Can the company return to its full-year plan by the first half after the first-quarter revenue decline and loss?

Revenue in the first quarter of FY2027/3 was ¥2,525 million, down 3.9% from ¥2,628 million in the same period of the previous year. Operating profit turned from ¥60 million in the same period of the previous year to an operating loss of ¥44 million. Ordinary loss was ¥47 million, and net loss attributable to owners of the parent was ¥38 million. Revenue progress against the full-year forecast of ¥12,800 million was 19.7%, approximately 5.3 percentage points below the 25% of the fiscal year that had elapsed.

The full-year plan calls for revenue of ¥12,800 million, operating profit of ¥610 million, ordinary profit of ¥600 million and net income attributable to owners of the parent of ¥470 million. Assuming the first-quarter operating loss of ¥44 million, the company will need operating profit of at least ¥44 million in the second quarter merely to bring cumulative first-half operating profit back into positive territory. To secure ¥305 million in the first half, which is simply half of the full-year operating profit plan, the company would need operating profit of ¥349 million in the second quarter. However, the company has not disclosed first-half and second-half plans showing its seasonality, so ¥305 million is a mechanical benchmark for measuring progress, not a company forecast.

The previous year's first-half results were revenue of ¥5,550 million and operating profit of ¥257 million. In the upcoming first-half results, whether revenue exceeds the previous year's first-half figure of ¥5,550 million and whether operating profit recovers to ¥257 million will determine whether the deterioration was merely a temporary first-quarter setback or a decline affecting both demand and profitability. The company cited the environment for acquiring new customers, purchasing trends among existing customers, inbound demand, visitor numbers, the closure of unprofitable stores and order trends at certain business partners as reasons for the first-quarter revenue decline.

In the first-half results, it will be necessary to assess not only the year-on-year change in revenue, but also the recovery by sales channel, including mail-order sales, directly operated stores and wholesale, and whether any improvement in operating results is being driven by higher sales or by selling, general and administrative expense controls. As of the first quarter, both the full-year earnings forecast and annual dividend forecast remained unchanged. However, if the company fails to return to operating profitability in the first half and revenue progress remains well below 50%, it will need to provide additional explanation supporting the maintenance of its full-year operating profit target of ¥610 million.