Can the Q1 return to profitability overturn the H1 loss outlook?

FY2027-Q1 revenue was ¥14.594 billion, up 0.6% from ¥14.508 billion in the year-earlier period. Operating profit was ¥113 million, up 210.5% from ¥36 million, while ordinary profit was ¥103 million, up 313.0%. The operating margin rose from approximately 0.25% to approximately 0.77%. Thus, Q1 profit was driven less by a recovery in sales volume than by the normalization of the cost burden, which had worsened in the year-earlier period.

The company attributed the profit increase to the generally smooth launch of its spring and summer collections, a recovery trend in inbound sales, which had fallen sharply the previous year, and the control of selling, general and administrative expenses below the year-earlier level. However, it explained that the disposal of inventory, which had expanded at the end of the previous fiscal year, reduced the proportion of full-price sales and caused the gross margin to deteriorate from the previous year. Accordingly, it is not possible to determine whether the Q1 improvement in operating profit resulted from a recovery in gross margin or was a temporary improvement from SG&A cost controls without reviewing both the H1 gross margin and SG&A expenses.

In FY2026-H1, revenue was ¥27.042 billion, operating loss was ¥213 million, ordinary loss was ¥149 million, and interim net loss attributable to owners of the parent was ¥299 million. As of FY2027-Q1, revenue had reached 24.3% of the full-year target of ¥60 billion, while operating profit was only 5.4% of the ¥2.1 billion full-year plan. Revenue progress was close to the 25% mark implied by the passage of the calendar year, but the profit plan is weighted toward the second half. The key point in the H1 results will therefore be how far standalone second-quarter profit improved.

It was also reported on 28 August that the company had revised its H1 operating and ordinary income outlooks downward to losses. The revised loss amounts cannot be confirmed from the information provided, so the next results announcement should clarify the loss outlook, the respective effects of market conditions, weather, inbound demand and inventory disposal, and the rationale for maintaining the full-year plan. Whether H1 operating income exceeds the ¥213 million loss in the year-earlier period, or falls below the revised loss outlook, will be a benchmark for determining whether the Q1 improvement is sustainable.