TAY TWO CO., LTD. Full-Year (4Q) Earnings Preview
Three pillars of trading cards, hobby products, and new games drove 87% guidance achievement rate on operating income through 3Q cumulative; a quarter to assess potential for full-year upside and the impact of rising store-opening investment costs
Summary
Under three strategic pillars—"expanding reuse operations, focusing on e-commerce, and strengthening the management foundation"—Teitsuu Inc. has captured expanding demand for trading cards and hobby products along with the new game hardware cycle, achieving cumulative 3Q operating income of JPY 958M (87.1% achievement rate against the full-year guidance of JPY 1,100M). For the full-year results, the key focus areas will be 4Q standalone revenue and profit levels (including the year-end holiday season), the full-scale impact of six new store openings, and the earnings contribution of BtoB operations such as TAYS. Additionally, the gain on sale of investment securities (~JPY 82M) disclosed as a subsequent event is likely to boost bottom-line profit, and the company's stance toward improving capital efficiency is also noteworthy. With the broader reuse market in an expansion phase targeting JPY 4T by 2030, the medium- to long-term investment thesis hinges on whether Teitsuu's differentiated strategy—a trading card/hobby-specialized reuse model combined with its "360-degree reuse" approach—can enhance the quality of growth.
Key Points for Next Quarter
| Key Points & Focus | Implications |
|---|---|
Full-Year Upside PotentialFull-year guidance achievement rate for operating income | 3Q cumulative operating income of JPY 958M represents 87.1% progress against the full-year guidance of JPY 1,100M. Compared to the prior-year 3Q achievement rate (our estimate: ~43.0%), upside expectations are elevated. |
Changes in Revenue Mix by Product4Q standalone revenue trends for pre-owned trading cards and new games | Pre-owned trading cards reached JPY 5,825M through 3Q cumulative (+25.7% YoY); new games reached JPY 6,910M (+43.9% YoY). Need to verify growth rates in 4Q inclusive of year-end holiday season effects. |
ROI on Store-Opening StrategyEarnings contribution from six new stores | Six "Furuichi" stores opened through 3Q cumulative. SG&A rose to JPY 9,200M (+9.3% YoY), making the payback of store-opening investments in terms of revenue and profit a key metric. |
Capital Efficiency & Financial SoundnessTrends in equity ratio and interest-bearing debt balance | Equity ratio of 41.1% (vs. 45.9% at prior FY-end) and short-term borrowings of JPY 3,500M (vs. JPY 2,000M at prior FY-end) indicate that aggressive investment is impacting the balance sheet. Need to confirm the improvement effect from booking the JPY 82M gain on sale of investment securities. |
Gross Profit Margin StabilityMix shift between pre-owned and new products and gross margin | 3Q cumulative gross profit margin was 33.9% (vs. 34.0% in the prior-year period). Monitoring the margin impact of a rising new-product mix (new-product ratio: 49.2% vs. 46.1% in the prior year). |
Global & BtoB Segment ProgressRevenue contribution from Taiwan operations and TAYS external sales | Tracking early-stage results from medium-term growth drivers, including the Taiwan "Furuichi × Manga Exhibition" store opening and expanded sales following TAYS patent acquisition. |
Alignment with Medium-Term Management PlanPath toward the FY02/2029 operating income target of JPY 2.5B | The landing point for this fiscal year's full-year guidance of JPY 1,100M (+20.6% YoY) will determine credibility of the FY02/2029 operating income target. |
Key Issues from Previous Results (FY02/2026 3Q Results)
Cumulative 3Q revenue of JPY 30,008M (+15.7% YoY) and operating income of JPY 958M (+144.1% YoY) marked robust top- and bottom-line growth. Strong performance in pre-owned trading cards and hobby products was complemented by demand uplift from the launch of new game hardware in the new games segment. While SG&A trended higher due to store-opening investments and rising expenses, revenue growth more than offset these increases, driving improved cost efficiency. The following issues should be verified in the full-year results.
