Revenue up, but earnings progress is slow; margin recovery in FY2027-H1 is the focus

FY2027-Q1 revenue was ¥3,914.6 million, up 2.5% from ¥3,819.8 million in the year-earlier period. Operating profit, however, was ¥479 million, down 37.7% from ¥769 million. The operating margin fell from approximately 2.0% to approximately 1.2%, indicating that the benefit of higher revenue did not flow through to earnings.

The full-year forecasts are revenue of ¥16,100 million, operating profit of ¥3,760 million, ordinary profit of ¥3,800 million, and net income attributable to owners of the parent of ¥2,090 million. First-quarter progress was approximately 24.3% for revenue, compared with approximately 12.7% for operating profit. While revenue had reached almost one-quarter of the full-year forecast in the first quarter, earnings were well below a simple equal quarterly allocation, making recovery in FY2027-H1 necessary.

The comparison period, FY2026-H1, recorded revenue of ¥7,827 million and operating profit of ¥1,301 million. In the next earnings release, it will be important to check not only whether revenue continues to increase year on year, but also whether operating profit exceeds ¥1,301 million and the operating margin recovers to approximately 1.7%, its year-earlier level. The company attributed the first-quarter earnings decline to higher SG&A expenses, including personnel and utility costs, but did not disclose the amount attributable to each factor.

Accordingly, FY2027-H1 should be assessed based on the increase in gross profit, the increase in SG&A expenses, and the breakdown of personnel, utility and store-related costs. If interim progress against the full-year operating profit forecast of ¥3,760 million does not approach 50%, the plan will imply a substantial earnings recovery in the second half, requiring a careful assessment of the likelihood of achieving the forecast.