Chikaranomoto Holdings Q1 FY2027 Earnings Deep Dive Report

Chikaranomoto Holdings Co., Ltd. (Securities Code: 3561), the global operator of the "Ippudo" ramen chain, has released its financial results for the first quarter of the fiscal year ending March 31, 2027 (April–June 2026).

This report provides a detailed, multi-faceted analysis of the company's performance highlights, segment-specific trends, progress in growth investments, and the full-year outlook and shareholder return policy, based on the disclosed financial materials.

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1. Overview of Financial Results and Performance Highlights

In Q1 FY2027, consolidated net sales reached ¥9,006 million (+5.9% YoY) , marking a record high for a first quarter . The domestic store operations and product sales businesses served as the primary drivers of growth, while the overseas store operations business also secured steady revenue increases.

On the profit front, rising raw material costs and labor expenses, combined with costs associated with proactive investments in human capital and strengthening the foundation of overseas operations for future growth, resulted in an operating profit of ¥239 million (-48.6% YoY) . Additionally, due to the absence of the gain on the sale of fixed assets recorded in the same period last year, net profit attributable to owners of the parent stood at ¥185 million (-71.0% YoY) .

The slide above presents key data on major profit and loss items for the first quarter, comparing them to the previous year and the internal plan. While sales are steadily expanding, the cost of sales ratio rose to 31.6% (+1.6pt YoY) and the SG&A ratio increased to 65.7% (+1.2pt YoY). These figures reflect the upfront implementation of growth investments—such as improving employee compensation, enhancing store operations, and global marketing—while absorbing cost increases in an inflationary environment.

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2. Segment Performance and Qualitative Analysis

The company’s business is divided into three segments: "Domestic Store Operations," "Overseas Store Operations," and "Product Sales" (note: segment classifications were partially revised this fiscal year). Below is a detailed look at each.

(1) Domestic Store Operations: Contribution from New Openings and Inbound Demand

• Net Sales : ¥4,603 million (+4.4% YoY)
• Operating Profit : ¥186 million (-42.9% YoY)

The domestic store operations segment achieved record-high Q1 sales , bolstered by the contribution of new store openings. The increase in average spend per customer was supported by inbound demand , with the internal estimate for the inbound ratio reaching 18.8% in Q1.

Existing store sales remained at the same level as the previous year (99.6% of the previous year's level) despite no price hikes. In terms of expansion, the company opened 6 stores and closed 1, resulting in a net increase of 5 stores . Multi-brand development is progressing, including the expansion of "Ippudo" areas and the strengthening of the "Najimatei" dominant strategy.

Profitability was impacted by investments in improving the labor environment (e.g., base salary increases and reduced working hours) and rising raw material costs. However, positive effects, such as lower turnover rates and improved staff skills and productivity, are beginning to emerge.

(2) Overseas Store Operations: Localized Marketing and New Market Development

• Net Sales : ¥3,627 million (+4.8% YoY)
• Operating Profit : ¥37 million (-79.6% YoY)

The overseas store operations segment secured revenue growth, including a +5.7pt impact from foreign exchange rates across all directly managed stores. Excluding currency effects, existing store sales remained flat year-on-year. The company is accelerating store openings tailored to market characteristics, such as entering the growth market of Bentonville in the U.S. Midwest and launching the Halal-compliant "Ramen Mania" concept in Asia.

Profitability saw a significant decline due to a combination of global cost increases, extreme weather, and shifts in foot traffic, which made changes in the business environment more pronounced in certain areas. In response, the company is restructuring its profit base through price revisions, menu updates, personnel reallocation, and the expansion of its product sales business.

(3) Product Sales: A Profit Driver Recording Record-High Growth

• Net Sales : ¥776 million (+22.6% YoY)
• Operating Profit : ¥100 million (+66.9% YoY)

The product sales business achieved the most significant growth among all segments. It maintained high profitability with an operating profit margin of 13.0% , with both sales and profit reaching record highs.

