FY2027 full-year plan cut sharply, with H1 focused on assessing the revised earnings level

The full-year plan for the fiscal year ending February 2027 was reduced from the initial forecasts of ¥14.65 billion in revenue, ¥245 million in operating profit and ¥100 million in net income to ¥14.0 billion, ¥110 million and ¥25 million, respectively. The revenue reduction was limited to ¥650 million, or 4.4%, while operating profit was reduced by ¥135 million, or 55.1%, and net income by ¥75 million, or 75.0%, indicating that the downside is greater in margins and costs than in sales volume.

The revised operating margin is only approximately 0.8%, calculated by dividing operating profit of ¥110 million by revenue of ¥14.0 billion. Net income of ¥25 million represents a net margin of approximately 0.2%. Earnings are also below the previous year's operating profit of ¥190 million and operating margin of 1.4%. At the next H1 results announcement, the focus should not simply be on whether revenue is in line with the plan, but on where profit was lost, including gross margin, markdowns and disposal losses, and SG&A expenses.

The company explained that, in the apparel business during H1, full-price sales of summer goods temporarily struggled because of the rainy season and typhoons, while cooling-related goods in the general merchandise business were affected by natural disasters. An important dividing line will be whether weather-related factors merely shifted the timing of sales or continue into the second half and beyond through inventory clearance and weak customer traffic. A 46% year-on-year decline in ordinary profit has also been reported, but the absolute amount of revised ordinary profit cannot be confirmed from the financial data provided.

The revised figures currently available are on a full-year basis. No specific revised forecasts or required earnings for the remaining period have been provided for FY2027-H1 revenue, operating profit, ordinary profit and net income. At the next results announcement, the reliability of the plan will be assessed based on whether the company can disclose H1 performance together with progress against the full-year forecast, the operating profit required in H2, and the underlying performance of existing stores excluding weather effects.