Revenue growth, but a sharp drop in profit makes cost absorption the key issue

In the first quarter from June through August 2026, revenue was ¥83,273 million, operating profit was ¥582 million, ordinary profit was ¥620 million, and net income attributable to owners of the parent was ¥382 million. Compared with revenue of ¥78,947 million and operating profit of ¥1,673 million in the same quarter last year, revenue increased 5.5% while operating profit fell 65.2%. The operating margin calculated from these figures declined 1.42 percentage points, from 2.12% in the same quarter last year to 0.70%, clearly showing that higher revenue did not translate into higher profit.

Profit margins also declined on a full-year basis. FY2026 revenue was ¥319,208 million, gross profit was ¥74,222 million, and operating profit was ¥5,297 million, compared with revenue of ¥292,940 million, gross profit of ¥68,723 million, and operating profit of ¥9,812 million in FY2025. Revenue increased 9.0%, while cost of sales rose 9.3%, from ¥224,216 million to ¥244,985 million. The gross margin edged down from 23.46% to 23.25%, while the operating margin fell sharply from 3.35% to 1.66%. Depreciation and amortization also increased 26.1%, from ¥7,761 million to ¥9,784 million, indicating a heavier fixed-cost burden from stores and logistics.

The company attributed the first-quarter decline in profit to higher raw material prices, foreign exchange costs, energy costs, logistics costs, personnel expenses and construction costs, as well as increased store-opening expenses. However, it has not disclosed a breakdown by expense category showing how much these factors reduced gross profit or increased SG&A expenses. The only reported segment is the retail business, so the deterioration in profit cannot be isolated by store format or region. The next key to assessing the reliability of the full-year plan will be whether the company discloses changes in gross margin, the SG&A ratio, and store-opening expenses, logistics costs and personnel expenses.