| Metric | Current | Prior | YoY |
|---|---|---|---|
| Revenue | ¥10277.5億 | ¥8951.9億 | +14.8% |
| Operating Income | ¥2109.1億 | ¥1575.6億 | +33.9% |
| Profit Before Tax | ¥2266.7億 | ¥1966.1億 | +15.3% |
| Net Income | ¥1585.1億 | ¥1403.0億 | +13.0% |
| ROE | 6.2% | 6.0% | - |
Fast Retailing delivered robust double-digit growth in Q1 FY2026, demonstrating significant operating leverage improvement. Revenue reached 1,027.75 billion yen, an increase of 132.76 billion yen (+14.8%). Operating Income expanded to 210.91 billion yen, up 53.35 billion yen (+33.9%), reflecting exceptional margin expansion. Ordinary Income grew to 226.67 billion yen, up 30.05 billion yen (+15.3%). Net Income attributable to owners reached 158.51 billion yen, an increase of 18.21 billion yen (+13.0%). The quarter exhibited Revenue↑Profit↑ trajectory with operating margin expanding 290 basis points to 20.5%, driven by gross margin improvement of 70 basis points and selling, general and administrative expense ratio reduction of 170 basis points, supported by pricing optimization, markdown discipline, and favorable foreign exchange effects.
Profitability: ROE 5.7%, Operating Margin 20.5%, Net Margin 14.3%, Gross Margin 55.2% Financial Health: D/E 0.67x, Equity Ratio 58.4% Cash Flow: FCF 107.3B yen, Operating CF 191.8B yen, Payout Ratio 107.9% Growth: Revenue +14.8%, Operating Income +33.9%, Net Income +13.0% Asset Efficiency: Total Asset Turnover 0.240x, Inventory Growth +6.9% The company's operating margin of 20.5% significantly exceeds the 15% benchmark threshold, demonstrating strong pricing power and cost discipline. Historical trend shows operating margin expansion from prior levels, while the 14.8% revenue growth maintains momentum above mid-single-digit expectations for mature apparel retailers.
Foreign exchange volatility presents margin risk, particularly if yen appreciation reverses recent favorable translation effects and compresses gross margins on imported merchandise. The company maintains substantial derivative positions with current assets of 1,415.35 billion yen and non-current assets of 862.85 billion yen, indicating active hedging but also exposure to mark-to-market fluctuations in other comprehensive income. Lease obligations total 549.44 billion yen, representing 12.8% of total assets and creating fixed cost commitments that may pressure profitability during demand downturns. The dividend payout ratio of 107.9% based on quarterly earnings warrants monitoring, though the company's operating cash flow to net income ratio of 1.30x and substantial liquid assets of 2,383.56 billion yen provide near-term support. Inventory growth of 6.9% relative to revenue growth of 14.8% demonstrates disciplined management, yet requires continued vigilance to prevent markdown pressure. Supply chain cost inflation in logistics and labor could reverse the 170 basis point selling expense ratio improvement if not offset by continued revenue leverage.
The 290 basis point operating margin expansion to 20.5% represents substantial operating leverage materialization, positioning the company favorably within its peer group and ahead of full-year guidance trajectory toward 650 billion yen operating income on 3,800 billion yen revenue. Cash conversion quality remains high with operating cash flow generating 1.30x net income and low accrual ratio of negative 1.0%, supporting confidence in earnings sustainability and capacity for continued shareholder returns despite elevated quarterly payout metrics. The balance sheet provides strategic flexibility with equity ratio of 58.4%, conservative leverage of 0.67x, and liquid assets exceeding 2.3 trillion yen, enabling simultaneous investment in growth initiatives and shareholder distributions while maintaining downside protection against operational or macroeconomic headwinds.
This report was automatically generated by integrating XBRL earnings data with AI financial analysis. Final investment decisions are your own responsibility.