Revenue is tracking plan, but the hurdle for recovering operating profit in H2 is high

FY2026-H1 revenue was ¥38,209 million and operating profit was ¥1,055 million. Revenue and operating profit increased 47.8% and 41.6%, respectively, year on year, but gross profit was ¥14,594 million, up only 45.9% year on year. Based on these figures, the gross margin was approximately 38.2%, down approximately 0.5 percentage points from approximately 38.7% in the same period last year, while the operating margin of approximately 2.76% was also below the approximately 2.88% recorded in the same period last year. The key point is that growth in revenue has not translated directly into a higher operating margin.

The full-year forecasts are revenue of ¥79,110 million, operating profit of ¥3,060 million and profit for the year attributable to owners of the parent of ¥1,630 million, and had not been changed as of H1. Based on H1 results, achieving the full-year forecasts requires H2 revenue of ¥40,901 million and operating profit of ¥2,005 million. These amounts are equivalent to approximately 107% of H1 revenue and approximately 190% of H1 operating profit, respectively, meaning that the full-year profit forecast depends on substantial growth in H2. Standalone Q2 operating profit was ¥861 million, up 93% year on year, but profit must continue to accumulate in Q3 and Q4 to meet the full-year target.

The company says that H1 revenue and gross profit exceeded its internal plan and that progress toward achieving the full-year forecasts is on track. However, the earnings summary does not disclose revenue and profit by segment, the amount of selling, general and administrative expenses, or the profit contribution by factor incorporated into the full-year forecasts. Accordingly, based solely on the disclosures currently available, it is not possible to fully determine whether the decline in H1 margins was due to a temporary change in the scope of consolidation or seasonality, or to a higher mix of D2C/EC operations.

In the next earnings release, we will review cumulative Q3 revenue, gross profit and operating profit, together with each figure's progress against the full-year forecast. The key issue is how much operating profit increases from ¥1,055 million and whether it is progressing at a sufficient pace to achieve the remaining ¥2,005 million. We will also assess whether the operating margin can maintain or exceed H1's 2.76%, whether the full-year forecasts remain unchanged, and whether specific profit guidance that takes H2 seasonality into account is additionally disclosed.