cawachi limited

Business Details

The company operates suburban mega drugstores (sales floor area of 400 tsubo or more) selling pharmaceuticals, cosmetics, sundries, and general food products. With the Tohoku, Kanto, and Koshinetsu-Tokai regions as its core trading area, it actively develops "healthcare center-type" stores incorporating attached dispensing pharmacies. Under the "Pharmacy・more" concept, it offers community-oriented stores that combine convenience and specialization through barrier-free design, expansive parking, and single-floor layouts. As of the end of FY2026 (ending March 2026), the company operated 386 stores (160 with attached pharmacies).

Recent Overview

Net profit fell 34.5% due to expanded impairment losses; dividend of ¥100 including commemorative payment

In FY2026 (ending March 2026), net sales were ¥284,492 million (down 1.2% year on year) and operating profit was ¥6,779 million (down 9.1% year on year). Profit attributable to owners of parent fell to ¥3,200 million (down 34.5% year on year), primarily due to an impairment loss of ¥2,117 million (versus ¥861 million in the prior period) recorded mainly on stores with no expected earnings recovery. On the other hand, operating cash flow improved to ¥8,865 million compared with the prior period. During the period, six new stores were opened—three in Tochigi Prefecture and one each in Miyagi, Fukushima, and Ibaraki Prefectures—bringing the period-end store count to 386. The company paid a dividend of ¥100 per share, including a ¥20 commemorative dividend marking its 65th founding anniversary. For FY2027 (ending March 2027), the company plans to increase the ordinary dividend by ¥20 to an annual total of ¥100 (changing to two payments of ¥50 each at interim and year-end). The forecast for the next fiscal year calls for net sales of ¥285,000 million and operating profit of ¥5,100 million (down 24.8% year on year), continuing the profit decline.

Key Products

Growth Drivers

• Increasing number of prescriptions filled amid a growing elderly population
• Expansion of new store openings for pharmacy-attached store formats (160 stores as of the end of FY2026)
• Enhanced specialization through expanded merchandising of health foods, preventive care, and beauty-related products
• Cost reductions through the promotion of systemization and automation aimed at overall efficiency improvement
• Responding to lifestyle changes and revitalizing existing stores through renovations and demand-stimulation measures
• Increasing market share through concentrated store openings in dominant areas (Tohoku and Kanto)

Risks

• Increased store openings by competitors and intensifying cross-industry competition
• Growing consumer restraint and thrift orientation amid continued price increases across various product categories
• Risk of persistently high impairment losses due to an increasing number of stores with no expected earnings recovery (¥2,117 million in the current period)
• Risk of stagnant personal consumption if wage growth fails to outpace price increases
• Risk of economic downside from geopolitical risk, exchange rate fluctuations, and changes in overseas conditions
• Forecast for the next fiscal year of operating profit of ¥5,100 million (down 24.8% year on year), indicating a further decline in profit levels
• Strategic uncertainty due to the medium-term management plan remaining undetermined (under review in light of the situation in the Middle East, etc.)