Sanrio Co. shares fell 18 percent in Tokyo trading Wednesday, marking the largest single-day decline for the Hello Kitty owner since May 2014. The sell-off followed fiscal first-quarter results that disappointed investors despite top-line growth. Shares traded as low as 1,163.0 yen during the session before closing 18.5 percent lower at 1,185.5 yen.
For the quarter ended June, Sanrio reported revenue of 52.04 billion yen ($326 million), up 20.7 percent from the same period a year earlier. Operating profit rose 11.1 percent to 22.44 billion yen. Profit attributable to owners of the parent company increased 9.3 percent year-on-year. The growth figures fell short of what investors had priced into the stock.
Sanrio maintained its full-year forecast for the fiscal year ending in March, projecting revenue growth of 18.4 percent to 229.8 billion yen and operating profit growth of 15 percent to 89.5 billion yen.
Prior to Wednesday's decline, Sanrio shares had rallied approximately 55 percent since its delayed full-year earnings release in June. That run had pushed the stock to a valuation that Morningstar considered fair. The research firm said the quarterly results were broadly in line with its estimates and kept its fiscal 2026 and medium-term outlook unchanged.
In Japan, contribution profit rose 43.5 percent year-over-year, driven by new original product launches, improved store performance and broader use of characters across licensee products and campaigns.
Performance in mainland China remained strong, with both new and existing stores contributing positively to sales. In the Americas, Sanrio reported signs of sales recovery, supported by growth in toy and apparel categories and wider use of Hello Kitty and Friends characters, even as the company manages tariff exposure in the region.
Sanrio is expanding into gaming, with a Nintendo Switch title expected in Oct. and a mobile game planned for 2027. Morningstar analysts do not expect the segment to be a meaningful near-term profit driver.
