Seven & I Holdings Co., Ltd. · TSE:3382

Seven & I — Seven & I Hldgs — Q2 2022 Earnings Presentation

46 slides from Seven & I's earnings presentation, Oct 6, 2022

  1. Slide 1: 1H FY2022 Financial Results Presentation

    1H FY2022 Financial Results Presentation October 8, 2021 Seven & i Holdings Co., Ltd. Copyright (C) 2021 Seven & i Holdings Co., Ltd. All Rights Reserved. 1

  2. Slide 2: Today's Agenda

    1H Results & 1 Full-Year Forecasts TODAY’S AGENDA 2 Progress on Group Strategy 3 Copyright (C) 2021 Seven & i Holdings Co., Ltd. All Rights Reserved.

  3. Slide 3: Today's Agenda: 1H Results & Full-Year Forecasts

    1H Results & 1 Full-Year Forecasts TODAY’S AGENDA 2 Progress on Group Strategy 3 Copyright (C) 2021 Seven & i Holdings Co., Ltd. All Rights Reserved.

  4. Slide 4: YOY Change in Existing Store Sales

    YOY Change in Existing Store Sales (September is preliminary estimates) 120 140 (%) Convenience store (%) Superstore 110 120 100 100 Ito-Yokado (incl. tenants) 90 80 Ito-Yokado (food) Seven Eleven Japan 7-Eleven, Inc. York-Benimaru *Broken lines indicate comparison with two years earlier *Broken lin

  5. Slide 5: 1H Consolidated Financial Results Highlights

    1H Consolidated Financial Results Highlights (Billions of yen, %) 1Q 2Q 1H FY2022 YOY / YOY / YOY / vs. Plan / Variance Variance Variance Variance 107.9 127.0 117.6 101.6 Group’s total sales* 2,871.4 3,504.9 6,376.4 +210.7 +744.5 +955.2 +101.4 111.8 149.7 130.8 103.7 Revenues from operations 1,555.3

  6. Slide 6: 1H YOY Change by Business Segment

    1H YOY Change by Business Segment Revenues from operations Operating income (Billions of yen) (Billions of yen) FY2021 2,788.4 FY2021 179.7 Domestic CVS +17.0 Domestic CVS +5.0 Overseas CVS +806.0 Overseas CVS +15.3 Superstore +12.3 Superstore (6.7) Department and Department and +22.2 +2.7 specialty

  7. Slide 7: Domestic CVS Operations 1H Results

    Domestic CVS Operations 1H Results (Billions of yen, %) Amount YOY Variance Revenues from operations 445.8 104.0 +17.0 Operating income 123.3 104.3 +5.0 EBITDA (Operating income + Depreciation and amortization + Amortization of goodwill) 162.8 103.7 +5.8 Copyright (C) 2021 Seven & i Holdings Co., Lt

  8. Slide 8: Domestic CVS Operations: Seven-Eleven Japan (1)

    Domestic CVS Operations: Seven-Eleven Japan (1) 1H YOY Change of operating income Existing store sales growth & GPM (Billions of yen) (Figures on September are preliminary estimates) (%) (%) Change in GPM (left) ▲11 +0.5 Existing store sales growth (right) +5.0 (1.1) ▲53 (5.3) *Broken lines indicate

  9. Slide 9: Domestic CVS Operations: Seven-Eleven Japan (2)

    Domestic CVS Operations: Seven-Eleven Japan (2) 1H SG&A expenses YOY% Income YOY% in franchised stores Advertising expenses Income (Monthly amount) 120 Salaries & wages 110 1,400 Land & building rent Income YOY% (%) Depreciation & amortization (%) (K yen) SG&A expenses total 102.3 101.8 102.4 102.0

  10. Slide 10: Overseas CVS Operations 1H Results

    Overseas CVS Operations 1H Results (Billions of yen, %) Amount YOY Variance Revenues from operations 1,887.8 174.5 +806.0 Operating income 57.1 136.5 +15.3 EBITDA (Operating income + Depreciation and amortization + Amortization of goodwill) 131.0 140.0 +37.4 Copyright (C) 2021 Seven & i Holdings Co.

  11. Slide 11: Overseas CVS Operations: 7-Eleven, Inc. (1)

    Overseas CVS Operations: 7-Eleven, Inc. (1) 1H YOY Change of operating income Existing store sales* & GPM (Billions of yen) (Figures on September are preliminary estimates) Change in GPM (left) +48.2 Existing Store Sales Growth (right) +1.5 *Broken lines indicate comparison with two years earlier +1

  12. Slide 12: Overseas CVS Operations: 7-Eleven, Inc. (2)

    Overseas CVS Operations: 7-Eleven, Inc. (2) Crude Oil Price (WTI) Fuel Sales Volume & GP (CPG) YOY change in CPG (left) 80 (￠) Fuel Sales Volume Growth per store (right) (%) (USD) 70 +20.0 +18.0 +60.0 +42.5 60 +8.6 +24.8 +10.0 +30.0 50 +4.9 +4.7 +3.5 +24.4 +1.2+1.1 (0.2) 40 (0.3) ±0.0 ±0.0 (9.2) (1.

