Will the return to operating profitability despite lower revenue continue in FY2027-H1?

Q1 revenue was ¥48.718 million, down ¥18.551 million, or 27.6%, from ¥67.269 million in the prior-year quarter. Meanwhile, operating profit turned positive at ¥2.560 million, compared with an operating loss of ¥1.183 million in the prior-year quarter. The operating margin was approximately 5.3%, an improvement of approximately 7.0 percentage points from approximately negative 1.8% in the prior-year quarter. Securing operating profitability while revenue contracted is an important change to monitor for recurrence in H1.

The company said it continued issuing catalogs with a narrower selection in its mail-order retail business and reduced expenses. However, it did not provide a breakdown of quantitative factors such as the amount of expense reductions, catalog circulation, order volume, customer numbers or average spend per customer. Accordingly, based on the Q1 disclosure alone, it is not possible to determine whether the ¥2.560 million operating profit reflects structural cost improvements or temporary expense restraint in response to the smaller revenue base.

The full-year revenue and operating profit forecasts remain undecided because the effects of new M&A, real estate sales and business restructuring cannot be reasonably calculated. Therefore, Q1 revenue of ¥48.718 million cannot be converted into a progress rate against the full-year plan, and there is still no benchmark for measuring the distance from the company’s plan in H1. In H1, year-on-year revenue, cumulative operating profit and operating margin should be reviewed alongside the prior-year figures.

The key points will be whether the operating margin does not decline significantly from approximately 5.3% in Q1 and whether the rate of revenue decline narrows from negative 27.6%. If the operating margin can be maintained without a recovery in revenue, the possibility remains that the mail-order sales base is weakening. H1 should therefore also be monitored for additional disclosure of the monetary impact of expense reductions and sales volumes.