1. Sustainability of Trading Card & Hobby Product Growth
- Prior Period: Pre-owned trading cards JPY 5,825M (+25.7%), pre-owned hobby products JPY 1,130M (+27.1%)—both delivered double-digit growth
- This Quarter Verification: Stability of trading card market prices in 4Q standalone; strength of demand during the year-end holiday season
- Key Metrics: Full-year YoY growth rate for total trading card revenue; maintenance of the pre-owned product ratio (49.7% through 3Q cumulative)
2. Duration of New Game Hardware Effect and Reversion Risk
- Prior Period: New games at JPY 6,910M (+43.9%) were the single largest revenue growth driver
- This Quarter Verification: Sustainability of hardware and software sell-through in 4Q; spillover effect into pre-owned game sales
- Key Metrics: 4Q standalone new game revenue YoY; impact of rising new-product mix on gross profit margin
3. Balance Between Accelerated Store Openings and SG&A Control
- Prior Period: SG&A at JPY 9,200M (+9.3%), but SG&A ratio improved by -1.8pt
- This Quarter Verification: Whether additional stores opened in 4Q; same-store sales growth; speed to breakeven for new locations
- Key Metrics: Full-year YoY improvement in SG&A ratio; 4Q standalone OPM (our estimate: 4Q standalone operating income of JPY 142M on a full-year guidance basis, implying a low 1.4% OPM)
4. Growth Contribution from E-Commerce and BtoB
- Prior Period: Yamtoku new headquarters commenced operations; expanded sales driven by TAYS patent acquisition; trading card inventory search terminal went live
- This Quarter Verification: Full-year landing for e-commerce revenue; TAYS external unit sales and earnings contribution; impact of inventory search terminal on customer satisfaction
- Key Metrics: E-commerce revenue growth rate; whether BtoB segment revenue/margins are separately disclosed
5. Changes in Financial Foundation and Capital Efficiency
- Prior Period: Equity ratio at 41.1% (-4.8pt); short-term borrowings increased by JPY 1,500M
- This Quarter Verification: Full-year inventory turnover ratio; interest-bearing debt levels at 4Q-end; impact of investment securities sale gain on bottom-line profit
- Key Metrics: Full-year ROE (our estimate: net income JPY 700M / net assets JPY 6,500M ≈ 10.8%); maintenance of JPY 4.00/share dividend (projected payout ratio of 36.1%)
Timely Disclosure & Industry Trends
- 2026/01/14FY02/2026 3Q Earnings Summary — Revenue of JPY 30,008M (+15.7% YoY), operating income of JPY 958M (+144.1% YoY), achieving strong top- and bottom-line growth with high progress against full-year guidance. No revision to guidance. Teitsuu 3Q Earnings Summary
- 2025/11/20Furuichi AEON Mall Fukuoka Store Grand Opening — Mall-based store opening in the Kyushu region, expanding the trade area. Contributed to higher foot traffic as the sixth store opened during the 3Q period. Furuichi AEON Mall Fukuoka Store Opening
- 2025/09/25Termination of Capital and Business Alliance with TORICO Inc. and Continuation of Business Alliance — The capital alliance was dissolved but the business alliance continues. No impact on operations of the Taiwan joint store "Furuichi × Manga Exhibition." Removed from equity method; equity-method investment loss of JPY 16M already recorded.
Previous Quarter Results (FY02/2026 3Q Actual)
Teitsuu Inc. operates a nationwide chain of entertainment and hobby specialty reuse stores under the "Furuichi" and "Book Market" brands, with trading cards, games, and hobby products as core merchandise. Under the "FY2025 Teitsuu Group Growth Strategy," the company is pursuing operations across five domains: reuse stores, e-commerce, BtoB, global, and IP business. Through 3Q cumulative, revenue reached JPY 30,008M (+15.7% YoY) and operating income was JPY 958M (+144.1% YoY), landing well ahead of pace against full-year guidance. The new game hardware effect and strong trading card/hobby product demand drove top-line growth, while improvement in the SG&A ratio also contributed to profit expansion.
