Can FY2027-H1 reverse the decline in revenue and profit seen in FY2027 1Q?

Revenue in FY2027 1Q fell to ¥847 million (¥847,211 thousand) from ¥955 million (¥954,920 thousand) in the same period of the previous year, a decline of 11.3%. The operating loss widened to ¥127 million (¥126,617 thousand) from ¥83 million (¥82,598 thousand), while the ordinary loss was ¥131 million and the net loss attributable to owners of the parent was ¥89 million. Revenue declined as the deficit widened, so this should be assessed as deterioration accompanied by lower fixed-cost absorption, rather than simply a temporary decline in margins.

The company’s full-year FY2027 forecasts are revenue of ¥5,250 million, operating profit of ¥180 million, ordinary profit of ¥155 million and net income attributable to owners of the parent of ¥120 million. First-quarter revenue amounted to only about 16.1% of the full-year forecast, meaning approximately ¥4,403 million will be required from 2Q onward to achieve the full-year revenue target. In addition, since the company posted an operating loss of ¥126.6 million in 1Q, it will need cumulative operating profit of approximately ¥306.6 million over the remaining 3 quarters to achieve full-year operating profit of ¥180 million.

The company cites a decline in visits by inbound travelers from mainland China, closures following the expiration of contracts for stores in other business formats, lower fixed-cost absorption due to the decline in revenue, and higher training-related expenses as factors behind the first-quarter revenue decline. The company also explained that in FY2026, the decline in travelers from mainland China weighed on same-store sales at company-operated stores. It is therefore necessary to determine whether the decline in inbound demand is temporary or reflects a structural change in the customer mix.

For FY2027-H1, the key point will be how much of the first-quarter revenue decline was recovered in 2Q, using the ¥1,891 million recorded in the same period of the previous year as the benchmark. In particular, it will be important to see whether the company discloses the revenue contribution from domestically produced eel, fugu courses, new business formats, external sales and mail-order sales, as well as the recovery in inbound demand by country and region. Even if the full-year forecast is maintained, a widening gap between H1 results and the revenue and profit levels required in the second half would lower the likelihood of achieving the forecast.