World Co., Ltd. (3612): FY2025 Results Summary — Parent Profit Rises as Core Operating Profit Slips at End of PLAN-W; New VISION-W Plan Targets 12.5% ROE

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

Note: World Co., Ltd.’s fiscal year ends in February. Following this site’s convention, the fiscal year ended February 28, 2026 is classified as FY2025, while the body text and tables below keep the company’s own labels (FY02/26 = fiscal year ended February 28, 2026; FY02/27 = fiscal year ending February 28, 2027). The company reports under IFRS.

For FY02/26, World Co., Ltd. reported revenue of 284,014 million yen (126% of the prior year) and profit attributable to owners of the parent of 12,013 million yen (109%), while core operating profit declined to 16,407 million yen (96%). The company had revised its forecast downward due to unfavorable sales in 4Q, as announced on March 12, 2026; the final result was at the level of the revised forecast but, in the company’s words, substantially below the initial forecast and a disappointing result at the final stage of its medium-term plan PLAN-W. For FY02/27, the first year of the new medium-term plan VISION-W, World forecasts revenue of 300,000 million yen, business profit of 18,500 million yen and a record-high profit attributable to owners of the parent of 12,600 million yen, together with a new dividend policy and an annual dividend forecast of 67 yen.

Consolidated Results (FY02/26 Actual)

Revenue was 284,014 million yen, up 58,356 million yen year on year (126%). Gross profit was 139,674 million yen (105%), with the gross profit ratio at 49.2% versus 59.1% in FY02/25. SG&A expenses were 123,267 million yen (106%), and core operating profit was 16,407 million yen, down 606 million yen (96%). Operating profit was 16,028 million yen (96%) and profit before tax was 14,203 million yen (92%). According to the company, although revenue and profit attributable to owners of the parent continued to increase, the profits at all stages between the top line and the bottom line decreased year on year for the first time during the recovery period after the COVID-19 pandemic.

Profit attributable to owners of the parent rose 974 million yen to 12,013 million yen (109%). The company attributes the income taxes reduction (including non-controlling interests) to a decrease in income taxes due to the application of tax effect accounting relating to the reorganization of the World Group, and to the prevention of profit outflow to non-controlling interests by making NARUMIYA INTERNATIONAL CO., LTD. a wholly owned company. Against the revised FY02/26 forecast, revenue was 2,014 million yen higher and core operating profit 7 million yen higher.

Item (Millions of yen)	FY02/26 Actual	FY02/26 Forecast	FY02/25 Actual	Change vs FY02/25	% Change vs FY02/25
Revenue	284,014	282,000	225,658	58,356	126%
Gross profit	139,674	139,000	133,288	6,386	105%
SG&A expenses	123,267	122,600	116,275	6,992	106%
Core operating profit	16,407	16,400	17,013	-606	96%
Other income and expenses, net	△379	△400	△283	-96	—
Operating profit	16,028	16,000	16,730	-702	96%
Finance income and costs, net	△1,825	△1,800	△1,290	-535	—
Profit before tax	14,203	14,200	15,440	-1,237	92%
Income taxes (a)	△2,190	△2,200	△4,401	2,211	—
Profit attributable to owners of parent	12,013	12,000	11,039	974	109%

(a) Includes income tax expense and non-controlling interests. Figures for FY02/25 have been adjusted to reflect the finalization of provisional accounting treatments for business combinations.

On the balance sheet, total assets were 280,059 million yen at February 28, 2026 (273,826 million yen a year earlier). Equity attributable to owners of the parent increased by 13,471 million yen to 94,659 million yen, as certain subsidiaries were made wholly owned through stock exchanges; non-controlling interest of 4.6 billion yen was transferred to equity through the stock exchange with NARUMIYA INTERNATIONAL CO., LTD. Inventories rose by 3.9 billion yen (14%), mainly due to the consolidation of RIGHT-ON CO., LTD., while the company notes that consolidated inventory turnover improved substantially on reduced winter clothing procurement. Interest-bearing debt was 129,951 million yen (131,920 million yen a year earlier). Net cash provided by operating activities was 30,984 million yen, free cash flow was 26,852 million yen, and free cash flow in real terms was 12,271 million yen (8,092 million yen in FY02/25), which the company says exceeded the 10.0 billion yen planned for the PLAN-W period.

Segment Results

Under the PLAN-W segment structure (figures in units of 100 million yen, as presented on the slide), only the Platform business achieved a record-high profit, supported by the consolidation of MC FASHION CO., LTD. (MCF). Brand business profit was 89 (FY02/25: 111; initial plan: 123), described as disappointing due to poor sales of the main apparel brands, although lifestyle brands continued to show profit increases. Digital business profit was 23 (FY02/25: 26; initial plan: 27), as the B2C circular business could not make up for the loss from the exclusion of Laxus, while the B2B technology business continued its profit increase trend. Platform business profit was 42 (FY02/25: 18; initial plan: 19). As a result, the B2B business’s share of total business profit rose to 38% in FY02/26 (19% in FY02/25), exceeding one-third for the first time.

From FY02/27, World has shifted to two large business segments, B2C business and B2B business, under the intermediate holding companies WORLD BRANDS CO., LTD. and WORLD SOLUTIONS CO., LTD. On this new basis, FY02/26 business profit was 9,159 million yen in the B2C business (4.3% of revenue) and 5,516 million yen in the B2B business (5.6%). The FY02/26 comparative figures on the new basis reflect the retroactive application of IFRS 18 and the new segment structure; the company notes these are unaudited reference figures, and they differ slightly from the reported figures above (for example, business profit of 16,467 million yen versus core operating profit of 16,407 million yen). For FY02/27, the company expects a V-shaped recovery in the B2C business, driven by improved profitability of apparel brands without relying on top-line growth, to make up for a plateau in the B2B business and a profit decrease in shared divisions.

