| Metric | This Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥587.7B | ¥522.2B | +12.5% |
| Operating Income / Operating Profit | ¥25.4B | ¥10.6B | +140.8% |
| Ordinary Income (JGAAP) | ¥27.9B | ¥12.4B | +125.0% |
| Net Income / Net Profit | ¥18.1B | ¥7.5B | +140.0% |
| ROE | 2.6% | 1.1% | - |
For the Q1 of the fiscal year ending February 2027, Revenue was ¥587.7B (YoY +¥65.5B +12.5%), Operating Income was ¥25.4B (YoY +¥14.9B +140.8%), Ordinary Income was ¥27.9B (YoY +¥15.5B +125.0%), and Net Income attributable to owners of parent was ¥18.1B (YoY +¥10.6B +140.0%), marking a substantial increase in both top and bottom lines. Operating margin improved to 4.3% from 2.0% a year earlier, a 2.3pt improvement; net margin expanded to 3.1% (prior year 1.4%), up 1.7pt, indicating significant profitability improvement. All four segments posted revenue growth, with the core Domestic Yoshinoya leading performance—Operating Income ¥24.98B (+169.5%). A reduction in SG&A ratio to 58.1% from 60.6% (improvement of 2.5pt) was a primary driver of profit growth, reflecting the combined effects of revenue expansion and cost-efficiency initiatives.
Revenue: Revenue was ¥587.7B (+12.5%), achieving double-digit growth. By segment, Domestic Yoshinoya was the largest driver at ¥390.6B (+13.7%, composition 66.5%), Hanamaru ¥88.3B (+10.4%, composition 15.0%), and Overseas Yoshinoya ¥78.0B (+13.7%, composition 13.3%)—the three main segments each posted double-digit growth. Other segments were ¥37.8B (+2.7%, composition 6.4%), a non-reportable segment including 20 consolidated subsidiaries, showing limited growth. Overall, both domestic and international customer recovery and price increases contributed to revenue expansion.
Profitability: Cost of sales was ¥220.8B (37.6% of sales), producing gross profit ¥366.9B and a gross margin of 62.4% (down 0.3pt from 62.7% a year earlier). SG&A was ¥341.5B (58.1% of sales), an increase of +7.8% YoY, which was well below revenue growth of +12.5%, driving the 2.3pt improvement in operating margin. Operating Income ¥25.4B (+140.8%), with an operating margin of 4.3%, reflects both revenue expansion and cost efficiency. Non-operating income included interest income ¥0.2B, equity-method investment income ¥1.0B, and foreign exchange gains ¥0.9B; offset by financing costs (interest expense) ¥1.0B and other non-operating expenses totaling ¥1.7B, resulting in Ordinary Income ¥27.9B (+125.0%). Extraordinary income totaled ¥5.6B (compensation income ¥3.7B, gain on sale of fixed assets ¥1.9B, etc.) and extraordinary losses ¥3.5B (impairment losses ¥2.9B, etc.), yielding a net extraordinary contribution of ¥2.1B and pushing profit before tax to ¥30.0B. After income taxes ¥12.0B (effective tax rate 39.9%), Net Income attributable to owners of parent was ¥18.1B (+140.0%). In conclusion, SG&A control and operating leverage realization drove the strong revenue and substantial profit growth.
Domestic Yoshinoya posted Revenue ¥390.6B (+13.7%) and Operating Income ¥25.0B (+169.5%) with a margin of 6.4%. Operating Income improved significantly from ¥9.3B a year earlier, with margin expanding from 2.7% to 6.4%, and this segment was the main contributor to group-wide profit growth. Hanamaru reported Revenue ¥88.3B (+10.4%) and Operating Income ¥8.6B (+19.9%) with a margin of 9.7%, maintaining stable profitability while growing. Overseas Yoshinoya recorded Revenue ¥78.0B (+13.7%) and Operating Income ¥5.2B (+26.3%) with a margin of 6.7%; overseas expansion is progressing smoothly and contribution to profit is increasing. Other segments reported Revenue ¥37.8B (+2.7%) and Operating Income ¥1.4B (-40.3%) with a margin of 3.8%; this non-reportable segment includes 20 consolidated subsidiaries, and allocation of corporate expenses and front-loaded investments have kept margins low. Company-wide adjustments of △¥14.8B (prior year △¥12.4B) include corporate expenses △¥15.1B and goodwill amortization △¥0.3B, compressing reported segment profit ¥38.8B to Operating Income ¥25.4B.
