Key Positives From The 2Q Results
Revenue rose to JPY 22,118M (+14.4% YoY), while operating income more than doubled to JPY 1,332M (+119.7% YoY). Gross margin improved, and SG&A grew more slowly than revenue, so incremental sales translated efficiently into profit. We view positively that strength in both pre-owned and new trading cards offset the post-launch decline in new hardware sales.
- Gross Margin Expansion: Gross profit margin rose to 36.0% (+1.3pt). Growth in pre-owned trading cards and games, as well as new software and hobby products, lifted gross profit to JPY 7,959M (+18.6%).
- SG&A Discipline: SG&A grew only 8.6%, bringing the SG&A-to-revenue ratio down to 30.0% (-1.6pt, our estimate). Cost efficiency improved even as the company continued to open new stores.
- Stronger 2Q Standalone Profitability: 2Q standalone (June–August) gross margin reached 37.4% (+5.1pt, our estimate). This points to a shift toward a higher-margin product mix, despite the post-launch decline in new hardware.
- Share Buyback Boosting EPS: The company repurchased 1,852,000 treasury shares for JPY 248M. The lower average share count lifted EPS to JPY 12.53 (+136.0%), outpacing net income growth.
- TAYS External Sales: External sales of TAYS, the company's trading card scanning and appraisal machine, remained solid. The company is making progress in building a B2B revenue stream that leverages its store operations know-how.
Key Concerns From The 2Q Results
2Q standalone revenue turned negative at JPY 10,397M (-3.5%, our estimate), reflecting a tough comparison against last year's new game hardware launch. Inventory build pushed operating CF to JPY -150M, so cash conversion is lagging profit growth. The company's 2H plan implies results below the prior-year 2H, and the sustainability of profit growth warrants scrutiny.
- Sharp 2Q Deceleration: 2Q standalone revenue fell 3.5% YoY, a sharp slowdown from +36.9% in 1Q standalone (our estimate). 2H will also face tough comparisons against high prior-year new hardware sales.
- Inventory Build and Negative FCF: Merchandise inventory rose to JPY 5,545M (+13.4% vs. prior FY-end), and operating CF was JPY -150M. FCF came in at JPY -410M (our estimate).
- Shift to Net Debt: Short-term borrowings increased by JPY 1,100M, bringing interest-bearing debt to JPY 3,822M. The company moved from an effectively debt-free position at the prior FY-end to net debt of JPY 711M (our estimate).
- Kumamoto Earthquake Impact: The AEON Mall Kumamoto store remains closed following the Kumamoto earthquake. A JPY 32M loss on disaster was booked as an extraordinary loss.
- Rising Trading Card Dependence: Reliance on trading cards is increasing in both pre-owned and new categories. Price volatility could affect both gross margin and inventory valuation.
Focus Areas / Items To Monitor Going Forward
- Implied 2H Profit Decline: Backing out from the full-year plan, implied 2H operating income is JPY 668M, 13.4% below the prior-year 2H figure of JPY 771M (our estimate). The key question is how much upside the year-end holiday season in 4Q, seasonally the strongest quarter, can deliver.
- Nature of the Inventory Build: Does the inventory increase reflect early purchasing ahead of the holiday season, or stockpiling in anticipation of trading card price trends? 2H inventory turnover and a recovery in operating CF are the key checkpoints.
- New Growth Drivers: We will monitor whether expansion of directly operated and franchise stores, the second store in Taiwan and TAYS external sales can grow into revenue pillars beyond trading cards.
