Heiwado First-Half Net Profit Falls 27% to ¥3,580 Million as Rice and Price-Hike Comparisons Squeeze Margins; Full-Year Forecast Held

More customers through the door, thinner margins

Heiwado Co., Ltd. (TSE: 8276), the Shiga-based supermarket and general-merchandise chain that dominates the Lake Biwa region, published consolidated results for the first half of FY2/2027, the period from February 21 to August 20, 2026, on October 1, 2026 under Japanese GAAP. Operating revenue, which combines merchandise sales of ¥210,620 million (+2.9%) with rental and other operating income, rose 3.1% to ¥230,489 million. Operating profit fell 17.1% to ¥5,665 million, ordinary profit 17.6% to ¥6,190 million and profit attributable to owners of the parent 27.0% to ¥3,580 million, or ¥72.39 per share against ¥98.23.

The company says existing stores grew, the five stores opened last year kept ramping up and the group's subsidiaries pulled more weight, so sales held up. The problem was margin: last year's comparison was flattered by the rice shortage and by a wave of price rises, and as both unwound the gross margin on merchandise slipped from 30.4% to 30.3%. Operating gross profit therefore grew only 3.1% to ¥83,676 million, while selling, general and administrative expenses rose 5.0% to ¥78,011 million on higher wages, logistics and store-running costs. The gap between the two lines is what cost ¥1,168 million of operating profit.

The parent company carried the slowdown

At Heiwado Co., Ltd. itself, operating revenue rose 4.8% to ¥214,854 million, helped by the absorption of the subsidiaries Yanagen in May 2025 and Ale in August 2025, but operating profit fell 19.9% to ¥4,172 million. Its ordinary profit rose 15.2% to ¥7,489 million only because subsidiaries paid it larger dividends, which is why the Retail segment, measured on an ordinary-profit basis, shows profit up 13.3% to ¥7,748 million on revenue of ¥218,225 million (+3.1%). Those dividends are eliminated on consolidation: the reconciling item widened to −¥2,927 million from −¥765 million, so the segment figure overstates how the business actually did.

Elsewhere in Retail, the book and fitness subsidiary Direct Shop returned to profit after shrinking unprofitable lines, and Heiwado (China), which runs department stores in Hunan province, saw sales and profit fall in yuan terms as a large refurbishment cut floor space. The Retail-related segment, which makes prepared food and fresh products and manages buildings, grew revenue 3.8% to ¥3,580 million and profit 8.5% to ¥958 million. The restaurant businesses, including the group's Kentucky Fried Chicken franchise, lifted revenue 4.0% to ¥8,683 million, but new-store costs cut their profit 25.8% to ¥410 million.

A solid balance sheet

Total assets rose ¥7,260 million to ¥320,355 million from February 20, 2026, with property, plant and equipment, receivables and investment securities all higher. Trade payables rose ¥3,058 million and short-term borrowings ¥1,950 million, while long-term borrowings fell ¥2,590 million. Net assets reached ¥201,512 million and the equity ratio stood at 62.2%, against 62.5%. Comprehensive income rose 2.5% to ¥5,185 million, as gains on securities held offset the lower net profit.

A big second half is now required

Heiwado left its full-year FY2/2027 forecast unchanged: operating revenue of ¥478,000 million (+4.8%), operating profit of ¥14,300 million (+7.4%), ordinary profit of ¥15,200 million (+4.1%) and net profit of ¥9,800 million (+4.1%), or ¥198.16 per share. With ¥5,665 million booked in the first half, the forecast implies second-half operating profit of about ¥8,635 million, roughly a third more than the comparable period of FY2/2026 based on the published growth rates. The company says it will revise the outlook promptly if consumer conditions require it. The dividend plan is unchanged at ¥33.00 at the interim and ¥33.00 at year end, ¥66.00 for the year, the same as FY2/2026.

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.