Strong first-half earnings progress, but the rationale for maintaining full-year guidance will be tested in Q3

First-half revenue rose 11.1% year on year to ¥7,109 million, while operating profit increased 231.1% to ¥620 million. Ordinary profit was ¥649 million and interim net income attributable to owners of the parent was ¥510 million, up 459.9% and 4,634.0%, respectively, year on year. Profit expanded by more than revenue, making it important to determine whether customer traffic and average spend at existing stores, the cost ratio, and domestic and overseas operating structures contributed to earnings, rather than simply an increase in the number of stores.

Full-year guidance remains unchanged at revenue of ¥14,032 million, operating profit of ¥948 million, ordinary profit of ¥962 million, and net income of ¥689 million. At the first-half results announcement, revenue progress was 50.7%, compared with 65.4% for operating profit, 67.5% for ordinary profit, and 74.0% for interim net income, indicating that earnings are ahead of revenue. In particular, the gap between operating profit and the full-year forecast has narrowed to ¥328 million, making it important to monitor whether store renovation costs, start-up costs for Nasu Paradise Village, and U.S. operating expenses increase again from Q3 onward.

For comparison, a simple 75% progress benchmark that does not take seasonality into account would be revenue of ¥10,524 million and operating profit of ¥711 million. This is not the company’s quarterly plan, but merely a mechanical nine-month checkpoint. If cumulative operating profit through Q3 exceeds this level, it will be easier to view the first-half earnings lead as continuing into the second half. If revenue falls below the progress benchmark while only operating profit exceeds it, however, the contributions from cost controls and temporary earnings factors will need to be examined separately.

The focus in Q3 is not limited to whether the full-year forecast is achieved. Key questions include whether the contributions from domestic existing stores, La Bohème, Gonpachi, and the U.S. subsidiary continued into Q3, and whether the company can explain its reasons for maintaining guidance in terms of revenue, operating profit, and cash flow. The annual dividend forecast remains ¥5 per share, so the next results announcement should also show whether the company indicates additional shareholder returns or a change in its dividend policy despite the strong earnings progress.