100-yen shops drive the year
Watts Co., Ltd. (TSE: 2735), the Osaka-based operator of the Watts and Watts with 100-yen shop chains, reported consolidated results for FY8/2026, the year from September 1, 2025 to August 31, 2026, on October 9, 2026 under Japanese GAAP. Net sales rose 4.8% to ¥64,504 million, operating profit 15.9% to ¥1,645 million and ordinary profit 19.1% to ¥1,702 million. Net profit attributable to owners of the parent rose 31.0% to ¥1,140 million, or ¥85.98 per share against ¥66.00.
Existing-store sales at the 100-yen shops rose to 104.4% of the prior year, helped by a boom in stickers and by extra demand linked to a naphtha shortage caused by tensions in the Middle East. Gross profit grew 4.6% to ¥25,004 million, holding the gross margin level with the prior year as the company sold more higher-priced items and relied on cost-competitive proposals from suppliers. Selling, general and administrative expenses rose 3.9% to ¥23,359 million on higher variable rents, pay raises and minimum-wage increases, all within plan.
Sales by business
The domestic 100-yen shop business grew sales 5.3% to ¥60,419 million, while the other domestic businesses, the Buona Vita variety-goods stores and the Real discount shops, were flat at ¥3,455 million (−0.2%). Overseas sales fell 13.4% to ¥628 million after Watts sold all its shares in its Peruvian subsidiary, Watts Peru S.A.C., in July and turned to wholesale exports, which now reach more than 30 countries. The group opened 161 stores and closed 110, ending August with 1,951; Watts-brand stores numbered 1,681, or 87.0% of the 100-yen shop network.
Balance sheet and shareholder returns
Operating cash flow swung to an inflow of ¥1,812 million from an outflow of ¥1,768 million. Cash and cash equivalents fell ¥1,449 million to ¥4,737 million as the company repaid ¥2,192 million of long-term debt, part of a shift toward more flexible short-term funding ahead of higher interest rates. Total assets fell 5.4% to ¥26,016 million while net assets rose 6.9% to ¥13,923 million, lifting the equity ratio to 53.5% from 47.3%. The year-end dividend was raised to ¥18.50 from the planned ¥15.50, for an annual ¥26 against ¥23, and the board approved a buyback of up to 515,800 shares, or ¥400 million, between October 13, 2026 and February 18, 2027.
FY8/2027 outlook and new plan
For FY8/2027 Watts forecasts net sales of ¥65,530 million (+1.6%), operating profit of ¥1,804 million (+9.6%), ordinary profit of ¥1,804 million (+6.0%) and net profit of ¥1,155 million (+1.3%), with the annual dividend held at ¥26. It warned that large minimum-wage increases will weigh on store costs given its reliance on part-time staff. Its first medium-term plan targets net sales of ¥70,000 million and operating profit of ¥2,300 million in FY8/2029, and a longer-term 2035 Vision aims for ¥100 billion of sales and a 5.0% operating margin.
| Metric | FY8/2026 | FY8/2025 | Change |
|---|---|---|---|
| Net sales (¥ million) | 64,504 | 61,578 | +4.8% |
| Gross profit (¥ million) | 25,004 | 23,907 | +4.6% |
| SG&A expenses (¥ million) | 23,359 | 22,488 | +3.9% |
| Operating profit (¥ million) | 1,645 | 1,419 | +15.9% |
| Ordinary profit (¥ million) | 1,702 | 1,429 | +19.1% |
| Pre-tax profit (¥ million) | 1,614 | 1,369 | +17.9% |
| Net profit attrib. to owners of parent (¥ million) | 1,140 | 870 | +31.0% |
| EPS (¥) | 85.98 | 66.00 | +30.3% |
| Domestic 100-yen shops — revenue (¥ million) | 60,419 | 57,390 | +5.3% |
| Other domestic businesses — revenue (¥ million) | 3,455 | 3,462 | −0.2% |
| Overseas — revenue (¥ million) | 628 | 725 | −13.4% |
| Total assets (¥ million) | 26,016 | 27,510 | −5.4% |
| Net assets (¥ million) | 13,923 | 13,029 | +6.9% |
| Equity ratio | 53.5% | 47.3% | +6.2 pt |
| FY8/2027 guidance — revenue (¥ million) | 65,530 | — | +1.6% |
| FY8/2027 guidance — operating profit (¥ million) | 1,804 | — | +9.6% |
| FY8/2027 guidance — ordinary profit (¥ million) | 1,804 | — | +6.0% |
| FY8/2027 guidance — net profit (¥ million) | 1,155 | — | +1.3% |
| Annual dividend per share (¥) | 26.00 | 23.00 | +13.0% |
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.