Revenue growth has not translated into earnings growth, making cost absorption the focus for FY2027-H1

Revenue in the first quarter of FY2027 was ¥2,100 million (actual amount: ¥2,100.748 million), up ¥38.263 million, or 1.9%, from ¥2,062.485 million in the prior-year quarter. Operating profit, meanwhile, was ¥62.188 million, down ¥17.610 million from ¥79.798 million a year earlier, a decline of 22.1%. Calculated operating margin on revenue fell by about 0.91 percentage points, from approximately 3.87% in the prior-year quarter to approximately 2.96% in the current quarter, indicating that higher revenue has not translated directly into higher profit.

The company said it conducted a free Morning A campaign, partially renewed its standard menu and distributed discount coupons through its official app. These initiatives may have supported the ¥38 million increase in revenue, but higher personnel and raw material costs are said to have reduced operating profit by ¥17 million at the same time. The company has not disclosed how many millions of yen each of personnel and raw material costs squeezed profit, or how much of the impact was absorbed through price revisions and changes in the product mix.

Ordinary profit also fell 12.8% year on year to ¥81 million, while profit attributable to owners of the parent fell 13.8% to ¥74 million. As the reported business consists of a single segment, the café and related businesses, no segment-level breakdown of profit is available to identify where margins deteriorated by store format or region. Accordingly, at the H1 results, it will be important to see whether the company discloses the increase in costs on a company-wide basis, together with supplementary indicators such as same-store sales, customer numbers and average spend per customer.

Against the full-year operating profit forecast of ¥399 million, 1Q results were ¥62 million, representing progress of approximately 15.5%. Because of seasonality, it is not possible to conclude that the company is behind plan based solely on a simple quarterly allocation. However, H1 operating profit of ¥199.5 million will serve as one mechanical checkpoint, as will whether it can exceed the prior-year H1 operating profit of ¥116 million. For revenue, it is also necessary to compare ¥4,304.5 million, half of the full-year forecast of ¥8,609 million, with prior-year H1 revenue of ¥4,127 million, and assess whether revenue growth is accompanied by a recovery in the margin.