Segment	Metric (Millions of yen)	FY02/26 Actual	FY02/27 Forecast
B2C business	Revenue	210,962	230,065
B2C business	Business profit	9,159	12,693
B2C business	Business profit margin	4.3%	5.5%
B2B business	Revenue	98,607	104,730
B2B business	Business profit	5,516	5,784
B2B business	Business profit margin	5.6%	5.5%
Corporate	Revenue	13,786	15,450
Corporate	Business profit	1,808	7
Adjustment	Revenue	△39,342	△50,245
Adjustment	Business profit	△16	17
Total	Revenue	284,014	300,000
Total	Business profit	16,467	18,500

Full-Year Forecast (FY02/27)

The presentation of the P/L for FY02/27 has been changed due to the early application of IFRS 18, with business profit (ex-core operating profit) and NOPAT adopted as management-defined performance measures. World forecasts revenue of 300,000 million yen (106%), business profit of 18,500 million yen (112%), operating profit of 17,500 million yen (111%) and profit attributable to owners of the parent of 12,600 million yen (105%), aiming for a record-high profit attributable to owners of the parent while focusing on the recovery of business profit. The business profit increase of 2.0 billion yen from 16.5 billion yen consists of +3.5 billion yen in B2C (recovery of apparel brands), +0.3 billion yen in B2B (allocation of human resources / reskilling) and -1.8 billion yen in shared divisions (decrease in guidance fee, development investment). Business profit is estimated at 8.4 billion yen in 1H, almost the same as 1H of FY02/26, and 10.2 billion yen in 2H, a 24% increase year on year. Assumptions include same-store sales growth of 100.4%, e-commerce sales growth of 104.6% and a net decrease of 13 directly managed stores in Japan (99 openings and 112 closures).

Item (Millions of yen)	FY02/27 Forecast	FY02/26 Actual	Change	% Change
Revenue	300,000	284,014	15,986	106%
Gross profit	154,500	139,674	14,826	111%
SG&A expenses	136,000	123,207	12,793	110%
Business profit	18,500	16,467	2,033	112%
Other operating income and expenses, net	△1,000	△770	-230	—
Operating profit	17,500	15,697	1,803	111%
Equity in net income of affiliates	–	△2,790	2,790	—
Investing income and expenses	50	3,262	-3,212	—
Profit or loss before financing and income taxes	17,550	16,169	1,381	109%
Financing income and expenses	△2,000	△1,967	-33	—
Profit before income taxes	15,550	14,203	1,347	109%
Income taxes (1)	△2,950	△2,190	-760	—
Profit attributable to owners of the parent	12,600	12,013	587	105%
NOPAT	14,530	13,928	602	104%
EPS (yen)	165	165	—	—
DPS (yen)	67	54.5	—	—

(1) Includes income tax expense and non-controlling interests. FY02/26 actual figures in this table are presented on the IFRS 18 basis used for the FY02/27 forecast.

Shareholder Returns

Under VISION-W, World is changing its dividend policy from a dividend payout ratio of 30% under PLAN-W to a dividend payout ratio of 40% or DOE of 5%, whichever is higher. The FY02/27 annual dividend forecast is 67 yen per share (interim dividend 31 yen, year-end dividend 36 yen), an increase of 23% compared to 54.5 yen (after split adjustment) for FY02/26. The company states that in case of excessive share dilution it may choose to buy back shares. Shareholder return is planned at an annual average of 5.6 billion yen during VISION-W, compared with 3.1 billion yen per annum under PLAN-W. The company is also introducing stock incentives: a performance-linked restricted stock compensation plan for executive officers and a restricted stock compensation plan for the employee stock ownership association for managers.

Item	FY02/26 Actual	FY02/27 Forecast
Annual dividend per share (yen)	54.5 (after split adjustment)	67
Interim / year-end dividend (yen)	This cannot be confirmed from the materials.	31 / 36
EPS (yen)	165	165
Dividend policy	Dividend payout ratio 30% (PLAN-W)	Dividend payout ratio 40% or DOE 5%, whichever is higher (VISION-W)

Medium-Term Management Plan: PLAN-W Review and VISION-W

Looking back on PLAN-W, World achieved revenue of 284.0 billion yen against a plan of 250.0 billion yen, ROE of 13.7% against a plan of 10.0%, and PBR of 1.3x at the end of FY02/26 against a plan of 1.0x, while equity was 94.7 billion yen with complete repayment of the subordinated loan. However, the company could not achieve its core operating profit target and profit decreased year on year in the final year of PLAN-W. In light of these results, performance-related bonuses for directors and those equivalent to executive officers were set at zero, and they voluntarily gave up all stock-price-related stock options, including vested ones.

The new medium-term plan VISION-W (FY02/27 to FY02/29) sets plan figures of revenue of 330.0 billion yen, a net profit ratio of 4.5%, equity of 120.0 billion yen, ROE of 12.5% and TSR of 11.0% (10.0% to 12.0%), with target figures of revenue of 500.0 billion yen and ROE and TSR of 15.0%. Its three management KPIs cover growth (an 8% annual increase in profit attributable to owners of the parent), profitability (ROE of 12.5% or more and ROIC (net method) of 8.5% or more) and financial soundness (a net D/E ratio of 0.75x or less). As a long-term aspiration, the company aims for revenue of 1 trillion yen. World plans to reserve 21.0 billion yen as out-of-plan M&A investment funds, and making RIGHT-ON CO., LTD. a wholly owned subsidiary became effective on March 1, 2026.

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.