Nitori Q1 Revenue Slips 2.3% on a Cool June, but Operating Margin Widens to 16.2%

Revenue fell 2.3%, but the margin moved up

Nitori Holdings Co., Ltd. (TSE: 9843), the group that develops, manufactures and sells furniture and interior goods under the Nitori name and runs the Shimachu home-centre chain, published consolidated results for the first quarter of the fiscal year ending March 31, 2027 — the three months from April 1 to June 30, 2026 — on August 7, 2026 under IFRS. Revenue fell 2.3% to ¥226,259 million, operating profit 1.1% to ¥36,545 million and profit attributable to owners of the parent 1.5% to ¥25,757 million, for basic earnings of ¥45.58 per share against ¥46.29. Pre-tax profit edged up 0.1% to ¥37,183 million. Both quarters cover April to June, so the comparison is like-for-like, and the filing prints its own year-on-year rates. The shares are listed on the Tokyo and Sapporo stock exchanges.

The arithmetic explains why profit fell less than sales. Cost of sales dropped 2.7% to ¥104,924 million, a little faster than revenue, so gross profit slipped only 2.0% to ¥121,334 million and the gross margin edged up from 53.4% to 53.6%. Selling, general and administrative expenses fell 1.8% to ¥85,914 million — slower than revenue, so their share of sales rose slightly. The rest of the gap was closed below gross profit: the share of profit of equity-method investees rose to ¥1,255 million from ¥976 million, other income to ¥930 million from ¥726 million, and other expenses were broadly flat at ¥1,061 million. Operating profit ended only ¥397 million lower, and the operating margin widened from 15.9% to 16.2%.

A steady spring, then a cool June

The filing describes a difficult market for furniture and interior goods: a slow recovery in consumer confidence has weakened appetite for durable goods, while competition across formats, rising labour costs and persistently high raw-material and logistics costs have added pressure. In the Nitori business, sales and customer numbers held up through May, helped by new products and a Golden Week redecorating campaign, but June temperatures ran below recent years and sales of seasonal goods stalled. For the quarter, domestic existing stores served 97.5% of the prior year's customers and took 96.7% of its sales.

The company attributes the fall in SG&A mainly to lower logistics costs, from right-sizing its delivery set-up, and to the absence of the equipment purchases booked a year earlier when a new distribution centre started up. On advertising, it has cut back on television and print in favour of social media and YouTube advertising.

Nitori business edges down; Shimachu lifts profit on a smaller floor

Nitori business revenue, including intersegment sales, fell 1.1% to ¥203,142 million (external revenue 1.2% to ¥199,588 million), and segment profit fell 1.6% to ¥33,415 million. Store sales were ¥166,854 million against ¥169,586 million, and mail-order sales ¥24,302 million against ¥24,659 million. In Japan the segment opened 10 Nitori and 10 Deco Home stores; overseas it opened six — three in Taiwan, two in mainland China and one in Thailand.

Shimachu business revenue fell 8.8% to ¥27,258 million (external revenue 10.3% to ¥26,670 million), yet segment profit rose 5.3% to ¥3,150 million. The filing ties the higher profit to a deliberate reshaping: sales floor was resized according to the profitability of each product category, freed-up space in some stores was used for Nitori stores or let to outside tenants, and each facility's profit structure was reviewed. Private-brand development, including a new mid-to-upper-priced furniture series, improved the gross margin. The group ran 1,084 stores at June 30, against 1,069 at March 31, after 26 openings and 11 closures.

Finance income lifted pre-tax profit; a higher tax charge took it back

Finance income rose to ¥1,729 million from ¥1,116 million while finance costs rose to ¥1,091 million from ¥927 million, which is why pre-tax profit edged up 0.1% even as operating profit fell. Income tax expense rose 4.1% to ¥11,425 million, taking the tax charge to 30.7% of pre-tax profit from 29.6%, and profit attributable to owners fell 1.5%. Comprehensive income rose 30.2% to ¥28,537 million: foreign-currency translation differences contributed a gain of ¥2,198 million against a loss of ¥2,089 million a year earlier, and cash-flow hedges a loss of only ¥33 million against ¥3,843 million.

Balance sheet: receivables and payables unwound

Total assets fell by ¥15,021 million from March 31 to ¥1,556,262 million, mainly because trade and other receivables fell by ¥18,175 million. Liabilities fell by ¥34,858 million to ¥547,855 million, led by trade and other payables (down ¥15,435 million), income taxes payable (down ¥8,257 million) and contract liabilities (down ¥7,889 million); current borrowings were cut to ¥140,000 million from ¥150,000 million. Equity rose by ¥19,836 million to ¥1,008,407 million, mainly through a ¥17,055 million rise in retained earnings, and the ratio of equity attributable to owners of the parent rose to 64.8% from 62.9%. Cash and cash equivalents stood at ¥153,523 million. No quarterly cash-flow statement was prepared; depreciation and amortisation came to ¥17,413 million against ¥17,064 million.

Guidance and dividend forecast unchanged

Nitori left unchanged the forecasts it published on May 14, 2026. For the first half it expects revenue of ¥457,400 million (up 4.2%) and operating profit of ¥60,200 million (up 0.6%); for the full year, revenue of ¥957,000 million (up 4.9%), operating profit of ¥130,300 million (up 3.8%), pre-tax profit of ¥131,000 million (up 2.9%) and profit attributable to owners of ¥91,000 million (up 1.9%), or ¥161.05 per share. The first quarter delivered 23.6% of the full-year revenue target and 28.0% of the operating-profit target; meeting the first-half plan implies second-quarter revenue of ¥231,141 million and operating profit of ¥23,655 million. The filing does not say what it expects to turn revenue back to growth.

The dividend forecast is also unchanged at ¥16.00 at the interim and ¥16.00 at the year-end, ¥32.00 for the year. Comparison with the prior year is complicated by a five-for-one share split effective October 1, 2025: the FY3/2026 interim dividend of ¥77.00 is stated before the split and the year-end dividend of ¥15.40 after it, so the filing gives no annual total for that year. Per-share earnings for both periods are calculated as if the split had taken place at the start of the prior fiscal year.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.