FY2026 full-year forecast sharply revised; focus shifts from sales delivery to profit recovery

Revenue for the nine months ended Q3 was ¥15.3453 billion, up 1.2% year on year. Operating profit, however, was only ¥60.957 million, down 51.5% from ¥125.586 million in the same period of the previous year. Ordinary profit was ¥179 million, and net profit attributable to owners of the parent was also ¥179 million. After nine months, revenue had reached 74.9% of the previous full-year forecast of ¥20.5 billion, while operating profit had reached only 33.9% of the forecast, showing a substantial gap between the progress of sales and profit.

The focus has therefore shifted from maintaining sales volume itself to how much margin can be recovered in the second half. On a simple calculation, sales of approximately ¥4.535 billion will be needed in the second half to lift nine-month revenue to the revised full-year forecast of ¥19.88 billion. Operating profit was already ¥60.96 million for the nine months, so achieving the revised operating loss forecast of ¥290 million assumes an operating loss of approximately ¥351 million in the second half. The sharp downward revision to the full-year forecast should be interpreted as incorporating deterioration in second-half profitability, rather than simply seasonal delays.

On 2 October, the full-year revenue forecast was revised from ¥20.5 billion to ¥19.88 billion, and the operating profit forecast was revised from a profit of ¥180 million to an operating loss of ¥290 million. The ordinary profit forecast was also revised from a profit of ¥270 million to an ordinary loss of ¥100 million, while the second-half ordinary profit forecast was revised from a profit of ¥238 million to an ordinary loss of ¥132 million. The company cited factors including stronger consumer restraint amid inflation. In the next earnings release, it will be necessary to examine not only the extent of any sales shortfall, but also where the loss arose, including gross margin, inventory valuation and discounting.

In the next full-year earnings release, we will check actual revenue against the revised forecast of ¥19.88 billion, the size of the operating loss, the difference between ordinary profit and operating profit, and whether the earnings forecast is revised again. In particular, if only final profit turns positive, it will be necessary to distinguish an apparent recovery driven by extraordinary gains, such as gains on the sale of investment securities, from a recovery in the profitability of apparel sales themselves.