FY2027-Q1 delivered higher revenue and profit, but the group margin declined — the focus is the gap between the core business and loss-making operations

FY2027-Q1 consolidated revenue was ¥778.1 million, up 9.9% year on year, while operating profit was ¥78.0 million, up 3.6%. Operating profit growth lagged revenue growth, resulting in a simple operating margin calculation of approximately 10.0%. In the year-earlier quarter, revenue was ¥708.3 million and operating profit was ¥75.3 million, producing an operating margin of approximately 10.6%. Thus, although revenue and profit increased, profit generation per ¥1 of revenue declined by approximately 0.6 percentage points.

By segment, the Jewelry, Art and Auction business generated revenue of ¥550.2 million and segment profit of ¥116.4 million, up 10.1% and 18.2%, respectively, year on year. By contrast, the Food business recorded a ¥12.5 million loss on revenue of ¥187.2 million; the Health & Beauty business recorded an ¥88.6 million loss on revenue of ¥35.7 million; the Resort Development business recorded a ¥58.6 million loss on revenue of ¥3.5 million; and the Other business recorded a ¥33.8 million loss on revenue of ¥1.6 million. The four businesses recorded combined segment losses of approximately ¥193.6 million, leaving the core business to support the group as a whole.

At the next earnings announcement, we will want to determine whether the core business's profit growth was driven by a temporary increase in selling prices or accompanied by improvements in customer visits, conversion rates and product mix. The Q1 disclosure provided business-by-business revenue and profit, but not the contribution of individual factors such as selling prices, raw-material costs, advertising expenses and store costs to the increase in group operating profit. In FY2027-H1, whether the operating margin remains near 10.0% or recovers to the year-earlier level will be an important indicator of the quality of the revenue growth.