SAC'S BAR HOLDINGS INC. FY2027 Q1 Earnings Report

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Executive Summary

The quarter was characterized by increases in both revenue and profit, with the growth rate of ordinary income (+10.8%) exceeding that of operating income (+5.6%). Revenue was ¥125.0B (¥118.2B in the same period of the prior year, YoY +5.8%), operating income was ¥5.9B (+5.6%), ordinary income was ¥6.4B (+10.8%), and net income was ¥3.6B (+7.4%). The increase in ordinary income was attributable to improvements in non-operating income and expenses, including interest income. The primary reason that net income growth was slower than ordinary income growth was the increase in the effective tax rate from 39.4% to 42.9%.

Factors Affecting Earnings Performance

【Revenue】Revenue increased 5.8% year on year to ¥125.0B. The Company’s group operates as a single segment focused on the sale of products centered on bags and leather goods, and a segment-by-segment breakdown has not been disclosed.

【Profit and Loss】The cost of sales ratio increased slightly to 50.3% (50.1% in the prior year), while the gross profit margin declined by -0.2pt to 49.7% from 49.9% in the prior year. Meanwhile, the SG&A expense ratio improved by -0.1pt to 45.0% from 45.2% in the prior year, indicating cost management in which revenue growth (+5.8%) slightly exceeded the increase in SG&A expenses (+5.5%). As the two factors largely offset each other, the operating margin was 4.7%, remaining almost flat year on year (-0.01pt). The ordinary income margin improved by +0.2pt to 5.2% from 4.9% in the prior year, with non-operating income and expenses, including an increase in interest income, contributing to the improvement. Income taxes of ¥2.7B were recorded against pretax income of ¥6.4B, and the effective tax rate increased to 42.9% from 39.4% in the prior year. Consequently, the net income growth rate (+7.4%) was below the pretax income growth rate (+13.8%). Revenue and profit both increased.

Key Financial Metrics

【Profitability】The operating margin was 4.7%, remaining almost flat from the prior year (4.7%); the ordinary income margin improved to 5.2% from 4.9% in the prior year; and the net profit margin improved slightly to 2.9% from 2.9% in the prior year. EPS increased 7.4% to ¥12.52 from ¥11.66 in the prior year.【Cash Quality】The approximately annualized days sales outstanding (DSO), calculated on an annualized basis, was approximately 24.5 days (32.9 days in the prior year); days inventory outstanding (DIO) was approximately 198 days (198.5 days in the prior year); and days payable outstanding (DPO) was approximately 43.4 days (50.4 days in the prior year). The cash conversion cycle (CCC) was approximately 179 days (181 days in the prior year), remaining almost flat. While the shortening of DSO primarily contributed to the improvement in CCC, the high level of DIO reflects the structure of the inventory-based business.【Investment Efficiency】ROE was 1.2% (on a cumulative quarterly basis), with the high ratio of inventory to total assets serving as a structural factor constraining asset efficiency.【Financial Soundness】The equity ratio improved to 74.6% from 74.1% in the prior year, while the current ratio remained high at approximately 320% (current assets of ¥211.0B/current liabilities of ¥65.8B). Long-term borrowings were at a low level of ¥5.0B, indicating limited reliance on interest-bearing debt.

Cash Flow Analysis

Instead of analyzing individual items in the statement of cash flows, fund movements are reviewed by comparing the beginning and ending balances on the balance sheet. Cash and deposits decreased by ¥19.4B (-33.5%) to ¥38.6B from ¥58.0B in the same period of the prior year, while inventories increased to ¥136.4B (+¥7.6B, +5.9%) and investment securities increased to ¥50.6B (+¥9.7B, +23.7%). This indicates that cash on hand was reallocated toward inventory accumulation and investment securities. Trade receivables decreased by ¥9.0B to ¥33.6B (¥42.6B in the prior year), indicating progress in collections. Retained earnings decreased by ¥6.5B to ¥227.9B from ¥234.4B in the prior year, suggesting that shareholder returns and other distributions exceeding the current quarter’s net income of ¥3.6B were made during the period. The equity ratio relative to total assets remained high at 74.6%, and the stability of the financial foundation has not been impaired despite changes in capital allocation.

