Revenue continues to grow, but earnings growth is not keeping pace with the expansion in sales

Operating revenue for the nine months ended FY2026 Q3 was ¥171,674 million, up 20.5% year on year. Operating profit was ¥6,136 million, up 0.7%; ordinary profit was ¥6,648 million, up 3.6%; and interim net profit attributable to owners of the parent was ¥4,478 million, up 3.3%. Both revenue and profit exceeded the prior-year levels, but operating profit growth was modest relative to the increase in operating revenue, meaning that most of the additional revenue has not been converted into profit.

Full-year guidance is operating revenue of ¥235,000 million, operating profit of ¥7,000 million, ordinary profit of ¥7,600 million and net profit attributable to owners of the parent of ¥5,300 million. As of the nine-month results, progress stood at 73.1% for operating revenue, 87.7% for operating profit, 87.5% for ordinary profit and 84.5% for net profit. On a simple progress basis, profit is therefore running ahead of plan, but the company still needs to generate ¥864 million in operating profit over the remaining three months. The timing of fourth-quarter expenses for new store openings, wages, depreciation and utilities could affect the final level of profit.

Investment costs are already visible in the margins. Based on first-half operating revenue of ¥112,902 million and operating profit of ¥4,356 million, the operating margin was approximately 3.9%, down from approximately 4.6% in the prior-year period, a decline of approximately 0.8 percentage points. For the nine months, the operating margin was approximately 3.6% on operating revenue of ¥171,674 million, down from approximately 4.3% a year earlier. While sales continue to expand through new store openings, store launch costs and investments in personnel may be front-loaded. It will be necessary to assess whether sales growth leads to a recovery in profitability.

The third-quarter financial statements do not provide sufficient disclosure of standalone quarterly performance for the three months or operating cash flow. The full-year results should therefore be reviewed for fourth-quarter standalone sales and operating profit, changes by SG&A expense category, and the profit contribution from existing and new stores. Even if full-year guidance is achieved, the assessment of growth quality from FY2027 onward will differ depending on whether the full-year operating margin remains around the first-half level of 3.9% or improves in the fourth quarter as new stores mature and structural reforms take effect.