Loss narrowed in 1Q of the 14-month fiscal year, but revenue progress needs to be reassessed in FY2027-H1

First-quarter revenue for the fiscal year ending May 2027 was ¥1,009.569 million, down 2.5% from ¥1,035.962 million in the same period a year earlier. Meanwhile, the operating loss was ¥121.052 million, narrowing by ¥67.044 million from ¥188.096 million a year earlier. The ordinary loss also narrowed to ¥89.636 million, while the quarterly net loss attributable to owners of the parent narrowed to ¥69.693 million. This was a quarter in which improvements in the cost structure preceded any improvement in revenue scale.

This fiscal year is a transition year in which the fiscal year-end was changed from the end of March to the end of May, resulting in a 14-month fiscal year from April 2026 through May 2027. The latest full-year forecast is revenue of ¥5,918.468 million, an operating loss of ¥176.858 million, an ordinary loss of ¥148.421 million and a net loss attributable to owners of the parent of ¥167.551 million. First-quarter revenue progress was 17.1%, 4.3 percentage points below the simple time-based progress of 21.4% after 3 of the 14 months had elapsed. The company has explained that revenue is concentrated in the fourth quarter due to seasonality, so the plan cannot be judged to be off track based solely on a simple linear comparison. However, revenue of around ¥2,536 million should be monitored as one benchmark at H1.

On earnings, the first-quarter operating loss of ¥121.1 million represents 68.5% of the full-year forecast loss of ¥176.9 million. This implies a plan to expand the loss by only ¥55.8 million over the remaining 11 months. If the operating loss exceeds ¥176.9 million at H1, meeting the plan will become more difficult even after factoring in recovery from the seasonal sales campaign in the second half. Conversely, if the H1 loss is below the simple first-quarter run rate, while the brand consulting business remains profitable and losses in the food-related business continue to narrow, confidence in the full-year forecast will improve.

At the next results announcement, it will be important to consider that simple year-on-year comparisons are difficult because this is a 14-month fiscal year, and to see whether the company clearly discloses cumulative H1 revenue, operating income or loss, adjusted EBITDA and progress against the full-year forecast. The company did not prepare a quarterly consolidated cash flow statement for the first quarter, and it has not disclosed in monetary terms the revenue scale expected from the seasonal sales campaign underlying the full-year forecast, the amount of cost reductions or the timing of project monetisation. At H1, the key issue will be whether the company provides cumulative revenue and earnings figures and the improvement required over the remaining period, rather than merely offering a qualitative assessment that results are proceeding as planned.