After the downward revision, FY2027-H1 revenue of ¥8.5 billion is the first hurdle

The initial full-year forecast presented with the results for the fiscal year ended February 2026 and the first-quarter results for the fiscal year ending February 2027 was revenue of ¥20.3 billion, operating profit of ¥350 million, ordinary profit of ¥400 million and net income of ¥900 million. In contrast, the earnings revision announced on 20 August revised revenue to ¥18.0 billion, the operating result to a loss of ¥1.73 billion and the net result to a loss of ¥1.18 billion. Revenue is ¥2.3 billion, or approximately 11.3%, below the initial plan, while both the operating result and net result are expected to deteriorate by ¥2.08 billion from the initial profit forecasts.

The H1 outlook presented in the same revision was revenue of ¥8.5 billion, an ordinary loss of ¥730 million and a net loss of ¥200 million. First-quarter revenue was ¥4.023 billion, so achieving H1 revenue of ¥8.5 billion on a simple basis would require ¥4.477 billion in the second quarter alone. This is approximately 11.3% above first-quarter actual revenue, making it a plan that requires a recovery in sales from the immediately preceding quarter, rather than merely meeting a year-on-year comparison.

Subtracting H1 revenue of ¥8.5 billion from full-year revenue of ¥18.0 billion leaves a simple calculation of ¥9.5 billion in revenue required in the second half. Mechanically subtracting the H1 net loss of ¥200 million from the full-year net loss of ¥1.18 billion also leaves a net loss of ¥980 million in the second half, but this may vary depending on the timing of extraordinary gains and losses and tax recognition, so it is not itself a profit forecast. In particular, the available information on the H1 revision does not clearly state the operating result, making a profit bridge through the operating result, operating margin and extraordinary gains and losses necessary in the next results release.

The factors cited by the company for the downward revision were weak sales of summer products, a decline in the number of stores and the limited earnings improvement from closing unprofitable stores. Accordingly, H1 should be assessed not only on total revenue of ¥8.5 billion, but also on same-store sales, the revenue decline from closed stores, contributions from new and collaboration products, and the impact of inventory valuation and markdowns. Even if revenue reaches plan, the validity of the full-year operating loss forecast of ¥1.73 billion will require separate verification if the gross margin declines.