ARCS (9948) Q2 2025 earnings summary

Executive summary

• Sales reached a record-high ¥302.7 billion for the interim period, up 3.6% year-over-year, but profit declined due to lower gross margin and increased SG&A expenses.

• Operating income declined 9.7% year-over-year to ¥7.16 billion, and net income attributable to shareholders fell 13.8% to ¥4.99 billion.

• Existing store average spend per customer rose 3.4% year-over-year, while customer count slightly decreased by 0.4%.

• The company implemented a new "3C" management structure and focused on local sourcing, private brand expansion, and digital initiatives.

• Gross profit improved for general foods but declined in fresh foods due to higher raw material and logistics costs.

Financial highlights

• Gross profit was ¥75.4 billion, up 2.9% year-over-year, with a gross margin of 24.9% (down 0.2pt year-over-year).

• Operating income was ¥7.1 billion, down 9.7% year-over-year, with an operating margin of 2.4% (down 0.3pt).

• Net income was ¥4.9 billion, down 13.8% year-over-year, with a net margin of 1.7% (down 0.3pt).

• SG&A expenses increased by ¥2.9 billion, mainly due to higher personnel costs, with the SG&A ratio rising 0.2 points to 22.6%.

• Cash and equivalents at period-end were ¥82.4 billion, up ¥7.7 billion from the previous year.

Outlook and guidance

• Full-year sales/revenue forecast at ¥613.0 billion, up ¥1.8 billion from initial budget and 3.6% year-over-year.

• Full-year operating income forecast at ¥17.3 billion (+2.8%), net income at ¥11.6 billion (–1.4%), with no changes to prior guidance.

• Dividend forecast unchanged at ¥68 per share for the full year.

• Initiatives for the second half include procurement integration, app-based promotions, new e-commerce, and cost controls.

• Group-wide efforts target achieving full-year budget through ¥1.28 billion in expected profit improvement from new measures.