  13. Slide 13: Overseas CVS Operations: 7-Eleven, Inc. (3)

    Overseas CVS Operations: 7-Eleven, Inc. (3) Fuel GP (CPG), WTI price and Fuel retail price (6-month moving average) 80.0 3.5 ($ /￠) Retail fuel margin(￠per gallon / left) WTI price ($ / left) Retail price per gallon($ / right) ($) 70.0 3.0 60.0 2.5 50.0 2.0 40.0 1.5 30.0 1.0 20.0 10.0 0.5 COVID-19 0

  14. Slide 14: Overseas CVS Operations: 7-Eleven, Inc. (4)

    Overseas CVS Operations: 7-Eleven, Inc. (4) SEI 1H business performance Speedway SEI excl. Speedway SEI total (May 14 – June 30) (January 1 – June 30) YOY% YOY% YOY% Merchandise APSD (dollars per store) 5,558 - 5,323 107.4 5,343 107.8 Merchandise gross profit margin (%) 30.2 - 34.8 +0.8 34.4 +0.4 Fu

  15. Slide 15: Superstore Operations 1H Results

    Superstore Operations 1H Results (Billions of yen, %) Amount YOY Variance Revenues from operations 901.1 101.4 +12.3 Operating income 11.0 62.0 (6.7) EBITDA (Operating income + Depreciation and amortization + Amortization of goodwill) 26.5 81.4 (6.0) Copyright (C) 2021 Seven & i Holdings Co., Ltd. A

  16. Slide 16: Superstore Operations

    Superstore Operations YOY Change of operating income (Billions of yen) (1.9) (2.8) (1.3) 17.7 (0.62) 11.0 (6.7) FY2021 IY YB(Incl. LF) YO Others FY2022 Notes) IY:Ito-Yokado YB：York-Benimaru LF：Life foods (is a wholly owned subsidiary which produces and sells delicatessen in York-Benimaru stores) YO：

  17. Slide 17: Department and Specialty Store Operations 1H Results

    Department and Specialty Store Operations 1H Results (Billions of yen, %) Amount YOY Variance Revenues from operations 332.4 107.2 +22.2 Operating income (7.7) - +2.7 EBITDA (Operating income + Depreciation and amortization + Amortization of goodwill) (0.39) - +2.6 Copyright (C) 2021 Seven & i Holdi

  18. Slide 18: Department and Specialty Store Operations

    Department and Specialty Store Operations YOY Change of operating income (Billions of yen) Nissen HD FY2021 SS Loft AH 7FS (Consolidated) Others FY2022 +2.7 (7.7) +0.52 (10.5) (0.14) +2.2 +0.16 (1.3) +1.3 Notes) SS: Sogo & Seibu AH： Akachan Honpo 7FS： Seven & i Food Systems Notes) Figures for each c

  19. Slide 19: FY2022 Revised Consolidated Financial Result Forecast

    FY2022 Revised Consolidated Financial Result Forecast (Billions of yen, %) Before revision After revision Change YOY / Variance YOY / Variance 122.7 125.1 Group’s total sales * 13,549.0 13,812.0 +263.0 +2,504.1 +2,767.1 139.4 144.1 Revenues from operations 8,038.0 8,309.0 +271.0 +2,271.2 +2,542.2 10

  20. Slide 20: FY2022 Revised Forecast of Revenues from Operations by Business Segment

    FY2022 Revised Forecast of Revenues from Operations by Business Segment (Billions of yen, %) Before revision After revision Change YOY Variance YOY Variance Consolidated 8,038.0 139.4 +2,271.2 8,309.0 144.1 +2,542.2 +271.0 Domestic CVS operations 898.0 104.6 +39.2 891.0 103.8 +32.2 (7.0) Overseas CV

  21. Slide 21: FY2022 Revised Forecast of Operating Income by Business Segment

    FY2022 Revised Forecast of Operating Income by Business Segment (Billions of yen, %) Before revision After revision Change YOY Variance YOY Variance Consolidated 380.0 103.7 +13.6 380.0 103.7 +13.6 - Domestic CVS operations 245.6 105.1 +11.8 245.6 105.1 +11.8 - Overseas CVS operations 116.3 117.9 +1

  22. Slide 22: Consolidated Financial KPIs: Achievement Progress Status

    Consolidated Financial KPIs: Achievement Progress Status (Billion yen) FY2021 Progress in Key consolidated KPIs results EBITDA Net income 1H FY2022 738.3 190.0 EBITDA ¥626.8B 〇 179.2 626.8 2H 2H Operating cash flow (excl. financial business) ¥456.7B 〇 1H 1H 1H 1H 337.4 341.2 90.0 106.5 Free cash flo

  23. Slide 23: Today's Agenda: Progress on Group Strategy

    1H Results & 1 Full-Year Forecasts TODAY’S AGENDA 2 Progress on Group Strategy 3 Copyright (C) 2021 Seven & i Holdings Co., Ltd. All Rights Reserved.

