BELLUNA CO.,LTD. FY2027 Q1 Earnings Report

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Executive Summary

Although revenue increased and operating income declined at the operating level during the quarter, ordinary income and net income increased due to improved non-operating income and expenses and the recognition of extraordinary income. Revenue was ¥52.19B (+2.7% YoY), while operating income was ¥1.24B (-21.8% YoY). The benefit of the gross margin improving to 63.6% (+1.3pt from 62.3% in the previous year) was outweighed by the SG&A ratio rising to 61.2% (+2.1pt), resulting in the operating margin declining to 2.4% (-0.7pt). Meanwhile, ordinary income increased to ¥1.37B (+8.8%) due to increases in dividend income and foreign exchange gains, while net income attributable to owners of the parent increased to ¥0.94B (+27.2%), also reflecting the recognition of gains on sales of investment securities.

Factors Affecting Performance

【Revenue】Company-wide revenue was ¥52.19B, up +2.7% YoY. The Property Business was the primary growth driver at ¥10.23B (+23.9%), while Gourmet at ¥6.56B (+6.4%) and Database Utilization at ¥5.40B (+6.3%) also contributed to revenue growth. In contrast, Cosmetics and Health Foods declined sharply to ¥2.44B (-15.0%), while Kimono-related, Apparel and General Merchandise, and Nurse-related also posted slight declines of -1.7%, -0.9%, and -0.9%, respectively, resulting in a mixed structure of growth segments and structurally contracting segments. By revenue composition, Apparel and General Merchandise was the largest at 37.6%, followed by Property at 19.6% and Gourmet at 12.6%.

【Profit and Loss】On the earnings front, the Database Utilization Business was the main pillar of company-wide profit, generating operating income of ¥1.12B and an operating margin of 20.7%. In contrast, Kimono-related posted an operating loss of ¥1.07B and a margin of -31.0%, significantly weighing on company-wide earnings. Although the Property Business recorded higher revenue, operating income deteriorated to ¥0.54B (-35.4%), potentially reflecting the project mix and timing differences in deliveries. Non-operating income was supported by dividend income of ¥0.26B and foreign exchange gains of ¥0.12B, absorbing the increase in interest expenses to ¥0.49B from ¥0.29B in the previous year and allowing ordinary income to increase +8.8%. In addition, gains on sales of investment securities of ¥0.08B, a temporary factor, contributed to a +27.2% increase in net income. In conclusion, the Company is in a phase of higher revenue but lower operating income, while ordinary income and net income have turned to growth; earnings quality has improved at the final stages despite ongoing issues at the operating level.

Segment Analysis

By segment, the Database Utilization Business is the core business in both profitability and scale, with revenue of ¥5.40B (+6.3%) and operating income of ¥1.12B (operating margin: 20.7%). The Property Business grew substantially, with revenue of ¥10.23B (+23.9%), but operating income remained at ¥0.54B (-35.4%), highlighting the divergence between revenue growth and profitability. Kimono-related continued to post a structural deficit, with revenue of ¥3.46B (-1.7%) and an operating loss of ¥1.07B (operating margin: -31.0%). Cosmetics and Health Foods also struggled, with revenue of ¥2.44B (-15.0%) and an operating loss of ¥0.04B, falling into the red from a profit in the previous year. Apparel and General Merchandise was nearly flat, with revenue of ¥19.62B (-0.9%), while operating income improved to ¥0.42B (+23.0%). Nurse-related remained stable, with revenue of ¥3.61B (-0.9%) and operating income of ¥0.23B (+1.3%). Gourmet showed an improving trend despite low profitability, with revenue of ¥6.56B (+6.4%) and operating income of ¥0.06B (+46.2%). Overall, the structure is clear: Database Utilization drives profit, while Kimono-related and Cosmetics and Health Foods weigh on company-wide earnings.

Key Financial Indicators

【Profitability】The operating margin declined to 2.4% from 3.1% in the same period of the previous year, as the SG&A ratio of 61.2% (+2.1pt) exceeded the benefit of the gross margin improving to 63.6% (+1.3pt). The net margin, on an attributable-to-owners-of-the-parent basis, improved to 1.8% from 1.5%, as non-operating income and extraordinary income offset the slowdown in the core business. 【Cash Quality】Non-operating income of ¥0.94B represented only 1.8% of revenue, indicating no excessive dependence; however, extraordinary income of ¥0.08B was a temporary factor resulting from gains on sales of investment securities. Inventories were ¥25.37B, up +7.7% from ¥23.56B in the previous year, accumulating faster than the +2.7% revenue growth rate, requiring monitoring of inventory efficiency. 【Investment Efficiency】ROE, on an attributable-to-owners-of-the-parent basis, remained low at 0.6%, with the decline in the operating margin directly reflected in capital efficiency. Total assets were ¥344.40B (+1.3% YoY), while net assets were ¥151.07B (-0.3% YoY), remaining broadly flat. 【Financial Soundness】The equity ratio declined to 43.9% from 44.5% in the previous year, a decrease of 0.6pt. In addition to long-term borrowings of ¥125.58B, short-term borrowings increased to ¥24.51B (+31.4% YoY), and interest expenses expanded to ¥0.49B (+71.8% YoY). Cash and deposits were substantial at ¥36.11B, limiting short-term liquidity constraints, although the rising interest burden warrants close monitoring for its impact on profitability.

