UNITED ARROWS LTD. (7606): FY2025 Results Summary — Record Profit as COEN Divestment Sharpens Focus on Mid-to-High-Price Business

This article is based on publicly available IR materials and is not a recommendation to buy or sell any specific securities.

Note: UNITED ARROWS LTD.’s fiscal year ends March 31. The company labels the year ended March 31, 2026 as “FY26/3” and the year ending March 31, 2027 as “FY27/3”; the text and tables below keep the company’s own labels. For FY26/3, consolidated net sales rose to ¥164,603 million (109.1% year on year), exceeding the company’s revised forecast, and the consolidated gross margin improved 0.3 percentage points to 52.4%, its highest level since FY2015/3. Operating income rose to ¥9,126 million (114.3% year on year) and net income attributable to owners of parent rose to ¥6,112 million (142.7% year on year), with the completed transfer of all shares of COEN CO., LTD. on March 2, 2026 among the notable events of the period.

Consolidated Results (FY26/3 Actual)

Consolidated revenue and all profit measures increased year on year and exceeded the revised forecasts. Gross profit rose to ¥86,230 million and the gross margin improved to 52.4%. Despite an increase in SG&A expenses (advertising, personnel, rent, depreciation and system-related costs, including a one-time special bonus in the fourth quarter), the SG&A ratio held flat at 46.8%, and operating income rose to ¥9,126 million (114.3% year on year). Ordinary income rose to ¥9,313 million (109.1% year on year). Extraordinary losses widened to ¥1,974 million, but net income attributable to owners of parent still rose to ¥6,112 million (142.7% year on year).

Item (Millions of yen)	FY26/3	FY25/3	Change	YoY
Sales	164,603	150,910	13,693	109.1%
Gross profit	86,230	78,629	7,600	109.7%
Gross margin (vs. sales)	52.4%	52.1%	0.3pt	－
SGA expenses	77,103	70,645	6,458	109.1%
SGA ratio (vs. sales)	46.8%	46.8%	0.0pt	－
Operating income	9,126	7,984	1,142	114.3%
Operating margin (vs. sales)	5.5%	5.3%	0.3pt	－
Non-operating P/L	187	555	(368)	33.7%
Ordinary income	9,313	8,539	774	109.1%
Extraordinary P/L	(1,974)	(1,456)	(517)	－
Net income attributable to owners of parent	6,112	4,282	1,830	142.7%
Net margin (vs. sales)	3.7%	2.8%	0.9pt	－

Segment Results

Non-consolidated total business unit sales increased to ¥129,746 million (109.9% year on year), led by the Trend-conscious Market (UA, BY, DRAWER and others), which increased to ¥83,970 million (108.8% year on year), and the Basic Trend-conscious Market (GLR and CITEN), which increased to ¥45,775 million (112.0% year on year), with particularly strong momentum in GLR and store openings of CITEN. By channel, non-consolidated retail sales rose to ¥87,051 million and online sales rose to ¥40,564 million. Among group companies, UNITED ARROWS TAIWAN LTD. posted an increase in revenue and profit with sales of ¥2,221 million (109.6% YoY), supported by sales growth and improved gross margin despite higher SG&A expenses. COEN CO., LTD. posted a decline in revenue and profit with sales of ¥9,031 million (86.6% YoY) before the Company completed the transfer of all its shares to Gyet Co., Ltd. on March 2, 2026. UNITED ARROWS SHANGHAI LTD., whose e-commerce sales fell short of expectations while its brick-and-mortar stores delivered a stronger-than-planned start, opened its second store in the Shenzhen area in March 2026 and its third store in the Hangzhou area in April 2026. Reflecting the COEN divestment, the store network changed from 322 stores (FY25/3) to 273 stores (FY26/3): UNITED ARROWS LTD. increased from 238 to 258 stores (27 opened, 7 closed), COEN CO., LTD. went from 74 stores to none, UNITED ARROWS TAIWAN LTD. increased from 10 to 14 stores, and UNITED ARROWS SHANGHAI LTD. opened its first store.

Item (Millions of yen)	FY26/3	FY25/3	Change	YoY
Total business unit sales	129,746	118,098	11,647	109.9%
Trend-conscious Market	83,970	77,211	6,758	108.8%
Basic Trend-conscious Market	45,775	40,886	4,889	112.0%

FY27/3 Forecast

For FY27/3, the company forecasts sales growth to offset the impact of the COEN divestment, with stable full-year margins and higher profits driven by SG&A control. Sales are forecast at ¥166,180 million (101.0% YoY), operating income at ¥10,000 million (109.6% YoY, 6.0% of sales), ordinary income at ¥10,083 million (108.3% YoY), and net income attributable to owners of parent at ¥6,175 million (101.0% YoY).

Item (Millions of yen)	FY27/3 Forecast	FY26/3 (Actual)	Change	YoY
Sales	166,180	164,603	1,576	101.0%
Gross profit	87,057	86,230	826	101.0%
Gross margin (vs. sales)	52.4%	52.4%	0.0pt	－
SGA expenses	77,057	77,103	(46)	99.9%
SGA ratio (vs. sales)	46.4%	46.8%	-0.5pt	－
Operating income	10,000	9,126	873	109.6%
Operating margin (vs. sales)	6.0%	5.5%	0.5pt	－
Non-operating P/L	83	187	(104)	44.4%
Ordinary income	10,083	9,313	769	108.3%
Extraordinary P/L	(624)	(1,974)	1,350	－
Net income attributable to owners of parent	6,175	6,112	62	101.0%
Net margin (vs. sales)	3.7%	3.7%	0.0pt	－

Shareholder Returns

The company’s dividend policy is based on a payout ratio of 40% or more. Annual dividend per share rose from ¥63.00 in FY25/3 (payout ratio 40.6%) to ¥89.00 in FY26/3 (interim ¥20.00, year-end ¥69.00), a payout ratio of 40.2%, up ¥26 year on year and ¥9 above the revised forecast. For FY27/3, the company forecasts a further increase to an annual dividend of ¥92.00 per share (interim ¥32.00, year-end ¥60.00), a projected payout ratio of 41.2%, ¥3.00 above the previous year. The company also plans a share repurchase of up to 1.0 million shares (up to ¥2.0 billion) over the period from May 12 to August 31, 2026.

Fiscal Year	Interim	Year-End	Annual DPS	Payout Ratio
FY26/3	20.00	69.00	89.00	40.2%
FY27/3 (Forecast)	32.00	60.00	92.00	41.2%

Medium-Term Plan / Topics

FY26/3 was the final year of the Medium-Term Management Plan 2023-2025. Versus FY23/3, consolidated sales reached ¥164,603 million (126.5% of the FY23/3 level), consolidated operating profit reached ¥9,126 million (143.4% of the FY23/3 level), the consolidated operating margin improved 0.6 percentage points to 5.5%, and ROE improved 1.7 percentage points to 15.3% — reaching the plan’s target figures for sales, operating profit and ROE. The company has now formulated the Medium-Term Management Plan 2026-2028, with a strategy to “become a high-sensitivity, high value-added Group with global scope and Japanese pride,” targeting consolidated sales of ¥185–195 billion, consolidated operating profit of ¥11.5-12.5 billion, a consolidated operating margin of 6.1-6.3%, and ROE of 14.3-15.7% in FY29/3, the final year of the plan. As a milestone toward its Long-Term Vision 2032, the company has revised its long-term sales target upward from ¥250 billion (initial plan, announced May 2023) to ¥300 billion, alongside a long-term operating profit target of ¥30 billion and operating margin of 10.0%, citing the current business environment and future M&A possibilities.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.