Improving the profitability of existing businesses and securing new sources of revenue

「As a result, performance for the interim accounting period consisted of revenue of ¥1,721 million, down 7.5% year on year, operating profit of ¥33 million, down 63.1%, and ordinary profit of ¥35 million, down 62.3%. In addition, the Company recorded an impairment loss of ¥3 million in connection with the closure of a directly operated store following the expiration of its fixed-term building lease, as well as an adjustment to income taxes of ¥43 million due to the reversal of deferred tax assets, resulting in an interim net loss of ¥15 million, compared with interim net profit of ¥82 million in the same period of the previous year.」

「Net sales were ¥878 million, down 7.0% year on year; operating income was ¥24 million, down 40.3%; ordinary income was ¥25 million, down 38.8%; and quarterly net income was ¥23 million, down 40.0%.」

「As a result, the Company's results for the fiscal year were net sales of ¥3,656 million (down 0.1% year on year), operating income of ¥126 million (down 12.7%), ordinary income of ¥131 million (down 8.0%), and net income of ¥87 million (down 39.2%).」

「As a result, for the interim accounting period, net sales were ¥1,862 million (down 2.3% year on year), operating income was ¥89 million (down 9.3%), and ordinary income was ¥93 million (down 5.2%). In addition, the Company recorded an impairment loss of ¥9 million due mainly to the closure of directly operated stores following the expiry of their fixed-term building lease agreements, resulting in interim net income of ¥82 million (down 14.0%).」

「Although purchase prices increased, the Company reviewed the materials used and restrained selling, general and administrative expenses. As a result, operating income was ¥144 million (up 8.1% year on year) and ordinary income was ¥142 million (up 3.4%).」

「As a result, for the interim accounting period, net sales were ¥1,906 million (up 2.7% year on year), operating income was ¥98 million (up 17.8%), ordinary income was ¥98 million (up 9.9%), and interim net income was ¥95 million (up 16.8%). Although the fiscal year-end was changed in the fiscal year ending February 2019, the Company achieved record interim-period profit since its stock market listing.」

「As a result, for the first quarter cumulative period, net sales were ¥943 million (down 0.0% year on year), operating income was ¥51 million (up 40.1%), ordinary income was ¥49 million (up 25.0%), and quarterly net income was ¥48 million (up 25.6%). Although the fiscal year-end was changed in the fiscal year ending February 2019, the Company achieved record first-quarter cumulative-period profit since its stock market listing.」

「Although purchase prices increased, the Company reviewed the materials used, optimized labor costs through thorough employee shift management at its stores, and promoted reductions in selling, general and administrative expenses through operational improvements. As a result, profitability improved substantially from the same period of the previous year, with operating income of ¥133 million (operating loss of ¥259 million in the previous fiscal year) and ordinary income of ¥138 million (ordinary loss of ¥188 million in the previous fiscal year).」

「As a result, revenue for the 9 months ended was ¥2,703 million, up 20.2%. In terms of profit, despite higher procurement prices, continued reviews of materials used and other measures led to substantial improvement from the same period of the previous year, resulting in operating profit of ¥96 million (operating loss of ¥229 million in the same period of the previous year), ordinary profit of ¥101 million (ordinary loss of ¥166 million), and quarterly net profit of ¥90 million (quarterly net loss of ¥190 million), representing higher revenue and higher profit.」

「In terms of profit, although procurement prices rose, substantial improvement from the same period of the previous year through reviews of materials used and selling, general and administrative expenses resulted in operating profit of ¥83 million (operating loss of ¥163 million in the same period of the previous year) and ordinary profit of ¥89 million (ordinary loss of ¥103 million). We also recorded an impairment loss of ¥5 million on store assets whose profitability had declined as a special loss. Quarterly net profit was ¥81 million (quarterly net loss of ¥108 million), and, following the first quarter, we achieved a new record for quarterly profit since listing for the 6 months ended, although the fiscal year-end was changed in the fiscal year ended February 2019.」