The slide above shows the quarterly performance and key initiatives of the product sales business. The dramatic growth is attributed to three main factors:

1. Strengthening E-commerce and B2B Sales : The introduction of limited-edition and collaborative products on the company's e-commerce site, alongside the expansion of B2B channels.
2. Collaboration with Major CVS and Food Manufacturers : Regular releases of collaborative products have enhanced brand awareness and attracted new customers.
3. Overseas Product Sales and New Market Development : Expansion into new markets such as Mexico and the growth of plant-based products for international markets.

Because the product sales business has lower fixed costs and higher profit margins compared to store operations, it is positioned as a key business area to drive the group's overall profit growth moving forward.

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3. Investments for Mid-to-Long-Term Growth and Financial Foundation

Promotion of DX and Human Capital Investment

To ensure sustainable future growth, the company continues to make strategic investments while keeping the SG&A ratio in check . The ratio of company-wide costs to sales is controlled at a low level of 0.9% .

• DX Investment : To improve store operational efficiency, the company is sequentially introducing advanced equipment such as mobile ordering, self-checkout kiosks, and automatic ramen cookers , creating an environment where staff can focus on high-value tasks like customer service.
• Human Capital Investment : The company is fostering communication and deeper understanding among multinational staff through initiatives like global leadership conferences and the use of AI translation.

Expansion of Store Network

As of the end of June 2026 (end of March for overseas), the company’s store network spans 16 countries and regions , totaling 323 stores (+6 stores from the end of the previous fiscal year).

• Domestic : 151 directly managed, 27 licensed, total 178 stores
• Overseas : 75 directly managed, 70 licensed, total 145 stores

Maintaining a Sound Financial Base

As of the end of June 2026, the consolidated equity ratio rose to 62.2% (from 60.3% at the end of March 2026), maintaining a very sound financial foundation . The company holds ¥6,913 million in cash and deposits, ensuring sufficient liquidity to support future store openings and various investments.

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4. Full-Year FY2027 Earnings Forecast and Shareholder Return Policy

Full-Year Consolidated Earnings Forecast

Despite the temporary pressure on profits in the first quarter, the company has not changed its initial plan, which anticipates increased revenue and profit for the full year.

• Net Sales : ¥40,125 million (+10.7% YoY)
• Operating Profit : ¥2,595 million (+11.6% YoY)
• Ordinary Profit : ¥2,638 million (+2.2% YoY)
• Net Profit Attributable to Owners of the Parent : ¥1,807 million (-1.2% YoY)

The slide above shows the full-year earnings forecast for FY2027. The company aims to surpass the ¥40 billion milestone in net sales and plans for a double-digit increase in operating profit to ¥2,595 million .

Basic strategies to achieve the full-year plan include:

• Domestic Store Operations : Plan to open 15–20 stores annually. Improve productivity through capital investment and continue capturing inbound demand.
• Overseas Store Operations : Plan to open 16 stores annually while optimizing the profit structure by closing unprofitable stores (net increase of 3 stores expected). Aim for profit growth through DX initiatives and expansion into new market areas.
• Product Sales : Strengthen collaboration with major convenience stores, expand sales to large-scale retailers, and boost exports.

Shareholder Return Policy (5th Consecutive Year of Dividend Increases)

Chikaranomoto Holdings maintains a policy of providing stable returns, targeting a dividend payout ratio of 20% or higher over the mid-to-long term.

For FY2027, the company plans an annual dividend of ¥24.00 per share (an interim dividend of ¥12.00 and a year-end dividend of ¥12.00), consisting of a ¥22 ordinary dividend and a ¥2 special dividend. If executed, this will mark the 5th consecutive year of dividend increases . Additionally, the company is transitioning its shareholder benefit program from paper-based to electronic cards to improve convenience and reduce environmental impact.

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5. Conclusion

Chikaranomoto Holdings' Q1 FY2027 results showed that while rising raw material and labor costs, along with upfront investments, temporarily pressured profits, the company's top-line growth remains clear, with net sales reaching a record high for a first quarter .

In particular, the company is making steady progress on measures to improve mid-to-long-term profitability, such as the rapid growth of the high-margin product sales business , the reliable capture of inbound demand in Japan, and store efficiency improvements through DX and automation . Moving forward, attention will be focused on the company's progress toward achieving its full-year targets of ¥40,125 million in sales and ¥2,595 million in operating profit, driven by the rationalization of unprofitable overseas stores and the realization of various investment effects.