| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥9241.1B | ¥8544.4B | +8.2% |
| Operating Income / Operating Profit | ¥275.8B | ¥231.7B | +19.0% |
| Ordinary Income | ¥300.2B | ¥261.6B | +14.7% |
| Net Income / Net Profit | ¥179.5B | ¥148.4B | +21.0% |
| ROE | 8.8% | 7.9% | - |
For the fiscal year ended March 2026, revenue was ¥9241.1B (YoY +¥696.7B +8.2%), Operating Income was ¥275.8B (YoY +¥44.1B +19.0%), Ordinary Income was ¥300.2B (YoY +¥38.6B +14.7%), and Net Income attributable to owners of the parent was ¥164.8B (YoY +¥28.3B +20.7%), achieving both revenue and profit growth. Gross margin improved to 26.6% (up +0.6pt from 26.0% a year earlier), and operating margin improved to 3.0% (up +0.3pt from 2.7%), indicating enhanced profitability. ROE recovered to 8.8% (up +0.7pt from 8.1%), and balance sheet quality continued to improve. Operating Cash Flow was ¥521.8B (YoY +38.1%), Free Cash Flow was positive at ¥52.2B, enabling both growth investments and shareholder returns.
[Revenue] Revenue increased to ¥9241.1B (YoY +8.2%). The core Supermarket Business achieved double-digit growth at ¥5407.6B (+11.9%), accounting for 58.5% of consolidated revenue and serving as the revenue base. The Pet Shop Business also grew substantially to ¥355.0B (+16.4%), the Sports Club Business recovered to ¥112.5B (+7.4%), and the Logistics & Facilities Business continued stable growth at ¥224.8B (+5.9%). The Drugstore Business increased to ¥1844.6B (+4.0%) but with a slowdown in growth, while the DIY / Home Center Business declined to ¥1240.7B (-2.6%). Gross margin improved to 26.6% (up +0.6pt from 26.0%), reflecting successful product-mix optimization and pricing strategy.
[Profitability] Operating Income was ¥275.8B (YoY +19.0%), and operating margin improved to 3.0% (up +0.3pt from 2.7%). SG&A expenses were ¥2462.0B (+9.1%), rising faster than revenue growth, mainly driven by increases in salaries and allowances of ¥929.2B (+10.1%) and rental expenses of ¥375.0B (+6.3%). Non-operating income included dividend income of ¥3.4B and interest income of ¥1.4B, while interest expense was ¥14.6B, resulting in net financial expense of -¥9.8B; nevertheless, Ordinary Income reached ¥300.2B (YoY +14.7%). Extraordinary losses included impairment losses of ¥34.5B, contributing to total extraordinary losses of ¥42.5B, and Pre-tax Income was ¥263.0B (YoY +18.1%). After deducting income taxes of ¥83.5B, Net Income attributable to owners of the parent was ¥164.8B (YoY +20.7%), a double-digit increase. Net income attributable to non-controlling interests was ¥14.8B, bringing Consolidated Net Income to ¥179.5B, finishing the year with revenue and profit growth.
The Supermarket Business recorded Operating Income of ¥221.2B (YoY +13.6%), with a margin of 4.1%, solidifying its position as the main profit source. The Logistics & Facilities Business achieved Operating Income of ¥46.6B (YoY +11.0%) and maintained outstanding high profitability with a margin of 20.7%, boosting consolidated margins. The DIY / Home Center Business, despite revenue decline, improved Operating Income to ¥47.7B (YoY +33.9%), achieving substantial margin improvement to 3.8%. Conversely, the Pet Shop Business, despite revenue growth, saw Operating Income drop to ¥5.1B (YoY -51.0%) with a margin of 1.4%, and the Drugstore Business recorded Operating Income of ¥37.8B (YoY -5.8%) with a margin of 2.1%, continuing a profit decline and presenting structural improvement challenges. The Sports Club Business returned to profitability with Operating Income of ¥1.7B (YoY +137.7%), and Other Businesses posted Operating Income of ¥1.8B (YoY +122.9%), both achieving significant year-over-year gains.
