Can the first-quarter profit lead be replicated in the first half?

In the first quarter of the fiscal year ending February 2027, operating revenue was ¥151,943 million and operating profit was ¥11,373 million, representing year-on-year increases of 9.8% and 17.4%, respectively. Calculated against the full-year forecasts of ¥577,300 million for operating revenue and ¥31,200 million for operating profit, progress was 26.3% and 36.5%, respectively. Operating revenue was slightly ahead of the 25% proportion of the year elapsed, while operating profit was well ahead, indicating on the surface that profit growth is running ahead of revenue growth.

However, the growth rates assumed in the company's full-year plan are only 6.5% year on year for operating revenue and 0.6% for operating profit. The plan does not extrapolate the first quarter's 17.4% profit growth rate through the full year, and appears to assume that profit growth will slow in the remaining quarters. First-quarter revenue growth included temporary bulk purchases of paint-related supplies, paper products, cling film and garbage bags associated with the situation in the Middle East, as well as strong sales of summer products such as air conditioners and electric fans as temperatures rose. The first-half results will need to distinguish whether these contributions continued.

The earnings presentation gives first-quarter sales of ¥149,432 million and a full-year sales forecast of ¥567,500 million, while the earnings summary gives operating revenue of ¥151,943 million and a full-year operating revenue forecast of ¥577,300 million. Adding the ¥9,800 million in operating receipts shown in the presentation to sales of ¥567,500 million produces operating revenue of ¥577,300 million, suggesting that the two materials use different top-line definitions. In FY2027-H1, it will be important to confirm consistently whether the cumulative first-half comparison is based on sales or operating revenue.

The presentation shows first-quarter performance against plan of 101.4% for sales and 117.3% for operating profit, among other figures, but does not disclose an overall company assessment such as “above plan” or the amount of risk incorporated into the full-year plan. In the first-half results, we will look for whether operating profit progress continues to exceed operating revenue progress, whether the ¥31,200 million full-year forecast is maintained, and where profit was secured among existing-store performance, gross profit and SG&A expenses after excluding temporary demand factors.