Record-high sales, but margins declined as costs and SG&A increased

Revenue in FY2026-H1 was ¥18,551.337 million, up 17.3% from ¥15,817.779 million in the year-earlier period. Same-store sales rose 6.6% year on year, while domestic total retail sales reached ¥3,499.8 million, a record high, indicating strong demand. By contrast, operating profit fell 16.0% to ¥1,424.494 million from ¥1,695.317 million, ordinary profit was ¥1,534.107 million, and interim net income attributable to owners of the parent was ¥984.043 million.

The deterioration in profitability is clear. The operating margin fell approximately 3.0 points from approximately 10.7% in the year-earlier period to 7.7%. The gross margin also declined 3.5 points year on year to 47.9%. Cost of sales was ¥9,663 million, or 125.6% of the year-earlier level, increasing faster than revenue. SG&A expenses also rose by ¥1,034 million year on year to ¥7,463 million. In addition to raw-material costs and the weaker yen, logistics, advertising and promotional expenses, and costs related to expanding sales locations put pressure on profit.

The company attributes the increase in revenue to same-store sales, new products, collaborations and the expansion of sales locations. However, its reporting segment consists of a single segment engaged in the manufacture and sale of ice cream products and related operations, and it does not disclose profit breakdowns by product, domestic and overseas operations, or retail and wholesale operations. Accordingly, in the third quarter, it will be important to see whether the company can provide additional disclosure on whether sales growth came from customer numbers, same-store sales, new products or wholesale operations, and whether the main driver of the margin decline was the cost-of-sales ratio or the SG&A ratio.

Next time, revenue, operating profit, gross margin and operating margin for the nine months ending in the third quarter should be compared with the year-earlier period to determine whether the combination of higher revenue and lower profit was a temporary first-half factor or has continued into the second half. In particular, whether the operating margin recovers from 7.7% and whether the decline in margins can be narrowed while maintaining positive same-store sales will be criteria for assessing the reliability of the full-year forecast.