SAC'S BAR HOLDINGS INC. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥24.53B
• Operating Income: ¥1.37B
• Net Income: ¥1.23B
• EPS: ¥29.63

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

Sacs Bar Holdings (99900) reported FY2026 Q2 consolidated results under JGAAP with revenue of ¥24.531bn, declining 3.9% year over year amid a weaker top line in its specialty retail footprint. Gross profit was ¥12.683bn, implying a robust gross margin of 51.7%, which suggests continued merchandising strength and controlled procurement, even as sales softened. Operating income fell 28.4% YoY to ¥1.368bn, indicating margin compression at the operating level due to higher selling, general and administrative costs and/or reduced operating leverage on lower sales volume. Ordinary income came in at ¥1.418bn and net income was ¥0.860bn (-30.1% YoY), with EPS of ¥29.63. DuPont decomposition points to an ROE of 2.91%, driven by a modest net margin of 3.51%, asset turnover of 0.609x, and low financial leverage of 1.36x; this profile indicates conservative balance sheet risk but subdued equity productivity. Liquidity remains strong: the current ratio is 350% and the quick ratio is 159%, supported by sizeable working capital of ¥16.3bn and a large inventory base (¥12.485bn). The capital structure is conservative with total liabilities of ¥10.772bn versus equity of ¥29.525bn (D/E ~0.36x), providing balance sheet resilience despite earnings volatility. Operating cash flow was solid at ¥1.988bn, yielding an OCF/Net Income ratio of 2.31x, which indicates high cash conversion in the period and underpins earnings quality. Interest expense is minimal at ¥11.5m with an interest coverage of roughly 119x, highlighting negligible financial strain from borrowing costs. Based on net income (¥0.860bn) and reported income taxes (¥0.696bn), we infer pre-tax income around ¥1.556bn, implying an estimated effective tax rate near 45% for the period; this contrasts with a mechanically reported 0% rate and underscores data limitations around tax disclosures. The equity ratio is shown as 0.0% in the dataset but should not be interpreted as zero; with equity of ¥29.525bn and assets of ¥40.295bn, the implied equity ratio is approximately 73%, reflecting very strong solvency. Free cash flow is shown as 0 due to the absence of investing cash flow disclosure; therefore, true FCF cannot be assessed from the provided data, but OCF alone appears healthy. Dividend information (DPS and payout) is not disclosed in the dataset despite placeholders showing zero; thus, dividend policy and distributions for the period cannot be concluded from this data alone. Inventory intensity remains high for the business model, which can weigh on asset turnover and tie up cash, but the balance sheet suggests ample headroom to manage seasonal needs. Overall, the quarter reflects resilient gross economics and excellent liquidity, offset by weaker operating leverage and lower ROE tied to a conservative capital structure and softer demand. The outlook hinges on stabilizing revenue run-rate, normalizing SG&A, and inventory discipline to recover operating margin. Key data gaps (equity ratio, cash and equivalents, investing cash flows, share count, dividend) limit precision of capital efficiency and shareholder return analysis, but the available figures support an assessment of solid cash generation and low financial risk.

Profitability Analysis

ROE of 2.91% is explained by a net profit margin of 3.51%, asset turnover of 0.609x, and financial leverage of 1.36x. The low leverage amplifies balance-sheet safety but limits ROE; improvement will likely require higher margins and/or better turnover. Operating margin compressed materially as operating income fell 28.4% YoY on a 3.9% revenue decline, indicating unfavorable operating leverage and cost absorption. Gross margin remained strong at 51.7%, implying pricing/mix resilience and sourcing discipline, but the drop from gross profit to operating income suggests SG&A pressure (e.g., labor, rents, logistics, marketing). EBITDA was ¥1.661bn (6.8% margin), providing substantial coverage over interest expense (119x at the operating level), underscoring robust core cash earnings. Ordinary income exceeded operating income by ¥50m, implying positive non-operating balance (e.g., financial income or equity method gains). The relationship between net income (¥860m) and taxes (¥696m) implies estimated pre-tax income of ~¥1.556bn and an effective tax rate near ~45%, which likely includes discrete items; this level of taxation weighed on net margin. Overall, profitability quality at the gross level is solid, but operating leverage is currently unfavorable, and high taxes further compress bottom-line returns.

Growth Assessment

Revenue decreased 3.9% YoY to ¥24.531bn, pointing to softer consumer demand and/or store traffic in the specialty retail segment. The sharper decline in operating income (-28.4% YoY) relative to sales suggests deleveraging on fixed costs and possible cost inflation. Net income declined 30.1% YoY, further pressured by a high effective tax burden. Sustainability of revenue will depend on merchandising relevance, store productivity, and e-commerce traction; the high gross margin indicates pricing power but not enough volume to offset cost structure. Profit quality is supported by strong OCF (¥1.988bn), implying that earnings are cash-backed this period. Near-term outlook hinges on inventory normalization and SG&A control to restore operating margin, alongside initiatives to stabilize same-store sales and optimize product mix. With low financial leverage, the company has balance sheet capacity to invest in growth or efficiencies, but the absence of investing cash flow disclosure limits visibility into current reinvestment intensity.