- Assumptions on the post-launch hardware decline and trading card demand underpinning the 2H plan, which implies lower profit vs. the prior-year 2H
- Breakdown of the gap between the recurring profit plan of JPY 2,000M and the net income plan of JPY 1,000M
- Breakdown of the 13.4% increase in merchandise inventory, and how inventory valuation risk is managed if trading card prices decline
- Outlook for reopening the AEON Mall Kumamoto store and the expected earnings impact
- Rationale for the JPY 4 dividend forecast (JPY 5 in the prior year) and the overall shareholder return policy, including share buybacks
Key Financial Highlights
| Item | Value | YoY |
|---|---|---|
| Revenue | JPY 22,118M | +14.4% |
| Gross Profit | JPY 7,959M | +18.6% |
| Gross Profit Margin | 36.0% | +1.3pt |
| SG&A | JPY 6,626M | +8.6% |
| Operating Income | JPY 1,332M | +119.7% |
| Operating Income Margin | 6.0% | +2.9pt |
| Recurring Profit | JPY 1,364M | +130.3% |
| └ Equity-Method Investment Gain (Loss) | JPY 20M | Prior year: JPY -16M |
| Extraordinary Losses | JPY 64M | Prior year: JPY 0M |
| └ Loss on Disaster | JPY 32M | - |
| └ Loss on Sale of Investment Securities | JPY 31M | - |
| Interim Net Income Attributable to Owners of Parent Company | JPY 788M | +134.0% |
| EPS | JPY 12.53 | +136.0% |
| 2Q Standalone Revenue (Our Estimate) | JPY 10,397M | -3.5% |
| 2Q Standalone Operating Income (Our Estimate) | JPY 540M | +40.3% |
Profit growth was driven mainly by higher gross profit (+JPY 1,248M), which far exceeded the increase in SG&A (+JPY 522M). Below the operating line, equity-method results swung from a loss to a gain. As a result, recurring profit growth outpaced operating income growth.
Performance By Business Segment
The company operates a single segment, the Multi-Package Sales business. It organizes its operations into five domains to drive its growth strategy: Reuse Stores, Reuse EC, Reuse B2B, Global and IP Business.
Segment Performance Table
| Segment | Revenue | YoY | Operating Income | YoY | Margin |
|---|---|---|---|---|---|
| Multi-Package Sales Business (Company-Wide) | JPY 22,118M | +14.4% | JPY 1,332M | +119.7% | 6.0% |
- Pre-Owned Trading Cards and Games: The pre-owned category grew YoY on strength in trading cards and games. Rising new-product prices are boosting demand for pre-owned goods, and the company is capturing this market tailwind.
- New Software, Trading Cards and Hobby: Demand for new software expanded as the new hardware installed base grew. New trading cards and hobby products also grew, lifting the new-product category overall above the prior year.
- Reuse Stores Domain: In 1H, the company opened four directly operated "Furuichi" stores and five franchise stores. Shopping mall locations broadened its customer touchpoints.
- Reuse B2B Domain: External sales of TAYS expanded. Bundled proposals with "POP×THREE," the company's buy-price POP creation service, also delivered some results.
- New Game Hardware: Sales declined against a high prior-year base driven by the new hardware launch. 2Q standalone revenue fell 3.5% (our estimate).
- AEON Mall Kumamoto Store: The mall closed following the Kumamoto earthquake on July 28, 2026, suspending store operations. A loss on disaster was recognized.
Progress Versus Full-Year Guidance
Operating income progress reached 66.6%, well above 44.0% in the same period last year (our estimate). However, the full-year plan implies 2H revenue of JPY 21,382M, down 6.6% vs. the prior-year 2H (our estimate). With 4Q, the seasonally strongest quarter, still ahead, current progress leaves room to beat the plan.
| Item | Value (1H Cumulative) | Full-Year Plan | Progress Rate |
|---|---|---|---|
| Revenue | JPY 22,118M | JPY 43,500M | 50.8% |
| Operating Income | JPY 1,332M | JPY 2,000M | 66.6% |
| Recurring Profit | JPY 1,364M | JPY 2,000M | 68.2% |
| Net Income | JPY 788M | JPY 1,000M | 78.8% |
| EPS | JPY 12.53 | JPY 15.73 | 79.7% |
- 4Q Peak: Historically, 4Q (December–February), which includes the year-end and New Year shopping season, delivers the highest revenue and operating income of the year. Last fiscal year, 4Q standalone revenue was JPY 12,225M and operating income was JPY 419M (our estimate).