Cash Flow Analysis

Although detailed disclosure of the cash flow statement is unavailable, funding trends can be inferred from changes in the balance sheet. Cash and deposits increased +4.6% YoY to ¥36.11B, while short-term borrowings increased +31.4% to ¥24.51B (+¥5.86B), indicating that working capital requirements are being funded through short-term borrowings. Long-term borrowings declined slightly by -1.3% YoY to ¥125.58B, indicating a shift toward short-term interest-bearing debt. Trade receivables increased +3.7% YoY to ¥11.94B, while inventories increased +7.7% to ¥25.37B, expanding the working capital burden. Meanwhile, contract liabilities, or advances received, rose substantially by +64.3% YoY to ¥4.92B, indicating a positive funding factor from advance collections in certain areas. Overall, the somewhat greater reliance on short-term borrowings than on cash generation from the core business is an important consideration when evaluating future funding efficiency.

Earnings Quality

The current period’s earnings reflect a structure in which recurring non-operating income and limited extraordinary items offset the decline in the core operating margin (-0.7pt). Non-operating income of ¥0.94B represented only 1.8% of revenue, with dividend income of ¥0.26B and foreign exchange gains of ¥0.12B as the principal components; dependence on non-recurring factors was not high. Extraordinary income was ¥0.08B, comprising gains on sales of investment securities, a temporary factor, while extraordinary losses were ¥0.01B, including losses on disposal of fixed assets. Even on a net basis, the impact was minor, and the increase in net income was primarily attributable to improvement at the ordinary income level. The difference between ordinary income of ¥1.37B and profit before tax of ¥1.44B was small and reflected the net extraordinary result. The effective tax rate was approximately 34.5% (income taxes of ¥0.50B / profit before tax of ¥1.44B), with no significant deviation from the previous year and no distortion apparent in the tax burden structure. However, interest expenses increased +71.8% to ¥0.49B from ¥0.29B in the previous year. Under the low operating margin, the growing interest burden is gradually affecting earnings quality. In addition, the fact that inventories and trade receivables are increasing faster than revenue is an important factor to consider when evaluating the cash backing of earnings.

Earnings Forecast and Guidance

Progress against the full-year plan was 23.6% for revenue at ¥5.219B / ¥221.00B, 7.1% for operating income at ¥1.24B / ¥17.50B, 8.3% for ordinary income at ¥1.37B / ¥16.50B, and 7.8% for net income attributable to owners of the parent at ¥0.94B / ¥12.00B. Compared with the benchmark of 25% for evenly distributed quarterly progress, revenue was generally within an acceptable range, while each profit level was substantially below the benchmark, indicating progress weighted toward the second half. The timing of project recognition in the Property Business and the concentration of SG&A expenses at the beginning of the fiscal year may be contributing factors. As of Q1, no revisions had been made to the earnings forecast or dividend forecast.

Shareholder Returns

The annual dividend forecast remains unchanged at ¥39.00, with no revision as of the current quarter. Based on the full-year EPS forecast of ¥124.69, the payout ratio is approximately 31.3% (¥39 / ¥124.69), a conservative level that returns a certain portion of earnings growth to shareholders while securing retained earnings. Given the substantial liquidity represented by cash and deposits of ¥36.11B, there is limited concern regarding dividend sustainability as long as the planned earnings level is achieved. However, if the increase in interest expenses and expansion of working capital continue, the resulting decline in free cash flow flexibility could affect the capacity for shareholder returns and warrants monitoring.

Risk Factors

1. Structural deficit in the Kimono-related Business: Against revenue of ¥3.46B, the segment posted an operating loss of ¥1.07B and a margin of -31.0%. Improvement from the same period of the previous year was limited (profit YoY +5.9%), and the segment continues to weigh on company-wide earnings.

2. Increase in interest burden: Interest expenses increased +71.8% to ¥0.49B from ¥0.29B in the previous year, while short-term borrowings expanded +31.4% to ¥24.51B. Given the low operating margin of 2.4%, earnings volatility risk during a period of rising interest rates is relatively significant.

3. Accumulation of working capital: Inventories increased +7.7% YoY to ¥25.37B and trade receivables increased +3.7% to ¥11.94B, both faster than the +2.7% revenue growth rate. This could lead to the risk of inventory valuation losses and a slowdown in cash-generation capacity.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (retail)

Profitability and Returns

Both the operating margin and net margin were below the industry median, placing the Company at a relatively low level within the industry.

Growth and Capital Efficiency

The revenue growth rate was also below the industry median, indicating that top-line growth was relatively moderate compared with peers.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. Although the gross margin improved to 63.6% (+1.3pt), the SG&A ratio rose +2.1pt to 61.2%, exceeding the improvement and causing the operating margin to decline to 2.4%. Controlling the cost structure will be key to restoring profitability.

2. Profitability disparities among segments have widened. The Database Utilization Business, with a margin of 20.7%, is driving company-wide earnings, while Kimono-related, with a margin of -31.0%, and Cosmetics and Health Foods, with a margin of -1.8%, are weighing on earnings. Changes in the business portfolio mix could determine the Company’s future overall margin.

3. Progress against the full-year plan was 23.6% for revenue, compared with 7.1% for operating income and 7.8% for net income, indicating slower progress on earnings. The extent to which the planned pace of profit recognition in the second half can be achieved will be the key focus going forward.

Theoretical Share Price (Reference Value)

This is a mechanically calculated reference range based solely on publicly available data using a residual income model (Ohlson-type, with an explicit 5-year fade period). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥1,462–¥1,547 at ±1% for the cost of equity, and ¥1,501–¥1,505 at ±0.1 for ω.

Notes:

• Since forecast ROE is below the cost of equity, the theoretical value is below book value per share.
• Net assets as of the end of the quarter 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 higher.

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

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This report is an earnings analysis document automatically generated by AI through analysis of XBRL earnings summary data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting professionals as necessary.

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