Pan Pacific International Holdings (7532): 4Q FY6/26: Results and guidance fall somewhat short; views on aggressive plans to increase strategic investment will be key

Research evidence excerpt

J P M O R G A N

Asia Pacific Equity Research

19 August 2026

Pan Pacific International Holdings

(7532)

4Q FY6/26: Results and guidance fall somewhat short;

views on aggressive plans to increase strategic

investment will be key

Overweight

7532.T, 7532 JP

Price (18 Aug 26):¥916

Price Target (Dec-26):¥1,100

Somewhat negative: 4Q operating profit grew 11% to ¥37.3 billion, slightly

below our estimate as of June 6 of ¥39.3 billion (in line with the Bloomberg

consensus estimate). PPIH guides for FY6/27 operating profit of ¥179 billion

(+2.4%) in nominal terms and ¥184 billion (+5.2%) excluding Olympic. We

forecast operating profit to grow by around 5% including Olympic, which we

believe is below the market consensus. One-time renovation costs for Olympic’s

store format conversions are a key factor. We think key focus points are the details

of PPIH’s new longer-term aggressive capex plan and assessments of related

aggressive strategic investments in marketing, IT, AI, and other areas.

4Q results: Consolidated sales grew 10.8%, the gross margin fell 0.3ppt, and

costs rose 9.7%. We had expected sales to grow 11%, the gross margin to

decline 0.34ppt, and costs to rise 8.7%. Cost growth was higher than we had

estimated. Operating profit by segment was discount stores ¥27.2 billion, Uny

¥5.9 billion, domestic other ¥1.5 billion, Asia ¥1.7 billion, and North America

¥1 billion. We had estimated discount stores ¥26 billion, Uny ¥5 billion,

domestic other ¥4.3 billion, Asia ¥1.8 billion, and North America ¥2.1 billion.

Core discount stores (higher gross margin) and Uny (lower costs) beat our

estimates by a total of ¥2.1 billion, but domestic other and North America

missed by around ¥4 billion. Other segment profit increased by ¥4.8 billion in

the nine months through 3Q, but fell a sharp ¥2.7 billion in 4Q due to (1) ¥600

million in provisions in the credit card business, (2) ¥600 million in M&Arelated costs, (3) ¥500 million in internal PC purchases, and (4) sales

promotions for the next stage. In North America, despite a weaker-thanexpected yen, full-year profit fell slightly below guidance due to weak

performance at Gelson’s Markets and the impact of higher costs.

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