Financial Health

Total assets were ¥40.295bn and total equity ¥29.525bn, implying an equity ratio of ~73% (despite the dataset showing 0.0% due to non-disclosure), highlighting strong solvency. Total liabilities were ¥10.772bn, with current liabilities of ¥6.517bn. Liquidity is robust: current ratio 350% and quick ratio 159%, backed by working capital of ¥16.304bn. Inventories are sizable at ¥12.485bn (~31% of assets and ~55% of current assets), reflecting the retail model; inventory management is a key driver of cash and returns. Debt-to-equity is ~0.36x (using total liabilities as a proxy), indicating a conservative capital structure. Interest expense is only ¥11.5m, and interest coverage is ~119x on operating income, demonstrating minimal refinancing risk. Cash and equivalents are not disclosed in the dataset, so absolute liquidity buffers cannot be quantified; however, the strong working capital position suggests resilience.

Cash Flow Quality

Operating cash flow of ¥1.988bn exceeds net income of ¥0.860bn, yielding an OCF/NI ratio of 2.31x, indicative of strong earnings quality for the period. This implies working capital release and/or non-cash charges (e.g., D&A ¥293m) supported cash generation. Free cash flow cannot be determined because investing cash flow is not disclosed (the reported 0 indicates non-disclosure, not zero); hence, FCF coverage metrics should not be inferred. Financing cash flow was an outflow of ¥0.972bn, likely reflecting dividends, share repurchases, or debt repayments, but details are not provided. Working capital remains the key swing factor given inventories of ¥12.485bn; disciplined purchasing and clearance will be critical to sustaining OCF if sales remain soft.

Dividend Sustainability

Dividend per share and payout ratio are not disclosed in the dataset (zeros are placeholders), so current distributions cannot be assessed directly. With net income of ¥860m and strong OCF of ¥1.988bn, internal capacity to fund dividends appears supported in principle, subject to capex and inventory needs. However, the absence of investing cash flow and actual cash balance disclosures prevents a robust FCF coverage analysis. The conservative balance sheet (D/E ~0.36x) provides flexibility to maintain or adjust distributions as needed, but specific policy signals are unavailable from the provided data.

Risk Assessment

Business Risks:

• Demand volatility in discretionary accessories and bags impacting same-store sales.
• Operating deleverage on fixed costs when sales soften, compressing operating margin.
• High inventory intensity (~¥12.5bn) increasing markdown risk and cash tie-up.
• Input cost and logistics inflation pressuring SG&A and gross-to-operating margin conversion.
• Channel mix shifts to e-commerce that may require incremental investment and margin trade-offs.
• Competitive pressures from fast fashion and specialty brands affecting pricing power.

Financial Risks:

• Potential working capital swings driven by inventory cycles affecting OCF.
• Limited visibility on cash and investing cash flows complicates liquidity assessment.
• Tax rate volatility (estimated ~45% this period) reducing net profitability.
• Concentration of assets in inventories increases exposure to obsolescence risk.

Key Concerns:

• Operating income declined 28.4% YoY on a modest 3.9% sales drop, signaling unfavorable operating leverage.
• ROE at 2.91% is low despite strong solvency, reflecting subdued profitability and asset turnover.
• Data gaps (cash, investing CF, dividends) limit assessment of FCF and shareholder returns.
• Inventory remains large relative to sales and assets, a key determinant of cash flow stability.

Investment Implications

Key Takeaways:

• Top-line contracted 3.9% YoY, with sharper declines in operating and net income.
• Gross margin is strong at 51.7%, but SG&A pressures reduced operating margin.
• ROE of 2.91% reflects low leverage and modest profitability; improving turnover and margin is essential.
• Liquidity and solvency are very strong (current ratio 350%, implied equity ratio ~73%).
• OCF of ¥1.988bn (>2x net income) indicates high earnings cash conversion this period.
• Interest burden is negligible (119x coverage), limiting financial risk.
• Visibility into capex/FCF and dividend policy is limited due to non-disclosures.

Metrics to Watch:

• Same-store sales growth and total revenue trajectory in H2.
• Operating margin recovery and SG&A ratio trends.
• Inventory turns and markdown rates; OCF sustainability.
• Effective tax rate normalization and drivers of non-operating items.
• Capex and investing cash flows to gauge reinvestment and true FCF.
• Cash and equivalents balance to corroborate liquidity buffers.

Relative Positioning: Within domestic specialty retail peers, Sacs Bar exhibits stronger-than-average liquidity and low leverage, a high gross margin profile, but weaker ROE due to modest asset turnover and margin compression in the current period; near-term performance hinges on inventory discipline and cost control to restore operating leverage.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis