OKUWA CO., LTD.

Business Details

Centered on Oakwa Co., Ltd., the Group operates a chain of supermarkets in the Kinki, Tokai, and Hokuriku areas. Net sales account for over 90% of consolidated net sales, making this a single reportable segment. Sunrise Co., Ltd. (agricultural products processing & delivery) and Oak Foods Co., Ltd. (food service business) complement the business. The Group's basic stance is to provide food safety, peace of mind, and a rich lifestyle, developing community-based products and services. Consolidated operating revenue for the first quarter of FY2027 (ending March 2027) (February 21, 2026 to May 20, 2026) was ¥59,708 million.

Recent Overview

In the first quarter, a decline in customer traffic, lower gross margin, and higher SG&A expenses combined to push operating profit into a loss of ¥318 million

In the first quarter of FY2027 (ending March 2027) (February 21, 2026 to May 20, 2026), net sales struggled (¥56,426 million, down 0.7% year on year) as customer traffic fell below the same period of the prior year due to the strengthening of consumers' saving mindset. Gross profit also contracted to ¥15,354 million (down 1.7% year on year) due to a decline in the gross profit margin, while SG&A expenses increased to ¥18,955 million (up 0.9% year on year), driven mainly by personnel costs, resulting in an operating loss of ¥318 million (compared to operating profit of ¥59 million in the same period of the prior year). Consolidated subsidiaries Oak Foods Co., Ltd. and Sunrise Co., Ltd. both also saw profit declines. There is no change to the full-year earnings forecast (operating revenue of ¥255,500 million, operating profit of ¥2,100 million), with a recovery expected from the second quarter onward.

Key Products

Growth Drivers

• Clarifying priority products by business format based on marketing analysis and implementing measures to increase customer visits
• Customer retention through one-to-one marketing based on purchase data analysis using the company's official app
• Improving store operational efficiency and optimizing costs through DX utilization
• Stable growth in real estate leasing revenue (¥1,036 million in the first quarter, up 3.9% year on year)
• Enhancing corporate value through the promotion of sustainability management, including decarbonization, plastic reduction, and food loss reduction
• New customer acquisition and regional contribution through a focus on the mobile sales business

Risks

• Decline in customer traffic and sluggish sales due to strengthening of consumers' saving mindset and defensive purchasing restraint
• Cost pressure from various fixed cost increases, including the continued rise in personnel costs (minimum wage increases)
• Decline in gross profit margin due to rising prices of food and daily necessities
• Intensifying competition that crosses business format boundaries (drugstores, e-commerce, etc.)
• Sustained high energy and raw material prices stemming from geopolitical risk
• Deterioration in profitability due to rising logistics costs and factors such as lower vegetable market prices at consolidated subsidiary Sunrise Co., Ltd.
• Structural market contraction due to the declining birthrate, aging population, and shrinking household sizes
• Risk of impairment of fixed assets
• Risk regarding the recoverability of deferred tax assets (risk of changes in estimates of future taxable income)