Q1 revenue rose, but delayed cost absorption in the retail business puts the focus on margin recovery in H1

FY2027-Q1 consolidated revenue was ¥215,015 million, up 3.2% year on year, while operating profit was ¥7,230 million, down 6.9%, ordinary profit was ¥7,484 million, down 6.1%, and net profit attributable to owners of the parent was ¥5,081 million, down 9.0%. Based on a simple calculation using revenue as the denominator, the operating margin declined by approximately 0.37 percentage points, from approximately 3.73% in the year-earlier period to approximately 3.36% in the current period, indicating that higher revenue did not translate directly into higher profit.

By segment, the retail business generated operating revenue of ¥223,182 million and segment profit of ¥7,344 million, with profit down 6.5% year on year. The card business, classified as “Other,” generated operating revenue of ¥744 million and segment profit of ¥139 million, with profit up 22.7%. Accordingly, the weakness in consolidated profit was centered on the retail business, and the improvement in the card business was not enough to offset the overall margin decline. The financial summary reviewed does not include a factor-by-factor breakdown of changes in Q1 labor expenses, rent, non-cash payment fees, system costs or other expenses.

The company explained that it had pursued kaizen initiatives and property-cost optimization in response to higher property costs associated with new store openings and higher labor expenses resulting from investment in employees and improvements in compensation, but was unable to absorb the increase in costs fully in Q1. Operating profit recovered to ¥26,006 million in FY2026, up 2.9% year on year, so the next results will need to distinguish between a temporary interruption in the full-year improvement trend and the continuation of up-front costs from store openings and wage investment.

The FY2027 full-year operating profit forecast is ¥27,000 million. If half of the annual plan is used simply as an H1 benchmark, ¥13,500 million would be one reference line, although this is a mechanical benchmark that does not reflect seasonality and is not the company’s H1 plan. At the next results announcement, important points will include cumulative H1 operating profit, gross margin, the selling, general and administrative expense ratio, profit breakdowns for both the store and card segments, and the extent to which cost increases are disclosed in monetary terms.