Can first-quarter profitability reach the upwardly revised FY2027-H1 plan?

First-quarter revenue was ¥4,280 million, down 1.5% year on year, while operating profit was ¥158 million, ordinary profit was ¥141 million, and net profit attributable to owners of the parent was ¥45 million. The operating margin was approximately 3.7% on a calculated basis, and the key change in the latest results was that profit increased despite stagnant revenue. Operating profit progress against the full-year forecast of ¥3,700 million as of the first quarter was approximately 42.7%, well above revenue progress of approximately 24.6%.

In the subsequent earnings revision announced on 20 October, the FY2027 full-year operating profit forecast was raised from ¥370 million to ¥520 million, and the ordinary profit forecast from ¥260 million to ¥420 million. The first-half ordinary profit forecast was also raised from ¥150 million to ¥307 million, while the revenue forecast was reportedly reduced from ¥17.4 billion to ¥17.1 billion. In other words, the next results will focus less on revenue growth and more on whether the profit plan can be achieved through improvements in the cost of sales, personnel expenses and head-office expenses, assuming declining customer numbers and a smaller store base.

The upward revision to the profit forecasts reflects not only first-quarter progress, but also greater-than-expected progress in structural profitability reforms, including the move to a one-company structure, store rationalisation and operational improvements. However, first-quarter same-store sales were only 101.5% of the prior-year level, while customer numbers were 98.1%, with average spend per customer of 103.5% making up the difference. In FY2027-H1, it will be important to determine whether profit is being generated solely through average-spend and cost measures without a recovery in customer numbers, or whether demand is also improving.

For disclosure purposes, the company has a single segment, the food-service business, and does not provide sufficient sales and profit figures by business. Accordingly, FY2027-H1 should be assessed using consolidated revenue, operating profit, ordinary profit and net profit, together with year-on-year changes in same-store sales, customer numbers, average spend per customer, store openings and closures, the cost ratio and SG&A expenses. The key test will be whether the revised figures of ¥307 million for first-half ordinary profit, ¥520 million for full-year operating profit and ¥270 million for full-year net profit are maintained, and whether the reasons for the revision are additionally disclosed in specific monetary amounts.