FY2027-Q1 is broadly on track for the full-year plan, but profit growth is slowing relative to revenue growth

FY2026 full-year revenue was ¥234,704 million and operating profit was ¥27,144 million, while the FY2027 full-year plan calls for revenue of ¥253,000 million and operating profit of ¥29,400 million. The company plan assumes year-on-year growth of 7.8% in revenue and 8.3% in operating profit. Against this backdrop, FY2027-Q1 results were revenue of ¥61,354 million and operating profit of ¥7,953 million, representing progress rates toward the full-year plan of approximately 24.2% and 27.0%, respectively. Revenue was slightly below the 25% share implied by one quarter having elapsed, while operating profit was above it, indicating profit-led progress at the start of the year.

However, year on year, revenue increased 4.5%, operating profit 1.3%, ordinary profit 1.1%, and net income attributable to owners of the parent 3.4%. Compared with FY2026 full-year growth rates of 12.9% for revenue and 14.7% for operating profit, FY2027-Q1 maintained higher revenue and profit but showed a clear slowdown in growth. Operating profit of ¥7,953 million divided by revenue of ¥61,354 million gives an operating margin of approximately 13.0%, down approximately 0.4 percentage points from approximately 13.4% a year earlier. The full-year plan implies an operating margin of approximately 11.6%, so it will be necessary to monitor whether the high Q1 margin can be maintained through the first half and beyond.

The company has not disclosed separate first-half targets for revenue and operating profit for FY2027-H1. Accordingly, revenue of ¥126,500 million and operating profit of ¥14,700 million are merely mechanical benchmarks obtained by dividing the full-year plan by two. Seasonality must be taken into account, but based on Q1 results, Q2 alone would need to generate revenue of ¥65,146 million and operating profit of ¥6,747 million to reach those benchmarks. In the next earnings release, it will be important to distinguish whether Q2 revenue growth was achieved in apparel or general merchandise, and whether the margin gains seen in Q1 were eroded by promotional expenses, personnel expenses, or discounting.

External factors cited as continued downside risks to profit include negative real wage growth, weak personal consumption, higher personnel and logistics costs due to labor shortages, and higher import costs resulting from the weaker yen. Therefore, in FY2027-H1, the focus will be not only on whether operating profit exceeds the prior-year period, but also on whether profit growth can return to a level above revenue growth and whether progress toward full-year operating profit of ¥29,400 million at least exceeds progress toward the revenue target.