From acquisition-driven contribution to organic growth: testing the quality of revenue in FY2027-H1

For the fiscal year ended February 2026, revenue increased 25.9% year on year to ¥284,014 million, while operating profit fell 4.2% to ¥16,028 million. The substantial growth in the top line did not translate directly into operating profit, making the separation of expanded consolidation scope from the earnings power of the existing business the most important issue for FY2027-H1. Profit attributable to owners of the parent increased 8.8% to ¥12,013 million, but this includes profit factors arising at stages other than operating profit, so the quality of revenue growth needs to be assessed at each level of profit.

FY2027-Q1 revenue rose 6.7% year on year to ¥74,707 million, while operating profit increased 7.7% to ¥7,293 million. Progress against the full-year revenue forecast of ¥300,000 million was approximately 24.9%, compared with approximately 41.7% against the operating profit forecast of ¥17,500 million, indicating that profit is building ahead of revenue. However, apparel sales are highly seasonal, and Q1 progress alone cannot be treated as a direct measure of full-year achievement. For H1, ¥150,000 million of revenue and ¥8,750 million of operating profit will serve as reference points for assessing whether profit continues to run ahead in the first half.

By segment in Q1, B2C revenue increased 10.4% year on year to ¥58,106 million, while business profit rose 13.6% to ¥5,015 million. B2B revenue increased 4.6% to ¥24,523 million, and business profit rose 31.1% to ¥1,849 million. The common division posted revenue of ¥3,802 million, up 3.1%, but business profit fell 34.9% to ¥367 million. The key points for H1 will be whether profit growth in B2C and B2B can absorb higher costs in the common division, and the breakdown of segment profit and head-office costs.

The company attributed Q1's higher revenue and profit mainly to the addition of Right-on and World Style Labels as 2 newly consolidated companies, and to the expansion of external sales at MC Fashion within B2B. However, the sales and profit contributions from the newly consolidated companies, same-store sales at existing brands and the organic growth rate excluding acquisition effects have not been disclosed. In addition, comparative information has been restated following changes to the reportable segments and the early adoption of IFRS 18. In H1, the company should break down acquisition effects and contributions from the existing business while clearly stating the comparative basis following the changes in consolidation scope and accounting standards.