Honeys Q1 Operating Profit Halves to ¥590 Million as Bad Weather and a Weak Yen Hit a 6.7% Sales Decline

A 6.7% sales decline against an almost fixed cost base

Honeys Holdings Co., Ltd. (TSE: 2792), which runs a chain of women's-fashion specialty stores in Japan and sources much of its merchandise from Southeast Asia, including its own factory in Myanmar, published consolidated first-quarter results for the three months from June 1 to August 31, 2026 on September 29, 2026 under Japanese GAAP. Revenue fell 6.7% to ¥12,968 million, operating profit fell 51.1% to ¥590 million, ordinary profit fell 45.5% to ¥693 million and net profit attributable to owners of the parent fell 52.6% to ¥375 million, or ¥13.46 per share against ¥28.41.

The company attributes the revenue decline to the weather and to thrift. Summer items, led by functional pieces such as cool-touch fabrics, sold steadily as temperatures rose, but there were more cool days than a year earlier, typhoons and heavy rain disrupted trading, and a persistent savings mindset among consumers held back customer numbers. Its own e-commerce site drew more visits, but the filing says the conversion rate from visit to purchase fell and online sales stalled. The domestic store count ended the quarter at 859, against 864 a year earlier, as the company continued to close and replace outlets.

Where the ¥615 million of operating profit went

Two things squeezed profit at once. The gross margin slipped 0.7 points to 58.9%: Honeys held retail prices on seasonal goods unchanged while a weaker yen raised its purchasing costs, so gross profit fell 7.8% to ¥7,639 million, about ¥644 million less than a year earlier. Selling, general and administrative expenses, meanwhile, fell only 0.4% to ¥7,049 million, which the company describes as broadly on plan. Because revenue came in below plan, SG&A rose to 54.4% of sales, up 3.5 points, and almost the entire fall in gross profit passed straight through to the operating line.

Below the operating line, a ¥117 million foreign-exchange gain and higher interest income lifted non-operating income to ¥160 million from ¥69 million, partly offset by a ¥57 million loss on the valuation of derivatives and a sharp drop in income from money trusts, to ¥1.7 million from ¥35.0 million. Extraordinary losses of ¥62 million, including ¥49 million of impairment on underperforming stores, took pre-tax profit to ¥632 million. Comprehensive income fell 84.4% to ¥238 million, mainly because deferred hedge gains swung from a ¥774 million gain to a ¥150 million loss.

Myanmar becomes a reportable segment and swings to a loss

From this quarter Honeys reports its Myanmar garment subsidiary, Honeys Garment Industry Limited, as a separate segment alongside Japan, having previously carried it in "other"; prior-year figures were restated to match. The Japan segment generated all external sales of ¥12,968 million (−6.7%) and segment profit of ¥574 million, down 52.2%. Myanmar, whose sales are entirely to the group, recorded revenue of ¥520 million (−15.8%) and a segment loss of ¥198 million against a ¥52 million profit a year earlier; the filing says it nonetheless beat its own plan on both lines. Intersegment eliminations added ¥214 million to consolidated operating profit, against a ¥47 million deduction a year earlier, which is why group operating profit is higher than the two segments combined.

Balance sheet, guidance and dividend

Total assets fell 2.3% to ¥56,277 million from May 31, 2026, mainly because accounts receivable dropped by ¥1,892 million, while cash and deposits rose ¥311 million to ¥15,424 million. Net assets were ¥48,489 million and the equity ratio rose to 86.2% from 85.2%. The group carries no borrowings on its balance sheet.

Guidance published on July 7, 2026 is unchanged: for the full year to May 31, 2027, Honeys expects revenue of ¥56,500 million (+0.6%), operating profit of ¥4,000 million (−13.4%), ordinary profit of ¥4,000 million (−17.7%) and net profit of ¥2,500 million (−12.2%). For the first half it targets revenue of ¥28,700 million and operating profit of ¥2,200 million, which would require about ¥1,610 million of operating profit in the second quarter alone. The first quarter delivered 23.0% of the full-year revenue target and 14.8% of the operating-profit target. The annual dividend forecast is unchanged at ¥55.00 per share, made up of ¥25.00 at the interim and ¥30.00 at the year-end, the same as the previous 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.