Assessing the initial signs of recovery in FY2027-Q1 after a sharp profit decline in FY2026

Revenue for FY2026 as a whole was ¥14,568 million, down 4.2% from ¥15,211 million in the previous fiscal year. Operating profit, however, fell 53.9% from ¥425.6 million to ¥196.1 million, and the operating margin declined from approximately 2.8% to approximately 1.3%. Profit declined by more than the contraction in revenue, indicating that the earnings level is being shaped not only by a simple recovery in demand, but also by the combination of product mix, sales channels, gross margin and advertising investment.

Profit before tax in FY2026 was ¥51.5 million, while profit attributable to owners of the parent was ¥214.3 million, showing a significant difference in how earnings appear from the operating stage through to the bottom line. Accordingly, the recovery in operating profit should be given the highest priority in FY2027-Q1. Even if net profit exceeds the year-earlier level, it will be difficult to conclude that the business's earning power has recovered if operating profit has not improved.

In FY2026-Q1, the comparable quarter from the previous year, revenue was ¥3,676 million, operating profit was ¥68 million, ordinary profit was ¥63 million, and profit attributable to owners of the parent was ¥35 million. In FY2027-Q1, the focus will be on whether these figures are exceeded and whether the operating margin rises above the 1.3% recorded for FY2026 as a whole. In particular, the sustainability of the recovery will differ depending on whether operating profit increases through gross-margin improvement even if revenue remains flat, or whether profit is secured solely through cuts in selling, general and administrative expenses.

The company's full-year FY2027 forecasts are revenue of ¥14,600 million, operating profit of ¥250 million, ordinary profit of ¥240 million, and profit attributable to owners of the parent of ¥160 million. Operating profit is expected to increase approximately 27% from the FY2026 actual result of ¥196.1 million, while revenue is expected to remain broadly flat from ¥14,568 million. In FY2027-Q1, it will be important to determine which businesses and expense items the company identifies as sources of recovery under this profit-growth plan, and whether it provides additional disclosure supporting the maintenance of its full-year forecasts.