Summary
1Q FY2/27 delivered revenue of JPY 11,721M (+36.9% YoY) and recurring profit of JPY 816M (+309.5% YoY), a sharp increase in both revenue and earnings driven by the convergence of stabilized new-generation gaming hardware supply, pull-forward demand ahead of price revisions, and strong trading card sales. On September 25, the company raised full-year consolidated guidance to revenue of JPY 43,500M and operating income/recurring profit of JPY 2,000M each. The 2Q print is therefore a checkpoint on progress against the revised plan. That said, 1Q gross profit margin came in at 34.7%, down from 37.7% a year earlier, suggesting the rising mix of new products may be weighing on profitability. We want to gauge the sustainability of the earnings level through the combination of gross margin and the SG&A ratio (27.9% in 1Q). In addition, the EC restructuring following the June termination of Furuichi Online, along with working capital expansion — merchandise inventory of JPY 5,081M and short-term borrowings of JPY 2,900M — will be key items to monitor in 2Q.
Key Points for Next Quarter
| Key Points & Focus | Implications |
|---|---|
Revenue Momentum1H cumulative revenue progress against revised full-year plan | 1Q revenue of JPY 11,721M represented 27.6% of the pre-revision full-year plan of JPY 42,500M (our estimate). 1H cumulative progress against the revised plan of JPY 43,500M, and growth from JPY 19,335M a year earlier, will determine whether the upside can be sustained. |
ProfitabilityYoY Gross Profit Margin trend and used/new product mix | 1Q came in at 34.7%, down from 37.7% YoY. Whether the company can hold the prior-year 1H level of 34.7% is the key gauge of whether new-product expansion and margin can coexist. |
Cost StructureSG&A ratio and new store opening progress | 1Q SG&A of JPY 3,273M (+8.9%), SG&A ratio of 27.9% (vs. 35.1% a year earlier). If top-line growth continues to absorb costs, the focus is whether the 6.8% Operating Income Margin (vs. 2.6% a year earlier) can be maintained. |
Business RestructuringEC trends following the termination of Furuichi Online | The June 2026 service termination flows into P&L from 2Q. We want to see how the concentration of resources into Yamatoku manifests in revenue and gross profit. |
Financials & Working CapitalMerchandise inventory, accounts receivable, and interest-bearing debt trends | At end-1Q, merchandise stood at JPY 5,081M, accounts receivable at JPY 1,412M, and short-term borrowings at JPY 2,900M. The equity ratio was 44.5% (vs. 48.8% at end-FY). The balance between inventory turnover and borrowing levels is a checkpoint. |
Key Issues from Previous Results (1Q FY2/27)
In 1Q, both used and new trading cards and games grew, producing revenue growth of +36.9% and recurring profit growth of +309.5% — a start well ahead of plan. The company left full-year guidance unchanged at the 1Q mark, then raised revenue, operating income, and recurring profit on September 25. The focus in 2Q is therefore on verifying that 1Q growth was not dependent on one-off factors. We will also track progress across the five growth strategy domains (reuse stores, reuse EC, reuse BtoB, global, IP business).
1. Sustainability of Revenue Momentum and Support for the Upward Revision
- Previous quarter: 1Q revenue of JPY 11,721M (+36.9% YoY). Management attributed this to expanded new-product demand on stabilized new-generation hardware supply, pull-forward demand ahead of price revisions, and strong trading card sales.
- What to watch this quarter: Whether there is payback from pull-forward demand, and whether growth in trading cards and used merchandise can offset it. We will check whether 1H cumulative accumulation is consistent with the September 25 upward revision (revenue of JPY 43,500M).
- Key metrics: 1H cumulative revenue vs. the prior-year period (JPY 19,335M), progress rate against the revised full-year plan of JPY 43,500M, and the trajectory of monthly sales updates.
2. Product Mix Shift and Gross Profit Margin
- Previous quarter: 1Q gross profit of JPY 4,066M with a Gross Profit Margin of 34.7%, down from 37.7% a year earlier. Growth in the new-product category likely affected the mix.
- What to watch this quarter: The gross margin level if the new-product weighting continues to rise, and the state of used-goods purchasing. We will judge, alongside absolute profit, whether higher volumes are offsetting margin compression.
- Key metrics: 1H cumulative Gross Profit Margin (34.7% a year earlier), gross profit (JPY 6,711M a year earlier), and the relationship with merchandise inventory balances.
3. SG&A Control, Store Openings, and EC Restructuring
- Previous quarter: 1Q SG&A of JPY 3,273M (+8.9%), SG&A ratio of 27.9% (vs. 35.1% a year earlier). The company opened three "Furuichi" stores (AEON Mall Kobe Kita, Ibaraki, and Chikushino) and stated it worked to contain costs amid store investment and broad cost inflation.
- What to watch this quarter: Additional shopping mall-format openings, and how the June 2026 termination of Furuichi Online and consolidation into Yamatoku flow through 2Q costs and revenue. Note that the Furuichi Top Books Namerikawa store, opened September 19, will be reflected from 3Q onward.