「In terms of profit, although procurement prices rose, substantial improvement from the same period of the previous year through a review of materials used and other measures resulted in operating profit of ¥36 million (operating loss of ¥88 million in the same period of the previous year), ordinary profit of ¥39 million (ordinary loss of ¥40 million), and quarterly net profit of ¥38 million (quarterly net loss of ¥41 million). Although the fiscal year-end was changed in the fiscal year ended February 2019, we also achieved the highest profit for a first quarter since listing.」

「In terms of profit, labour costs were optimised through thorough employee shift management at stores, executive compensation reductions continued, expenses were reduced through reviews of various contracts, and selling, general and administrative expenses were reduced through operational improvements. As a result, although we remained in the red, the operating loss narrowed substantially to ¥259 million from ¥685 million in the previous fiscal year.」

「Although the sharp increase in infections caused by variants had a significant impact on customer visits, continued cost reductions from the previous fiscal year and progress in closing unprofitable stores improved the operating loss by ¥314 million from the operating loss of ¥544 million in the same period of the previous year, resulting in an operating loss of ¥229 million for the 9 months ended.」

「Although the sharp increase in infections caused by variants had a significant impact on customer visits, continued cost reductions from the previous fiscal year and progress in closing unprofitable stores improved the operating loss by ¥244 million from the operating loss of ¥408 million in the same period of the previous year, resulting in an operating loss of ¥163 million for the 6 months ended.」

「Although we recorded an operating loss, continued cost reductions from the previous fiscal year and the effects of closing unprofitable stores improved the operating loss by ¥121 million from ¥210 million in the same period of the previous year, resulting in an operating loss of ¥88 million for the 3 months ended.」

「Although the operating loss was ¥685 million (operating loss of ¥744 million in the previous fiscal year), recording ¥748 million in subsidies related to reduced operating hours requested by the national and local governments as non-operating income resulted in ordinary profit of ¥59 million (ordinary loss of ¥620 million in the previous fiscal year).」

「Although the state of emergency and other measures had a significant impact on customer visits, continued cost reductions from the previous fiscal year and progress in closing unprofitable stores improved the operating loss by ¥28 million from the operating loss of ¥573 million in the same period of the previous year, resulting in an operating loss of ¥544 million for the 9 months ended. In terms of ordinary profit and quarterly net profit, we recorded ¥664 million in subsidies and other payments from local governments related to efforts to prevent the spread of infection through reduced operating hours as non-operating income. As a result, ordinary profit was ¥116 million (ordinary loss of ¥571 million in the same period of the previous year) and quarterly net profit was ¥111 million (quarterly net loss of ¥601 million).」

「Although the state of emergency and other measures had a significant impact on customer visits, continued cost reductions from the previous fiscal year and progress in closing unprofitable stores improved the operating loss by ¥32 million from the operating loss of ¥441 million in the same period of the previous year, resulting in an operating loss of ¥408 million for the 6 months ended.」

「Although the state of emergency and other measures had a significant impact on customer visits, continued cost reductions from the previous fiscal year and progress in closing unprofitable stores improved the operating loss by ¥112 million from the operating loss of ¥322 million in the same period of the previous year, resulting in an operating loss of ¥210 million for the 3 months ended. In terms of ordinary profit and quarterly net profit, we recorded ¥238 million in subsidies and other payments from local governments related to efforts to prevent the spread of infection through reduced operating hours as non-operating income. As a result, ordinary profit was ¥14 million (ordinary loss of ¥323 million in the same period of the previous year) and quarterly net profit was ¥12 million (quarterly net loss of ¥348 million), returning to profitability and improving significantly year on year.」

「As a result, revenue for the fiscal year was ¥2,315 million, down 53.0% year on year. In terms of profit, although we promoted the optimisation of selling, general and administrative expenses through labour-cost reductions achieved by thorough employee shift management at stores, expense reductions through reviews of various contracts, and head-office expense reductions through operational improvements implemented since previous fiscal years, the impact of the spread of the above-mentioned infectious disease on food-service revenue resulted in an operating loss of ¥744 million (operating profit of ¥8 million in the previous fiscal year).」

