Can first-quarter earnings growth be sustained through the first half and approach operating profit of ¥84.0 billion after the upward revision?

FY2027-Q1 consolidated revenue was ¥128,912 million, up 3.8% year on year; operating profit was ¥18,877 million, up 20.6%; ordinary profit was ¥19,927 million, up 16.7%; and net profit attributable to owners of the parent was ¥22,316 million, up 18.5%. The operating margin, calculated by dividing operating profit by revenue, was approximately 14.6%, meaning profit growth exceeded revenue growth. In FY2027-H1, we will want to confirm whether this margin was not a one-off and has been maintained on a first-half cumulative basis.

Reflecting strong results through Q1 and July, the company raised its FY2027 full-year plan to revenue of ¥562,000 million, operating profit of ¥84,000 million, ordinary profit of ¥83,000 million and net profit attributable to owners of the parent of ¥63,000 million. Comparing Q1 results with the full-year plan on a simple basis gives progress rates of approximately 22.9% for revenue, 22.5% for operating profit, 24.0% for ordinary profit and 35.4% for net profit, but the seasonality of department stores means that full-year progress cannot be assessed on these ratios alone. An explanation of the first-half cumulative earnings level and the assumptions for the second half is required.

FY2026 operating profit reached a record high for the third consecutive fiscal year at ¥80,020 million. The FY2027 plan calls for ¥84,000 million, implying earnings growth of approximately 5.0% from the previous fiscal year. Meanwhile, the Phase I target for FY2027 operating profit under the medium-term management plan is ¥85.0 billion, leaving a ¥1.0 billion gap with the current full-year plan. At the next results announcement, we should confirm whether this gap will be closed through growth in customer revenue, expense-structure reforms or a revision to the target level.

As of now, the company has not disclosed a formal progress rate against the FY2027-H1 full-year plan or its first-half cumulative plan. Accordingly, the next results announcement should at minimum confirm four points: year-on-year revenue growth, year-on-year operating profit growth, maintenance of an operating margin around 14.6%, and the unchanged full-year plan of ¥562.0 billion in revenue and ¥84.0 billion in operating profit. Even if earnings continue to grow, a decline in the operating margin could indicate a change in earnings quality due to inflation and strategic expenses.