Quality of Earnings

The quarter’s profit was primarily generated by recurring operating activities, and the impact of one-time factors was limited. Non-operating income was ¥0.7B (0.6% of revenue), consisting mainly of interest income and other items, while non-operating expenses were ¥0.2B (including ¥0.1B in interest expenses); their impact on earnings was minimal. Extraordinary losses were limited to ¥0.1B, including losses on the disposal of fixed assets, and the difference between ordinary income of ¥6.4B and pretax income of ¥6.4B was negligible. Meanwhile, in the conversion from pretax income to net income, the effective tax rate increased to 42.9% from 39.4% in the prior year. As a result, net income of ¥3.6B recorded a lower growth rate (+7.4%) than the growth in pretax income (+13.8%). Comprehensive income was ¥3.3B, ¥0.3B below net income attributable to owners of the parent of ¥3.6B. This difference was attributable to negative valuation adjustments for other securities and pension assets, including valuation differences on securities of -¥0.2B and adjustments related to retirement benefits of -¥0.1B. This difference does not impair the quality of operating earnings and is regarded as valuation volatility arising from market factors.

Earnings Forecast and Guidance

The Q1 progress rates against the full-year plan were 23.4% for revenue (¥125.0B/¥535.1B), 17.6% for operating income (¥5.9B/¥33.5B), 18.8% for ordinary income (¥6.4B/¥34.3B), and 17.2% for net income (¥3.6B/¥21.1B). Compared with the simple one-quarter benchmark of 25%, all items were below that level, with progress in the profit-related metrics particularly lagging revenue. No revisions were made to the earnings forecast or dividend forecast during the quarter.

Shareholder Returns

The full-year dividend forecast is ¥35.00 per share, implying a payout ratio of approximately 48.1% against forecast EPS of ¥72.72. No revision was made to the dividend forecast during the quarter. Treasury shares totaled 804 thousand shares (approximately 2.7% of the 29,860 thousand issued shares), and no information regarding additional repurchases of treasury shares during the quarter was identified. Given the equity ratio of 74.6% and current ratio of approximately 320%, the Company retains sufficient financial capacity to support the current dividend plan.

Risk Factors

1. Decline in net income conversion efficiency due to the increase in the effective tax rate: The effective tax rate was 42.9%, up from 39.4% in the prior year, causing net income growth (+7.4%) to fall below pretax income growth (+13.8%).

2. Increase in inventories and asset efficiency: Inventories increased 5.9% year on year to ¥136.4B, and their ratio to total assets also increased. Inventory days were long at approximately 198 days, requiring monitoring of the risks of valuation losses and markdowns in the event of fluctuations in demand.

3. Decline in cash and deposits: Cash and deposits were ¥38.6B, down -33.5% from ¥58.0B in the same period of the prior year. Although liquidity itself remained high, with a current ratio of approximately 320%, the cash buffer has narrowed as funds were reallocated to inventories and investment securities.

Industry Benchmark (Reference; Compiled by the Company)

Industry Benchmark (retail)

Profitability and Returns

The Company’s operating margin and net profit margin both exceed the industry median, placing its profitability in a relatively favorable position within the industry.

Growth and Capital Efficiency

The revenue growth rate was slightly below the industry median, placing the Company around the middle of the industry in terms of revenue growth.

Source: Compiled by the Company

Key Points from the Earnings Results

1. Revenue and profit both increased. While ordinary income growth (+10.8%) exceeded operating income growth (+5.6%), the increase in the effective tax rate caused net income growth (+7.4%) to remain below pretax income growth (+13.8%). The trend in the tax burden is a key point in assessing earnings quality.

2. Progress against the full-year plan was 17.6% for operating income and 17.2% for net income, below the simple 25% benchmark. The extent to which progress recovers in subsequent quarters will be a key focus.

3. While cash and deposits declined -33.5%, inventories (+5.9%) and investment securities (+23.7%) increased. Attention will focus on how the change in capital allocation affects future cash-generation capacity.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit five-year fade). It is not a forecast of the market share price or a recommendation to take any specific investment action.

Sensitivity: ¥943–¥997 at ±1% for the cost of equity, and ¥967–¥971 at ±0.1 for ω.

Notes:

• Because 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 relative to the full-year forecast).
• Because net assets include non-controlling interests, the theoretical value may be calculated somewhat on the high side.

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-06 / This value does not predict or guarantee future share prices)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release 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 discretion and responsibility, with consultation with a professional as necessary.

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