| Item | Amount | YoY | vs. Guidance | Remarks |
|---|---|---|---|---|
| Revenue | JPY 30,008M | +15.7% | 75.0% achieved | Led by trading cards and new games |
| Operating Income | JPY 958M | +144.1% | 87.1% achieved | SG&A ratio 30.7% (-1.8pt improvement) |
| Recurring Profit | JPY 941M | +122.7% | 85.5% achieved | Equity-method investment loss of -JPY 16M recorded |
| Net Income | JPY 548M | +154.5% | 78.3% achieved | Income taxes JPY 402M (effective tax rate 42.4%) |
| EPS | JPY 8.63 | +152.8% | - | Weighted average shares outstanding: 63,536K |
Achievement Rate vs. Full-Year Guidance: Operating income 87.1% (prior-year period, our estimate: ~43.0%)
Company Information
- Company Name: TAY TWO CO., LTD.
- Ticker: 7610
- Listed Market: Tokyo Stock Exchange Standard Market
- Fiscal Year-End: February
- Core Business: Operation of entertainment and hobby specialty reuse stores "Furuichi" and "Book Market"; buying and selling of pre-owned and new trading cards, games, hobby products, books, etc.; e-commerce business; BtoB operations including the TAYS trading card appraisal device
Envalith, Inc. ("Envalith") provides exclusive research coverage services to domestic and international institutional investors, as well as domestic individual investors, with the objective of contributing to the development of global and Japanese capital markets by providing information necessary for considering investments in Japanese listed companies.
- Purpose and Disclaimer Regarding Investment Decisions
This report has been prepared solely for informational purposes and does not constitute a solicitation to acquire, sell, or hold securities or any other financial products. Furthermore, this report does not constitute specific investment, financial, or tax advice. Any opinions, judgments, or recommendations contained herein are not intended to induce investment activities. Please be advised that all investment decisions must be made based on the investor's own responsibility and judgment, and Envalith and subject company shall not be involved in any such investment decisions.
- Information Sources, Accuracy, and Disclaimer of Warranty
This report has been prepared based on a formal request from the subject company, utilizing information provided by and interviews conducted with said company. By using this report, you are deemed to have agreed to the following: 1. Information Sources: This report is prepared on the assumption that the publicly available information and information disclosed by the subject company and provided during interviews is true and reliable. Envalith has not independently verified or validated the veracity of such information. 2. Accuracy: The interpretations, analyses, and hypotheses or conclusions based thereon contained in this report are independently derived by Envalith using its own perspectives and analytical methods based on the information mentioned in the preceding paragraph. 3. Disclaimer of Warranty: In the event that there are errors or omissions in the information disclosed by the subject company, Envalith and subject company shall not be held liable for any inaccuracies in this report resulting therefrom. Envalith and subject company make no warranties, whether express or implied, regarding the accuracy, safety, validity, completeness, or any other aspect of this report, nor regarding the past or future performance of the subject company.
- Limitation of Liability
Envalith and subject company shall not be liable for any costs, damages, or losses (including direct, indirect, incidental, consequential, or punitive damages) arising from the use of this report or the information obtained therefrom. Users of this report acknowledge and agree that such use is at their own risk.
- Potential Conflicts of Interest
Envalith may have, or may have in the future, business relationships with the subject company. Accordingly, investors should be aware that conflicts of interest may exist that could affect the objectivity of this report.
- No Obligation to Change or Update Content
The contents and opinions in this report, as well as the information upon which it is based, are current as of the date of preparation and are subject to change without notice. Please be advised that Envalith is under no obligation to update the contents of this report, and investors must verify the timeliness of the information on their own.
- Governing Language
This report is prepared in Japanese, English, and Chinese. In the event of any discrepancy or difference in interpretation between the language versions, the Japanese version shall be treated as the original and shall prevail.
- Copyright
All rights (including copyrights) relating to this report belong to Envalith. Any reproduction, redistribution, or other use of all or part of this report without the prior written permission of Envalith is strictly prohibited.
- Use for Other Investment Products
Except where Envalith has provided prior written approval, the use of this report and the trademarks or trade names of Envalith or the subject company in connection with the information distribution, transaction, sales promotion, or advertising of any investment products (including derivatives, structured products, investment trusts, or investment assets whose price, return, or performance is based on or linked to this report) is strictly prohibited.