「As a result, revenue for the 9 months ended was ¥1,717 million, down 52.9% year on year. In terms of profit, although we promoted the optimisation of selling, general and administrative expenses through labour-cost reductions achieved by thorough employee shift management at stores, expense reductions through reviews of various contracts, and head-office expense reductions through operational improvements implemented since previous fiscal years, the impact of the spread of the above-mentioned infectious disease on food-service revenue resulted in an operating loss of ¥573 million (operating loss of ¥36 million in the same period of the previous year) and an ordinary loss of ¥571 million (ordinary loss of ¥30 million).」

「As a result, revenue for the 6 months ended was ¥1,002 million, down 59.8% year on year. In terms of profit, although we promoted the optimisation of selling, general and administrative expenses through labour-cost reductions achieved by thorough employee shift management at stores, expense reductions through reviews of various contracts, and head-office expense reductions through operational improvements implemented since previous fiscal years, the impact of the spread of the above-mentioned infectious disease on food-service revenue resulted in an operating loss of ¥441 million (operating profit of ¥17 million in the same period of the previous year) and an ordinary loss of ¥444 million (ordinary profit of ¥24 million).」

「As a result, revenue for the 3 months ended was ¥411 million, down 65.5% year on year. In terms of profit, although reductions in selling, general and administrative expenses, including head-office expenses, progressed steadily through improvements to head-office and sales administration functions made since previous fiscal years, sluggish food-service revenue, mainly due to the impact of the above-mentioned infectious disease, resulted in an operating loss of ¥322 million (operating loss of ¥10 million in the same period of the previous year) and an ordinary loss of ¥323 million (ordinary loss of ¥22 million).」

「In addition to strong performance in the content planning services business, reductions in selling, general and administrative expenses progressed steadily, including continued reductions in head-office expenses resulting from efforts since previous fiscal years to improve head-office and sales administration functions. As a result, we recorded operating profit of ¥8 million and returned to operating profitability for the first time in 4 fiscal years, since the fiscal year ended March 2016.」

「As a result, revenue for the 9 months ended was ¥3,649 million. In terms of profit, sluggish growth in food-service revenue, costs related to opening SQUARE ENIX CAFE Osaka, and the fact that Collabo_Index, a new format specialising in collaboration events that began operations in April 2019, was still in its introductory and experimental stages and had not yet contributed to profit resulted in an operating loss of ¥36 million, an ordinary loss of ¥30 million and a quarterly net loss of ¥35 million.」

「In the previous fiscal year, we recorded an operating loss of ¥12 million, an ordinary loss of ¥16 million and net profit of ¥21 million. For the 6 months ended, we recorded operating profit of ¥17 million, ordinary profit of ¥24 million and quarterly net profit of ¥16 million, while operating cash flow was positive at ¥62 million.」

「In food services, existing stores performed steadily as the effects of initiatives to improve customer attraction became established, including efforts through various restaurant media to secure dinner-time reservations, which began in the previous fiscal year, and measures to improve QSCA at stores, together with seasonal initiatives such as limited-time menus. In terms of profit, although cost savings from integrating distribution functions into the purchasing and logistics system of our parent company, DD Holdings Co., Ltd., and from group-wide recruitment were realised, the initial investment costs associated with converting to the new format and payment fees related to the issuance of new shares through a third-party allotment (debt-equity swap) and the issuance of the 5th Series Stock Acquisition Rights in May 2019 resulted in an operating loss of ¥10 million, an ordinary loss of ¥22 million and a quarterly net loss of ¥24 million.」

「We believe that increasing cash flow through higher profitability in our existing businesses is essential for future growth and business expansion. In addition to improving customer attraction by strengthening our proprietary branding and marketing initiatives, we will improve each store's earnings structure and establish a highly profitable business base by reducing costs through reform of our distribution structure, making maximum use of the scale benefits of our group, and using management resources such as stores and personnel more efficiently.」

「As a result, for the 9 months ended, revenue was ¥3,654 million, down 6.6% year on year; operating loss was ¥42 million (operating loss of ¥77 million in the same period of the previous year); ordinary loss was ¥42 million (ordinary loss of ¥82 million); and quarterly net profit was ¥2 million (quarterly net loss of ¥367 million).」

