Revenue growth but lower operating profit, with the Q1 margin decline the focus for FY2027-H1

Revenue in FY2027 Q1 was ¥41.248 billion, up 2.4% year on year, but operating profit was ¥2.907 billion, down 16.9%, and ordinary profit was ¥3.360 billion, down 13.0%. The simple operating margin was approximately 7.0%, down approximately 1.7 percentage points from approximately 8.7% a year earlier. Operating profit moved in the opposite direction to revenue, making margin maintenance more important than the quality of revenue growth at this stage.

According to the company’s explanation, strong sales of consumables such as tires, engine oil and batteries, together with higher labor-charge revenue, increased gross profit by ¥236 million year on year. Meanwhile, selling, general and administrative expenses increased ¥827 million, including personnel costs from adding store staff, training expenses, DX promotion costs and commissions associated with updating the sales-data analysis system, exceeding the increase in gross profit. Next time, we will check whether the company can provide a reasonably detailed breakdown of store operating costs, training and qualification expenses, system-related costs and logistics costs.

In the same quarter a year earlier, revenue was ¥40.288 billion and operating profit was ¥3.504 billion. The current combination of revenue growth and lower operating profit may therefore reflect more than a temporary comparison factor and could indicate a higher cost burden. In FY2026 as a whole, revenue increased 11.2% to ¥171.280 billion, while operating profit declined 2.4% to ¥15.087 billion, confirming that margins had also deteriorated for the full year. In FY2027-H1, whether operating profit exceeds the ¥5.505 billion recorded in the same period a year earlier and whether SG&A growth slows from Q1 to Q2 will help assess the likelihood of achieving the full-year operating profit target of ¥16.0 billion.