Profitability: Operating margin improved to 4.3% (prior year 2.0%), up 2.3pt; net margin expanded to 3.1% (prior year 1.4%), up 1.7pt. ROE of 2.6% is calculated on an annualized basis from Net Income ¥18.1B against equity ¥694.0B; capital efficiency remains low but shows improvement from the prior year. Gross margin of 62.4% is slightly down 0.3pt from 62.7% but remains high. Improvement in SG&A ratio to 58.1% (prior year 60.6%) was a key driver of profit growth.
Cash Quality: Cash and deposits are ¥249.3B, ample liquidity, and interest-bearing debt total ¥167.8B (short-term borrowings ¥100.5B + long-term borrowings ¥67.3B), indicating a net cash-like position in substance. Current ratio is 115.1% (current assets ¥480.4B / current liabilities ¥417.5B), and quick ratio is 103.9%, indicating secured short-term payment capacity. Interest coverage is 25.4x (Operating Income ¥25.4B / interest expense ¥1.0B), implying high interest payment resilience.
Investment Efficiency: Total asset turnover is 0.446x (Revenue ¥587.7B / total assets ¥1,318.3B annualized), showing gradual improvement. Tangible fixed assets are ¥588.6B (44.7% of total assets), indicating a heavy store asset base and room to improve turnover.
Financial Soundness: Equity Ratio is 53.2% (total equity ¥701.2B / total assets ¥1,318.3B), a slight decline from 54.5% but still favorable. Debt/Equity ratio is 0.24x (interest-bearing debt ¥167.8B / total equity ¥701.2B), low and conservative. Short-term borrowings increased from ¥70.5B to ¥100.5B (+¥30.0B, +42.6%), which requires attention for refinancing risk.
The large Operating Income increase to ¥25.4B reflects fundamental improvement driven by SG&A ratio improvement. Net Income ¥18.1B includes Extraordinary Income ¥5.6B (compensation income ¥3.7B, gain on sale of fixed assets ¥1.9B) and Extraordinary Losses ¥3.5B (impairment losses ¥2.9B, loss on retirement of fixed assets ¥0.4B, etc.), so one-off items account for approximately 11.6% of Net Income. Ending cash of ¥249.3B increased by ¥32.9B from ¥216.4B a year earlier, indicating ample liquidity. In working capital, accounts receivable increased to ¥81.7B (prior year ¥68.0B, +20.1%), outpacing revenue growth and raising concerns about slight elongation in collection periods. Inventories were ¥46.7B (prior year ¥46.1B), a marginal increase, indicating generally good control in a revenue expansion phase. The ¥30.0B increase in short-term borrowings is presumed to finance working capital and capital expenditures, and together with the cash build-up signals a change in balance sheet structure. Detailed financing cash flow data are not available, but a short-term liabilities ratio of 59.9% (short-term liabilities ¥417.5B / total liabilities ¥617.0B) suggests somewhat high refinancing sensitivity.
Recurring earnings quality has improved due to stable revenue growth and improved SG&A efficiency. Gross margin of 62.4% is slightly down 0.3pt YoY but remains high. Non-operating income ¥4.2B (0.7% of sales) comprises interest income ¥0.2B, foreign exchange gains ¥0.9B, equity-method investment income ¥1.0B, etc., and is not excessive. Meanwhile, net contribution from extraordinary items (¥5.6B extraordinary income less ¥3.5B extraordinary losses = ¥2.1B) represents 7.0% of profit before tax ¥30.0B, indicating that one-off items boosted profits. Comprehensive income ¥21.2B is Net Income ¥18.1B plus foreign currency translation adjustments ¥3.1B, showing a degree of FX impact. The difference between Ordinary Income ¥27.9B and Net Income ¥18.1B is due to extraordinary items and tax effects (effective tax rate 39.9%), and the company’s earnings power at the ordinary level has clearly improved. On accruals, the faster increase in accounts receivable than revenue growth and stable inventories indicate overall balance, but attention is required on future inventory management and impairment risk.
Full Year plan: Revenue ¥2,420.0B (YoY +7.2%), Operating Income ¥85.0B (+5.1%), Ordinary Income ¥88.0B (+0.0%), Net Income ¥49.0B. Q1 progress rates are: Revenue 24.3%, Operating Income 29.9%, Ordinary Income 31.7%, Net Income 36.9%. Operating Income progress exceeds the typical 25% by 4.9pt, reflecting SG&A efficiency improvements progressing ahead of plan. Net Income progress of 36.9% is materially influenced by extraordinary income, and the full-year forecast should consider the eventual lapse of one-off items. Revenue progress is largely on track; achievement is feasible if same-store trends remain firm and new store openings proceed as planned. If Q1 momentum in Operating Income persists, upside is possible, but rising labor and raw material costs and FX reversal risk warrant caution. Dividend forecast is ¥11.0 per share unchanged; with approximately 65.13 million shares outstanding, the annual dividend payout is about ¥0.72B, and payout ratio relative to the Net Income plan of ¥49.0B is about 15%, a conservative level.