Changes To Guidance
Guidance was not revised with this earnings release. On September 25, 2026, the company had already revised the full-year forecast first published on April 14, reflecting 1H trends. The current plan calls for revenue of JPY 43,500M, operating income of JPY 2,000M (+45.2%) and net income of JPY 1,000M (+15.2%).
Commentary On Shareholder Returns
The annual dividend forecast was maintained at JPY 4.00 (interim JPY 0, year-end JPY 4.00). This is below the prior year's JPY 5.00 and implies a payout ratio of 25.4% on forecast EPS (our estimate). Based on a board resolution dated May 19, 2026, the company repurchased 1,852,000 treasury shares (JPY 248M). It also disposed of 300,000 treasury shares as restricted stock compensation.
Financial Position
The equity ratio remained close to 50% at 47.8%. However, the inventory build was funded with short-term borrowings. As a result, the company moved from an effectively debt-free position to a modest net debt position.
- Key Figures
- Leverage Metrics
| Item | Value | Additional Information |
|---|---|---|
| Cash and Cash Equivalents | JPY 2,978M | -0.2% vs. prior FY-end |
| Cash and Deposits | JPY 3,111M | +0.7% vs. prior FY-end |
| Merchandise Inventory | JPY 5,545M | +13.4% vs. prior FY-end |
| Total Assets | JPY 15,141M | +5.8% vs. prior FY-end |
| Shareholders' Equity | JPY 7,236M | +3.7% vs. prior FY-end |
| Interest-Bearing Debt | JPY 3,822M | +33.4% vs. prior FY-end |
| └ Short-Term Borrowings | JPY 2,600M | Prior FY-end: JPY 1,500M |
| └ Long-Term Borrowings (Incl. Current Portion) | JPY 1,022M | -12.3% vs. prior FY-end |
| └ Bonds (Current Portion) | JPY 200M | Unchanged from prior FY-end |
| EBITDA | JPY 1,547M | Operating income + depreciation; our estimate |
| Metric | Value | Notes |
|---|---|---|
| Net Debt/EBITDA | 0.46x | Based on 1H EBITDA; our estimate. Net cash at prior FY-end |
| Debt/Equity | 0.53x | Our estimate. Prior FY-end: 0.41x |
| Interest Coverage Ratio | 58.2x | Operating income ÷ interest expense; our estimate. Same period last year: 29.1x |
| Equity Ratio | 47.8% | Company disclosure. Prior FY-end: 48.8% |
Disclosures Released Alongside The Earnings Announcement
- 2026/10/15Released 1H earnings presentation materials, covering trends in key product categories such as trading cards and progress on the growth strategy (FY2/2027 2Q (Interim) Earnings Presentation Materials)
Major Announcements During The Quarter
- 2026/07/17Completed payment for the disposal of 300,000 treasury shares as restricted stock compensation
- 2026/08/31Launched a campaign offering JPY 5,000 in savings for customers trading up from PS4 to PS5, strengthening both buy-ins and sales during the hardware adoption phase
- 2026/09/24Held the grand opening of "Furuichi Top Books Namerikawa." Store openings will continue in 2H
- 2026/09/25Revised the full-year consolidated guidance to reflect 1H trends
- 2026/10/09Opened "Furuichi Wakkanai Shiomi" in Wakkanai, Hokkaido on October 10, extending the store network into regional cities
Large-Shareholding Filings / Material Proposals Over The Past Year
- Goshi Niinuma: 7.14%→5.26% (2026/07/17) - Pure investment
- Goshi Niinuma: 5.26%→4.24% (2026/07/23) - Pure investment; holding fell below 5%
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