Margins improve despite flat sales; next focus: can the improvement continue through the first half?

Revenue in FY2027-Q1 was ¥2,055.205 million, down 0.3% from ¥2,062.407 million in the prior-year period. Operating profit increased from ¥28.173 million to ¥67.624 million, resulting in a 140.0% increase. Calculated as operating profit divided by revenue, the operating margin rose approximately 1.92 percentage points, from approximately 1.37% in the prior-year period to approximately 3.29% in the current quarter. The key feature of these results is an improvement in margins without top-line growth.

The company said it pursued new-member acquisition through spring enrollment campaigns, trial sessions and short-term spring classes, while responding to demand for outsourced swimming lessons driven by aging school pools and a shortage of instructors. However, it has not disclosed the sales contribution of each measure, its impact on average membership fees, or the sales and profit contribution of outsourced contracts. Accordingly, the margin trend alone does not fully distinguish whether the increase in operating profit resulted from price revisions, cost controls, the contract mix or seasonal factors.

Operating profit for FY2026 was ¥433 million, with an operating margin of approximately 5.08%. The FY2027 full-year forecast calls for operating profit of ¥465 million and revenue of ¥8,668 million, implying a forecast operating margin of approximately 5.36%. It is important to determine whether the margin improvement incorporated into the full-year forecast will continue into the first half, rather than representing only a Q1 rebound, while absorbing the decline in membership and increases in personnel and advertising expenses.

In FY2027-Q1, total special losses were ¥0, and there was no identifiable rebound from special losses that would have materially boosted profit. On the other hand, the company did not prepare a consolidated statement of cash flows for the first quarter, and operating, investing and financing cash flows were all undisclosed. In the next first-half results, it will be necessary to confirm whether the increase in operating profit is reflected in operating cash flow and whether impairment or litigation-related losses recur.