Revenue is tracking to plan, but margin recovery is the focus for FY2027-H1

FY2027 1Q operating revenue was ¥14,701 million and operating profit was ¥563 million. Against full-year forecasts of ¥63,000 million for operating revenue and ¥2,300 million for operating profit, 1Q progress was 23.3% and 24.5%, respectively. Compared with the simple elapsed-period benchmark of 25.0% after three months, neither revenue nor profit is significantly below plan, although operating profit progress has only slightly outpaced operating revenue progress.

The year-on-year comparison, however, presents a different picture. Operating revenue increased 2.3% year on year, while operating profit declined 6.0% and ordinary profit declined 7.3%. Operating margin fell by approximately 0.34 percentage points, from about 4.17% in the year-earlier quarter to about 3.83% in 1Q. If the pattern of declining profit despite maintaining revenue continues through cumulative 2Q, additional profit recovery in the second half will be needed to achieve the full-year operating profit forecast of ¥2,300 million.

The hurdle to margin recovery is also evident from the comparison with the previous fiscal year. In the fiscal year ended February 2026, operating revenue was ¥59,240 million and operating profit was ¥2,185 million, down 4.3% year on year. For FY2027, the company plans operating revenue of ¥63,000 million, up 6.3% year on year, and operating profit of ¥2,300 million, up 5.3%, assuming that the profit pressure seen in the previous fiscal year will reverse this year. The 1Q results have not yet produced an increase in operating profit sufficient to support that reversal.

At the next earnings release, it will be necessary to check not only whether operating revenue and operating profit reach the simple half-year benchmarks of ¥31,500 million and ¥1,150 million, respectively, but also whether cumulative 2Q operating margin exceeds 1Q's 3.83%. Even if the full-year forecasts are maintained, additional explanation will be needed to determine whether revenue growth is being driven by price increases, promotional activity or new store openings, and whether the margin decline is temporary.