FY2027: operating profit growth to slow relative to revenue growth

FY2026 revenue was ¥2,445,260 million, operating profit was ¥174,842 million, ordinary profit was ¥177,509 million, and net income attributable to owners of the parent was ¥110,088 million, with all major profit measures exceeding the previous year. The FY2027 company forecast is revenue of ¥2,687,000 million, operating profit of ¥179,000 million, ordinary profit of ¥175,300 million, and net income of ¥110,500 million. Operating profit and net income are expected to grow less than revenue.

The FY2026 operating margin was 7.2% based on disclosed figures, compared with approximately 6.7% based on the FY2027 forecast. Despite a 9.9% year-on-year increase in revenue, operating profit is expected to rise only 2.4% and ordinary profit to decline 1.2%, suggesting that higher costs for products, labor, logistics, utilities and other items, or weaker non-operating income and expenses, will absorb part of the growth. Given the company’s record of increasing revenue and operating profit for 37 consecutive fiscal years through FY2026, the coming year will test not only whether that streak continues but also its ability to convert revenue growth into profit.

In FY2026-Q1, revenue was ¥573,283 million, operating profit was ¥41,348 million, ordinary profit was ¥42,189 million, and quarterly net income was ¥28,477 million. In FY2027-Q1, it will be necessary to determine whether these levels are exceeded and whether the operating margin has declined as revenue grows. Because the proportion of first-quarter profit in the full-year forecast is affected by seasonality, results should be assessed using both year-on-year comparisons and the previous year’s quarterly mix, rather than a simple 25% benchmark.

At the earnings release, it will be important to see how extensively the company discloses the contributions of price revisions, customer traffic, average spend per customer, product mix, selling, general and administrative expenses, labor costs, logistics costs, and foreign-exchange gains and losses, in addition to revenue and operating profit. In particular, because ordinary profit is expected to decline in FY2027, the focus will be on whether foreign-exchange gains included in non-operating income have fallen away, or whether interest expense and other non-operating expenses have increased.