Annual dividend forecast ¥11.0 (prior year actual ¥11.0) is unchanged. Annualizing Q1 Net Income attributable to owners of parent ¥18.1B gives approximately ¥72.4B, but the full-year plan is ¥49.0B, reflecting a conservative forecast accounting for one-off items. Based on the dividend forecast ¥11.0 and ~65.13 million shares outstanding, annual dividend payout is about ¥0.72B and the payout ratio versus the full-year Net Income plan ¥49.0B is about 15%. With cash and deposits ¥249.3B, a net cash-like position, and Equity Ratio 53.2%, financial health is high and dividend sustainability is strong. No share buyback was disclosed; shareholder returns are concentrated on dividends. A payout ratio of 15% is conservative for the retail sector, suggesting a policy prioritizing retained earnings for growth investment and financial safety.
SG&A inflation risk: Although SG&A ratio improved to 58.1% in Q1 from 60.6% a year earlier, labor shortages exert upward pressure on wages and there is risk from rent revisions. Within SG&A ¥341.5B, bonus reserves increased to ¥18.4B (prior year ¥12.4B, +52.4%), a substantial rise that could increase future labor cost burden and compress margins. If revenue growth slows, fixed cost burdens could cause operating leverage to reverse.
Short-term borrowing dependence and refinancing risk: Short-term borrowings ¥100.5B (prior year ¥70.5B, +42.6%) and short-term liabilities ratio 59.9% increase maturity vulnerability. In a rising-rate environment, funding costs could rise, and in adverse credit conditions roll-over may be difficult. Although cash ¥249.3B provides ample liquidity, the rising trend in short-term funding reduces financial flexibility.
Extraordinary items and one-off profit volatility: Q1 Extraordinary Income ¥5.6B (compensation income, gain on sale of fixed assets) and Extraordinary Losses ¥3.5B (impairment losses, etc.) increase Net Income volatility. Impairment losses ¥2.9B suggest rationalization of unprofitable stores, and further one-off costs may arise from store closures/renovations. Asset retirement obligations ¥33.6B (5.5% of liabilities) could lead to cash outflows upon store exits, reducing predictability of earnings and cash flows.
Revenue & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 4.3% | 3.4% (0.8%–7.7%) | +1.0pt |
| Net Margin | 3.1% | 2.2% (0.5%–6.2%) | +0.8pt |
Profitability exceeds the industry median, reflecting relative advantage from SG&A efficiency improvements.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 12.5% | 7.7% (0.8%–14.6%) | +4.8pt |
Revenue growth rate is 4.8pt above the industry median, driven by recovery in same-store sales domestically and internationally and new store openings.
※ Source: Company compilation
SG&A efficiency improvement and realization of operating leverage drove the substantial Q1 profit increase. The 2.5pt improvement in SG&A ratio to 58.1% (prior year 60.6%) limited SG&A growth to +7.8% versus revenue growth +12.5%, and the improvement in margin at core Domestic Yoshinoya to 6.4% (prior year 2.7%) is emblematic. If this efficiency is sustained full-year, there is upside to Operating Income; conversely, rising labor and rent pressures could reverse margin improvements. The large increase in bonus reserves (+52.4%) should be monitored as a leading indicator.
The increase in short-term borrowings (+¥30.0B, +42.6%) and short-term liabilities ratio 59.9% indicate a shift in financing structure. With cash ¥249.3B and ample liquidity, immediate concerns are limited, but sensitivity to interest rate rises and refinancing risk is higher. At the same time, Equity Ratio 53.2% and Debt/Equity 0.24x indicate solid financial health and a net cash-like stance relative to interest-bearing debt ¥167.8B. The evolution of short-term funding and changes in financing terms will influence future earnings and dividend sustainability.
Net Income progress of 36.9% was materially affected by Extraordinary Income ¥5.6B, exceeding recurring earnings. Impairment losses ¥2.9B and asset retirement obligations ¥33.6B indicate risks from store rationalization and exit costs; further one-off expenses may occur. The conservative payout ratio of 15% signals a focus on internal reserves for growth investment and financial safety. Dividend sustainability for ¥11.0 is high, but scope for dividend increases is limited without further strengthening of recurring Ordinary Income.
This report is an AI-generated earnings analysis document produced by analyzing XBRL financial statement disclosures. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are company-compiled reference information based on public financial statements. Investment decisions are your responsibility; consult professional advisors as needed.