[Profitability] Operating margin improved to 3.0% (up +0.3pt from 2.7%) and Net Profit Margin improved to 1.8% (up +0.2pt from 1.6%). ROE recovered to 8.8% (up +0.7pt from 8.1%), and ROA (on Ordinary Income basis) was 6.2% (up +0.4pt from 5.8%). [Cash Quality] Operating CF / Net Income ratio was 2.91x, and accrual ratio was -6.9%, demonstrating high-quality cash generation. OCF/EBITDA was 0.97x, a healthy level. [Investment Efficiency] Total asset turnover was 1.80x (slightly down from 1.85x), and invested capital turnover was 3.01x. Capex / Depreciation ratio was 1.59x, indicating continued growth investment; most of the ¥415.0B in capital expenditures contributed to increases in tangible fixed assets. [Financial Soundness] Equity Ratio was 39.5% (down -1.4pt from 40.9%), D/E ratio was 0.40x, and Interest-bearing Debt / EBITDA multiple was 1.51x, reflecting appropriate leverage. Interest Coverage (EBIT / Interest Expense) was 18.9x, indicating minimal interest burden. Current Ratio was 78.9% and Quick Ratio was 44.3%, indicating low short-term liquidity, but the retail working-capital model driven by accounts payable (Net working capital -¥412.4B) enhances capital efficiency.
Operating Cash Flow was ¥521.8B (YoY +38.1%), a substantial increase, demonstrating cash generation 2.91x Net Income of ¥179.5B. The subtotal of operating CF was ¥619.7B (up +33.3% from ¥464.9B), supported by non-cash expenses such as Depreciation & Amortization of ¥260.9B, goodwill amortization of ¥10.5B, and impairment losses of ¥34.5B. In working capital, an increase in accounts payable of ¥67.1B contributed positively, while increases in trade receivables of ¥46.1B and inventories of ¥15.4B pressured cash. After income tax payments of ¥89.4B, Operating CF totaled ¥521.8B. Investing CF expanded to -¥469.6B (prior year -¥398.9B), with main outflows of capital expenditures ¥415.0B, acquisition of subsidiary shares ¥33.0B, and intangible asset acquisitions ¥10.7B. Financing CF turned positive to ¥45.9B (from ¥-46.9B prior year), raising funds via long-term borrowings ¥212.1B and bond issuance ¥100.0B, while repaying long-term borrowings ¥157.9B, paying dividends ¥39.1B, and net reduction of commercial paper ¥20.0B. Free Cash Flow remained positive at ¥52.2B, enabling continued growth investment while securing dividend funds. Cash and cash equivalents increased to ¥317.4B at year-end (up ¥97.4B from ¥220.0B at the beginning of the year), strengthening liquidity on hand.
The recurring earnings base comprised Operating Income of ¥275.8B, plus net non-operating income of ¥24.4B (non-operating income ¥48.7B including dividend income ¥3.4B and rental income ¥10.6B, less non-operating expenses ¥24.3B including interest expense ¥14.6B), forming Ordinary Income of ¥300.2B. Non-operating income represented 0.5% of sales, indicating low reliance and an earnings structure rooted in core operations. Extraordinary items included Special Gains of ¥5.3B (including gain on negative goodwill ¥0.9B and gain on sales of fixed assets ¥0.4B) versus Special Losses of ¥42.5B (including impairment losses ¥34.5B and loss on retirement of fixed assets ¥2.0B), yielding a net one-off burden of -¥37.2B and resulting in Pre-tax Income of ¥263.0B. The impairment loss of ¥34.5B equals 19.2% of Net Income and, while temporary, underscores the ongoing need to manage store profitability and asset quality. Comprehensive income was ¥194.7B (¥179.5B Net Income plus ¥15.2B), mainly driven by an increase of ¥15.5B in valuation differences on available-for-sale securities. Operating CF / Net Income ratio of 2.91x and accrual ratio of -6.9% indicate high quality, and recurring earnings stability is strong.
The forecast for FY ending March 2027 is: Revenue ¥10,000.0B (vs current period +8.2%), Operating Income ¥280.0B (vs current period +1.5%), Ordinary Income ¥305.0B (vs current period +1.6%), Net Income attributable to owners of the parent ¥165.0B (vs current period +0.1%), and EPS ¥313.25. Sales are assumed to grow at a rate similar to the prior year, while Operating Income growth is expected to remain flat, implying incorporation of cost inflation. Operating Income progress rate is 98.5% (current operating income ¥275.8B ÷ forecast ¥280.0B), indicating near achievement, premised on maintaining Supermarket Business profitability and continued high margins in Logistics & Facilities. Key is whether SG&A growth can be contained to the revenue growth rate and whether there is room to further improve gross margin. Dividend guidance is ¥38 per annum (down from ¥74 this period), and the note mentions the possibility of increased dividends, so the background to the dividend policy change should be monitored.
