does not constitute a forecast of the market price or a recommendation of any specific investment action, nor does it predict or guarantee future stock prices.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings report data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting a professional as necessary.

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