Sales growth is evident, but operating profit recovery remains limited

The financial summary provided shows FY2027 1Q revenue of ¥2,250 million, up approximately 8.2% from ¥2,080 million in the same period of the previous year. Operating profit, however, declined from ¥11 million to ¥5 million, and the operating margin fell 0.31 percentage points, from approximately 0.53% to approximately 0.22%. Despite revenue growth, margin recovery has not yet followed. FY2026 full-year operating profit was only ¥4 million, while FY2027 full-year operating profit is forecast to recover to ¥66 million. The plan therefore calls for an improvement in absolute profit, but the 1Q result remains small.

1Q progress against the full-year forecast was approximately 22.8% for revenue, calculated as ¥2,250 million ÷ ¥9,857 million, and approximately 7.6% for operating profit, calculated as ¥5 million ÷ ¥66 million. By contrast, ordinary profit was ¥140 million, or approximately 59.3% of the ¥236 million full-year forecast, and net income attributable to owners of the parent was ¥95 million, already exceeding the ¥93 million full-year forecast. The gap between operating profit and ordinary profit was ¥135 million in 1Q alone, but its breakdown has not been disclosed. It is therefore too early to conclude that the core business is recovering based only on progress in ordinary profit and net income.

The company attributed the decline in operating profit to increases in personnel and equipment expenses associated with having 3 more directly operated stores than in the same period of the previous year. However, it has not provided a quantitative breakdown showing how many millions of yen personnel expenses, equipment expenses and other fixed costs each increased. In the next results release, it will be necessary to distinguish whether revenue growth came from the sales strength of existing stores or from an increase in the number of new stores, and to determine whether the costs associated with additional openings are a one-off upfront burden or a structural burden that will continue after H1.

The H1 figures of ¥4,929 million in revenue and ¥33 million in operating profit are mechanical benchmarks obtained by simply allocating 50% of the full-year forecast to the first half; they are not H1 forecasts published by the company. Even so, if revenue falls short of this level, the burden on the second half needed to achieve annual revenue of ¥9,857 million will increase. If operating profit falls below ¥33 million, the recovery to ¥66 million for the full year will become more heavily weighted toward the second half. In H1, we will look not only at the amount of operating profit, but also at whether an operating margin of at least approximately 0.67% can be secured and whether a breakdown of the cost increases is newly disclosed.