Revenue growth but lower operating profit in Q1; recovery in underlying earnings to be assessed in H1

In Q1 of the fiscal year ending March 2027, revenue was ¥22,344 million, operating profit was ¥1,654 million, ordinary profit was ¥1,865 million, and net profit attributable to owners of the parent was ¥1,645 million. Year on year, revenue increased 3.0%, operating profit decreased 2.1%, ordinary profit increased 1.6%, and net profit increased 33.7%. Thus, while the top line and bottom line grew, profit declined at the operating level. Operating profit margin also fell from approximately 7.8% in the same period of the previous year to approximately 7.4%, indicating that revenue growth alone was insufficient to absorb higher costs.

The increase in net profit was helped by a ¥558 million gain on the sale of investment securities resulting from the partial sale of cross-shareholdings. Accordingly, the 33.7% year-on-year increase in net profit to ¥1,645 million cannot be regarded as evidence of a sustained improvement in earnings power. In the mail-order business, higher procurement costs resulting from the weaker yen put pressure on profit, while the group-administered businesses incurred one-off costs, including recruitment and personnel expenses for temporary staff following a logistics equipment failure. The next focus should be to distinguish the operating profit level excluding these one-off factors from growth in ordinary profit that does not depend on extraordinary gains.

The company forecasts full-year revenue of ¥90,000 million, operating profit of ¥6,100 million, ordinary profit of ¥6,500 million, and net profit of ¥4,700 million for the fiscal year ending March 2027. Q1 progress rates were approximately 24.8% for revenue, 27.1% for operating profit, 28.7% for ordinary profit, and 35.0% for net profit, although the net profit progress rate includes the ¥558 million gain on sale. On a simple one-quarter basis, operating profit appears broadly on track, but whether H1 operating profit can exceed the ¥3,069 million recorded in FY2026-H1 will be a practical benchmark for judging a recovery in underlying earnings.

At the next results announcement, investors should review cumulative H1 operating profit, operating profit margin, gross profit and promotional expenses in the mail-order business, and the solution business's contribution to profit growth. The company did not prepare a cash flow statement for Q1, and quarterly figures for operating cash flow and cash balances were not disclosed. The H1 results should therefore also show whether the increase in profit translated into working capital improvements and cash generation.