Sales increased, but profit growth slowed first in the first quarter

Operating revenue in the first quarter was ¥107,750 million, an increase of ¥4,038 million from ¥103,712 million in the same period of the previous year. Operating profit, however, fell by ¥583 million, from ¥3,885 million to ¥3,302 million, representing a 15.0% decline. Operating margin was approximately 3.1% in the current period versus approximately 3.7% in the same period of the previous year, a calculated decline of roughly 0.7 percentage points. The most significant change this time is that the expansion in sales has not translated directly into higher profit.

The company’s full-year forecast for FY2027/2 is operating revenue of ¥434,500–454,600 million and operating profit of ¥18,000–19,800 million. First-quarter results represent 23.7–24.8% of the full-year range for operating revenue, but only 16.7–18.3% for operating profit. Compared with a simple 25% benchmark, profit is progressing more slowly than sales. First-half results for the previous year were operating revenue of ¥211,011 million, operating profit of ¥8,884 million and an operating margin of approximately 4.2%. Whether these levels can be exceeded in the first half of FY2027/2 will be an initial indicator of the company’s ability to achieve the lower end of its full-year operating profit forecast of ¥18,000 million.

The company cited the impact of competing stores, lower year-on-year sales of rice, higher product procurement costs, more aggressive pricing to maintain competitiveness and higher employee wages as reasons for the decline in profit. However, the first-quarter materials do not provide a bridge breaking down the impact of these factors on operating profit, or gross profit and sales details by product category. The group also operates as a single retail segment, so there is no supplementary information by segment for sales or profit. At the first-half results announcement, it will be important to check the operating margin, gross margin and same-store sales, as well as the amount, in millions of yen, by which pricing policies and cost increases affected profit.