- Key metrics: 1H cumulative SG&A ratio (31.6% a year earlier, our estimate), Operating Income Margin (6.8% in 1Q; 3.1% in 1H of the prior year), and store count.
4. Improvement in Non-Operating Items and Quality of Recurring Profit
- Previous quarter: 1Q booked equity-method investment income of JPY 12,981K (vs. an equity-method investment loss of JPY 24,711K a year earlier). Goodwill amortization was zero (vs. JPY 10,146K a year earlier). Non-operating income was JPY 44M and non-operating expenses JPY 20M.
- What to watch this quarter: The direction of equity-method earnings and the trajectory of interest expense (JPY 10,287K in 1Q). We will check how financing costs move in a phase of rising borrowings.
- Key metrics: 1H cumulative recurring profit (JPY 592M a year earlier), the spread between operating income and recurring profit, and the breakdown of extraordinary items and income taxes.
5. Working Capital and Capital Policy
- Previous quarter: Total assets at end-1Q were JPY 15,388M (+JPY 1,081M vs. end-FY), with accounts receivable of JPY 1,412M and merchandise of JPY 5,081M both increasing. Short-term borrowings stood at JPY 2,900M (vs. JPY 1,500M at end-FY). Based on the May 19 resolution, the company acquired 1,852,000 treasury shares (JPY 248,168K), and the equity ratio declined to 44.5%.
- What to watch this quarter: The balance between inventory build ahead of the peak season and borrowing levels, plus progress on the share buyback. Full-year dividend guidance is unchanged at JPY 4.00 annually (JPY 0.00 at the 2Q-end).
- Key metrics: End-2Q merchandise balance (versus the prior-year level), interest-bearing debt balance, equity ratio, and period-end treasury share count.
Key Timely Disclosures During the Year
- 2026/09/25Notice Regarding Revision of Consolidated Earnings Forecast - Full-year FY2/27 revenue guidance was raised from JPY 42,500M to JPY 43,500M, and operating income and recurring profit each from JPY 1,600M to JPY 2,000M. Strength in trading card-related merchandise and used goods underpins the revision, making progress against the revised plan the central focus of the 2Q print.
- 2026/09/24Notice Regarding Grand Opening of Furuichi Top Books Namerikawa Store - An in-shop format FC store operated as a joint venture with Top Culture; as it opened on September 19, the P&L impact comes from 3Q onward. We want to assess store opening cost efficiency as a new channel for network expansion.
- 2026/09/07Notice Regarding Monthly Sales Summary for August 2026 - A disclosure indicating the sales trend in the final month of 2Q; combined with July (disclosed August 7), it is a leading indicator of the 1H cumulative result and whether payback from pull-forward demand has emerged.
Previous Quarter Results (1Q FY2/27 Actuals)
TAY TWO CO.,LTD. is a single-segment multi-package retailer (TSE Standard, Retail) centered on the "Furuichi" and "Furuhon Ichiba" banners, handling games, trading cards, and books in both new and used formats. Under the group vision "Connecting Communities and the World Through Reuse — 360-Degree Reuse," the "FY2026 TAY TWO Group Growth Strategy" published on April 14, 2026 identifies five business domains: reuse stores, reuse EC, reuse BtoB, global, and IP business. In 1Q, both used and new trading cards and games grew, with revenue and all profit lines substantially exceeding the prior-year period. The company left the then-current full-year plan unchanged before raising guidance in September.
| Item | Amount | YoY | Progress vs. Revised Full-Year Plan | Notes |
|---|---|---|---|---|
| Revenue | JPY 11,721M | +36.9% | 26.9% | Used goods driven by strong trading cards and games; new products supported by stabilized hardware supply and pull-forward demand ahead of price revisions |
| Operating Income | JPY 792M | +257.7% | 39.6% | Operating Income Margin of 6.8% (vs. 2.6% a year earlier); SG&A ratio down to 27.9% |
| Recurring Profit | JPY 816M | +309.5% | 40.8% | Booked equity-method investment income of JPY 12,981K (vs. a loss of JPY 24,711K a year earlier) |
| Net Income | JPY 475M | +421.8% | 47.5% | Extraordinary losses of JPY 7M (loss on sale of investment securities of JPY 7,310K; loss on retirement of fixed assets of JPY 236K) |
| EPS | JPY 7.49 | +420.1% | 47.6% | Weighted average shares outstanding of 63,542,843 |
(Progress rates against the revised full-year plan and YoY EPS are our estimates. As the company does not disclose quarterly plans, ratios are calculated against the revised full-year plan announced September 25, 2026: revenue of JPY 43,500M, operating income of JPY 2,000M, recurring profit of JPY 2,000M, Net Income Attributable to Owners of Parent Company of JPY 1,000M, and EPS of JPY 15.73.)
Progress Rate vs. Full-Year Plan (Recurring Profit Basis): 40.8% (our estimate against the post-September 25 revised full-year recurring profit of JPY 2,000M). The prior-year 1Q recurring profit of JPY 199M represented 14.7% of the prior full-year actual of JPY 1,355M (also our estimate).
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