「As a result, for the 6 months ended, revenue was ¥2,462 million, down 6.1% year on year; operating loss was ¥61 million (operating loss of ¥82 million in the same period of the previous year); ordinary loss was ¥60 million (ordinary loss of ¥75 million); and quarterly net loss was ¥14 million (quarterly net loss of ¥348 million).」

「Although some sales initiatives, including collaboration events featuring anime characters, produced results, customer traffic at existing stores remained difficult. In addition, operating restrictions were imposed at stores scheduled for strategic closure, and the number of stores declined. As a result, food-service revenue was ¥1,097 million, down 9.7% year on year.」

「We regard operating profit as an important management indicator for objectively assessing progress toward our management policies, business strategies and management targets. Although we recorded an operating loss of ¥114 million for the fiscal year, we believe that the highest priority is to restore performance quickly and secure stable operating profit by implementing the measures described above.」

「As a result, for the 9 months ended, revenue was ¥3,911 million, down 7.2% year on year; operating loss was ¥80 million (operating loss of ¥43 million in the same period of the previous year); ordinary loss was ¥82 million (ordinary loss of ¥35 million); and quarterly net loss was ¥367 million (quarterly net loss of ¥163 million).」

「As a result, for the 6 months ended, revenue was ¥2,622 million, down 7.7% year on year; operating loss was ¥86 million (operating loss of ¥37 million in the same period of the previous year); ordinary loss was ¥75 million (ordinary loss of ¥30 million); and quarterly net loss was ¥348 million (quarterly net loss of ¥26 million).」

「As a result, revenue for the 3 months ended was ¥1,252 million, down 9.3% year on year. In terms of profit, despite cost reductions including a review of promotional expenses, lower revenue caused by store closures and temporary closures associated with format changes, together with the costs of those format changes and organisational restructuring, resulted in an operating loss of ¥75 million (operating loss of ¥25 million in the same period of the previous year), an ordinary loss of ¥65 million (ordinary loss of ¥19 million), and a quarterly net loss of ¥44 million (quarterly net loss of ¥16 million).」

「As a result, for the fiscal year, revenue was ¥5,505 million, up 4.4% year on year; operating loss was ¥58 million (operating profit of ¥105 million in the previous fiscal year); ordinary loss was ¥41 million (ordinary profit of ¥130 million); and net loss was ¥171 million (net profit of ¥12 million).」

「As a result, revenue for the 9 months ended was ¥4,213 million, up 7.3% year on year. In terms of profit, sluggish sales at existing stores resulted in an operating loss of ¥43 million (operating profit of ¥95 million in the same period of the previous year) and an ordinary loss of ¥35 million (ordinary profit of ¥115 million). In addition, we recorded an extraordinary loss of ¥94 million related to impairment of fixed assets at certain stores whose profitability had declined, resulting in a quarterly net loss of ¥163 million (quarterly net profit of ¥67 million).」

「In terms of profit, although we implemented thorough cost controls, sluggish sales at existing stores and the closure of 3 stores due to the redevelopment of the commercial facilities in which they were located resulted in an operating loss of ¥37 million (operating profit of ¥48 million in the same period of the previous year), an ordinary loss of ¥30 million (ordinary profit of ¥61 million), and a quarterly net loss of ¥26 million (quarterly net profit of ¥33 million).」

「In terms of profit, lower sales at existing stores and the cost burden associated with new openings, including large-format stores, resulted in an operating loss of ¥25 million (operating loss of ¥9 million in the same period of the previous year), an ordinary loss of ¥19 million (ordinary loss of ¥5 million), and a quarterly net loss of ¥16 million (quarterly net loss of ¥5 million).」

「We believe that increasing cash flow through greater profitability in our existing businesses is essential. By actively working to improve customer traffic through stronger branding and marketing, and to maximize returns on investments in stores and personnel, we will improve the earnings structure of each store and build a more profitable business base.」