Annual dividend was ¥74 (interim ¥35, year-end ¥39), a substantial increase from ¥29 in the prior year. Payout Ratio was 26.4% (based on Net Income attributable to owners of the parent), at a conservative level, and total dividends paid amounted to ¥39.1B. With FCF of ¥52.2B and dividends paid of ¥39.1B, FCF coverage was 1.33x, indicating high sustainability. Share buybacks amounted to ¥21.2B. Net assets were ¥1852.3B on an issued share count of 53,987 thousand shares (after deducting 1,314 thousand treasury shares), resulting in Book Value per Share (BPS) of ¥3516.53. Details on dividend yield and Total Return Ratio were not disclosed, but total shareholder return (dividends + buybacks) amounted to ¥60.3B, representing a Total Return Ratio of 33.6% relative to Consolidated Net Income of ¥179.5B, leaving room for further returns. Dividend guidance for FY ending March 2027 is ¥38, but the note refers to a "possibility of dividend increase," so upward revision remains possible depending on future performance.
Short-term liquidity risk: Current Ratio is 78.9% and Quick Ratio is 44.3%, placing short-term liquidity at a cautionary level, with Current Liabilities ¥1,954.6B versus Current Assets ¥1,542.2B causing a maturity mismatch. Short-term liabilities include Commercial Paper ¥179.9B, Short-term Borrowings ¥249.2B, bonds maturing within one year ¥100.3B, and long-term borrowings due within one year ¥171.3B, creating concentration of short-term debt and potential refinancing risk if funding markets tighten. Cash and deposits ¥329.8B and Cash / Short-term Liabilities ratio of 0.42x provide some cushion, but ensuring flexibility against seasonal working-capital swings is important.
Polarization of segment profitability: The Pet Shop Business saw Operating Income of ¥5.1B (YoY -51.0%) and margin of 1.4%, and the Drugstore Business recorded Operating Income of ¥37.8B (YoY -5.8%), indicating ongoing profit declines and slow structural improvement. Conversely, Logistics & Facilities has a 20.7% margin and DIY / Home Center improved to 3.8% (up +1.0pt from prior year), and high-margin businesses are supporting consolidated margins. If Pet and Drug recovery stalls, the scope for consolidated margin improvement will be limited.
Cost inflation and rising SG&A ratio: SG&A grew to ¥2462.0B (YoY +9.1%), outpacing revenue growth of +8.2%, with notable increases in salaries and allowances ¥929.2B (+10.1%), rent ¥375.0B (+6.3%), and utilities ¥140.9B (+2.3%). The FY2027 Operating Income forecast (+1.5%) remaining flat reflects embedded cost inflation; if automation, labor-saving measures, and energy management do not sufficiently offset rising costs, improvement in operating margin could stall.
Profitability & Return
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 3.0% | 4.6% (1.7%–8.2%) | -1.6pt |
| Net Profit Margin | 1.9% | 3.3% (0.9%–5.8%) | -1.4pt |
Profitability metrics are below industry medians but fall within the IQR range, and as a diversified operator with a high-margin Logistics & Facilities segment, the company retains certain competitive strengths.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 8.2% | 4.3% (2.2%–13.0%) | +3.9pt |
Revenue growth outperformed the industry median by +3.9pt, driven by expansion in the Supermarket Business and high growth in Pet Shops, placing the company in the upper ranks on growth.
※ Source: Company compilation
Gross margin improved by +0.6pt and operating margin by +0.3pt, with ROE recovering to 8.8%. Stable earnings from the Supermarket Business plus high margins in Logistics & Facilities (20.7%) lifted consolidated margins, and significant profitability improvement in DIY / Home Center (Operating Income +33.9%) demonstrated the strength of the diversified format. Operating CF / Net Income 2.91x and accrual ratio -6.9% indicate high-quality cash generation; with positive FCF of ¥52.2B and a payout ratio of 26.4%, the company maintained shareholder returns while preserving financial flexibility.
However, SG&A rose +9.1%, outpacing revenue growth of +8.2%, and cost inflation in labor and rent has eroded operating leverage. The FY2027 Operating Income forecast of +1.5% indicates a flat outlook; further profit improvement will require cost control and productivity gains. Current Ratio 78.9% and Quick Ratio 44.3% signal short-term liquidity vigilance, making working-capital seasonality and short-term debt maturity management key issues. Continued deterioration in Pet Shop and Drugstore margins would impede sustainable consolidated margin improvement.
This report was generated by AI analyzing XBRL financial statement data and is an automated earnings analysis. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are the Company's compilation based on public financial statements and are provided for reference. Investment decisions are your responsibility; consult a professional advisor as needed.