Skylark Group provides rich value through food to approximately 350 million customers annually. Since my appointment as CFO in April 2025, I have devoted all my energy to the mission of maximally leveraging the insights I have cultivated in corporate management and corporate finance to support the company’s robust business model from the perspectives of financial and investment strategy and to guide it onto a path of further growth. In this Integrated Report, I will review the results for the fiscal year ended December 2025 and explain the basic principles of our capital policy, the acceleration of growth investments, and the stability of our financial base.
Evaluating the FY2025 results and moving toward accelerated achievement of the Medium-Term Management Plan
Results for the fiscal year ended December 2025 showed net sales increasing 14.1% year on year to 457.8 billion yen, operating profit increasing 23.9% to 30.0 billion yen, and net income increasing 19.9% to 16.7 billion yen. Driven by strong same-store sales growth, these were very favorable results, significantly exceeding initial forecasts.
The primary factor driving this strong performance was the improvement in field capabilities through the promotion of store-centered management. We shifted from the conventional headquarters-led management that emphasized cost reduction to a system by which store Managers act as business managers, autonomously and proactively investing in working hours, aiming to maximize customer satisfaction and profit. As a concrete result, the number of crew members (part-time workers) leaving the company decreased by 21% year on year, and improved service quality led to a 26% year-on-year increase in compliments from customers, contributing to higher net sales.
Trends in net sales and operating profit (billion yen)
In FY2025, there was an approximately 13.0 billion yen cost increase due to inflation. However, against this backdrop, we strategically added 2% more working hours during peak weekend times, ensuring adequate staffing. This improved seat turnover rates, resulting in a significant same-store sales increase of 8% year on year (guest count up 2%, average check up 6%). Although labor costs increased, the growth in net sales absorbed this, and the labor cost ratio decreased by 1% year on year. We also worked on a company-wide cost reduction project, reducing costs by 3.3 billion yen. As a result, operating profit achieved a significant increase of 23.9% year on year to 30.0 billion yen.
The ongoing Medium-Term Management Plan (2025-2027) is progressing at an extremely strong pace exceeding initial expectations, due to the early manifestation of results from deeper store-centered management and strategic M&A. For our full-year guidance (earnings forecast) for FY2026, we have set ambitious targets: net sales of 490.0 billion yen and operating profit of 33.5 billion yen. We aim to achieve the Medium-Term Management Plan one year ahead of schedule, which we believe is fully achievable through the combination of our strong business foundation and agile strategy execution capabilities. We will solidify this accelerating momentum and not only achieve the early completion of the Medium-Term Management Plan but also dedicate ourselves to building a business foundation for further dramatic growth beyond that.
Recent performance trends and FY2026 plan
| |
FY2024
|
FY2025 |
FY2026 |
| Net sales (billion yen) |
4,011 |
4,578 |
4,900 |
| Operating profit (billion yen) |
242 |
300 |
335 |
Deepening our capital policy and portfolio strategy to realize sustainable growth
Our company clearly positions itself as “a corporate group in a growth phase.” In this phase, we believe that proactively investing to expand our future business foundation is essential, rather than simply pursuing capital efficiency.
Pursuit of ROE and awareness of cost of capital
We have set ROE as our most important management indicator, planning to achieve 10% in 2026. As an approach to improving ROE, we emphasize maximizing profit through growth investments. Specifically, by rigorously managing the IRR (Internal Rate of Return) of individual investment projects and generating returns that stably exceed our cost of equity (approx. 8%), we aim for a sustainable increase in corporate value. We also have a policy of allocating cash flows generated from business activities in a balanced manner between business investments for future growth and shareholder return.
Trend in ROE（%）
Optimal allocation
For 2026, we have set a total investment plan of 50.0 billion yen (including M&A). Focusing on existing store remodeling, new domestic store openings, overseas expansion, M&A, and investments in SCM/DX to strengthen our supply chain, we will continue optimal allocation while remaining conscious of the cost of capital.
Shareholder return and portfolio management
In the area of shareholder return, our basic policy is a payout ratio of 30%. The annual dividend payment for FY2025 was 22.00 yen (up 3.50 yen year on year), and our 2026 guidance projects a further increase to 26.00 yen. Regarding business portfolio management, we aim for stable growth through optimization of the our brand portfolio within our restaurant business platform. In addition to the two axes of family dining (Gusto, etc.) and highly specialized casual dining (Syabu-Yo, etc.), the addition of “Sukesan Udon” and “Shinpachi Shokudo” to the Group has yielded a strong portfolio covering everything from the low-price, everyday meal domain to the high-value-added domain.
In FY2025, our earnings per share (EPS) improved to 73.62 yen, placing the stock at high levels with a PER of 45.71x and PBR of 4.08x at the fiscal year-end. We view this as a reflection of the market’s strong expectations for our growth potential.
Trend in earnings per share (EPS) (yen)
Progress in the first year of the Medium-Term Management Plan
Accelerating growth investments and strengthening the financial base, backed by strong cash generation capability
In FY2025, the company recorded an operating cash flow of 74.5 billion yen and a free cash flow of 40.4 billion yen. To secure liquidity and enable flexible fundraising, we procured funds through borrowings from financial institutions and issued corporate bonds, appropriately managing interest rate rise risk by fixing long-term interest rates.
Using this cash as a source, we are actively promoting strategic investments, including capital expenditures for new store openings and store remodeling, M&A, and overseas business expansion. While continuing such proactive investments, we maintain management focused on financial soundness, keeping an equity ratio of 36.2% and a net debt-to-equity ratio of 0.48x (vs. 0.51x in the previous year), which are healthy levels. Our financial base is also highly regarded externally. In April 2026, the Japan Credit Rating Agency (JCR) upgraded the outlook for our A- rating from “Stable” to “Positive.” We will continue to accelerate growth investments and strengthen our financial base, backed by our strong cash generation capability, to achieve a sustainable increase in corporate value.
Trend in net debt-to-equity ratio (multiple)
Management conscious of stock price and sharing of value with shareholders
We have incorporated stock price-linked compensation into our compensation structure for directors (excluding outside directors) to share value with our shareholders. To further advance this stance and strengthen management’s commitment to medium- to long-term performance improvement, we newly introduced a Restricted Stock Compensation System for officers in April 2026. Through this, we will further deepen the sharing of value between management and our shareholders.
Towards Skylark’s future potential and sustainable growth
Even amidst a highly uncertain macro environment, Skylark Group will further accelerate growth while maintaining a sound financial position. The greatest weapon ensuring sustainable growth is the cost initiative driven by our vertically integrated supply chain. This system, which handles everything from global procurement to production, logistics, and cooking, will serve as a powerful weapon even under expected future inflationary conditions.
We will also pursue further growth through new store openings in domestic densely-populated areas where we do not have enough presence, expansion of overseas businesses in Taiwan and Malaysia, and diversified brand deployment including “Sukesan Udon” and “Shinpachi Shokudo.”
While we anticipate cost increases due to inflation in 2026 as well, we have confidence that deepened store-centered management and our experience with cost reduction will sufficiently translate into profit growth.
Skylark Group will continue “Creating Richness with Value to Society” through food service, driven by a virtuous cycle of management that starts with improving the capabilities of each and every employee. I ask for the continued understanding and continued support and guidance of all our stakeholders.