  24. Slide 24: Domestic CVS Operations Strategy

    Domestic CVS Operations Strategy Domestic CVS Operations Medium-term Strategy (republished from MTMP material) Acceleration and diversification Changes in the social structure COVID-19 of small commercial areas Ideal image Meet diversifying needs and provide convenience to all local communities Sust

  25. Slide 25: Domestic CVS Operations Strategy

    Domestic CVS Operations Strategy No. of customers and average Changes in way 7-Eleven are used (1H YOY sales) spending per customer *Vs FY2020 descending order (％) Sales Ranki FY FY2022 130 ng Category No. of customers 2021 vs FY20 (％) Average spending per customer 1 Rice ball (Special rice ball) 12

  26. Slide 26: Domestic CVS Operations Strategy

    Domestic CVS Operations Strategy Regional tailored response for Hokkaido Vegetable assortment (Aug 23-) • Larger number of household housewives COVID pandemic led to increased demand Local and families for vegetables as cooking ingredients characteristics • Frequent home drinking • Highly price-cons

  27. Slide 27: Domestic CVS Operations Strategy

    Domestic CVS Operations Strategy Test sales verification of DAISO products Test sales verification of Loft products Trend in sales composition (test started on Dec 2020) Trend in sales composition (test started on Jun 25) Miscellaneous goods sales composition at 20 pilot stores Miscellaneous goods s

  28. Slide 28: Domestic CVS Operations Strategy

    Domestic CVS Operations Strategy In-depth sales floor tailored to each commercial area Residential and New layout for 2020 suburban area Business districts (Residential and suburban area) End of Approx. Approx. 1H results for stores FY2021 5,000 stores 680 stores with new layout Comparison with two

  29. Slide 29: Domestic CVS Operations Strategy (Online CVS)

    Domestic CVS Operations Strategy (Online CVS) Increase in users due to Expand store network and expansion of services raise brand awareness ■ Trend in online CVS sales Store count End of Aug 2021 Approx. 550 stores End of Feb 2022 Approx. 1,200 stores Delivery in as little as 30 minutes Visual acces

  30. Slide 30: North American CVS Business Strategy

    North American CVS Business Strategy (Synergy with Speedway) Further increase synergy benefits (assumed synergies in the third year) At time of August 2020 At time of July 2021 At time of October 2021 announcement announcement announcement $475M- $525M- $575M $625M $600M-$650M (From May 2023 to Apri

  31. Slide 31: North American CVS Business Strategy (Integration Road Map)

    North American CVS Business Strategy (Integration Road Map with Speedway) 2021 2022 and beyond Assortment test Change in sales area (PBs, Fresh food and proprietary beverages ) Merchandise Merchandise Restaurant Restaurant test Restaurant acceleration Supply chain Optimize and harmonize cost of good

  32. Slide 32: North American CVS Business Strategy

    North American CVS Business Strategy 7NOW(Delivery) Restaurant Business Sales trends by Quarter 8X Approx. 437 restaurants 23 restaurants 1Q 2Q 3Q 4Q 1Q 2Q 2020 2021 APSD Sales (Jan-Aug 2021) Margin (Jan-Aug 2021)(%) Units (Aug 2021) Basket (Aug 2021) +73% 37.4 +45% $6,793 4.5 $14.0 $5,432 34.9% 3.1

  33. Slide 33: Global Strategy

    Global Strategy  Vision 7&i HLDGS. SEJ SEI Strengths Strengths ・ Value Chain ・ Trademark/Brand ・ Store Network ・ Global Licensing ・ Product Development ・ Digital / IT Platform Capabilities Established 7-Eleven International LLC Strengthen Collaboration with Promote New Market Entry Expand Global Co

  34. Slide 34: Group Food, DX and Financial Strategy

    Group Food Strategy, Digital Transformation (DX) Strategy and Financial Strategy 2019 2020 2021 Group Merchandise Strategy & Planning Division Group food ・ Seven Premium Development Strategy & Planning Department Overseas strategy ・ Procurement Strategy & Planning Department Procurement Division ・ L

  35. Slide 35: Group Priority Strategy

    Group Priority Strategy (Republished from MTMP material) Provide a new experience and value consistently from the customer’s point of view Challenge of new “Growth areas” Open the next “Convenience” door Challenge of “Food” expected now Create an abundant “Lifestyle Hubs” Strategy aiming for growth

  36. Slide 36: Appendix

    Appendix Copyright (C) 2021 Seven & i Holdings Co., Ltd. All Rights Reserved. 36

  37. Slide 37: 1H Revenues and Operating Income by Business Segment

    1H Revenues from Operations and Operating Income by Business Segment (Billions of yen, %) Revenues from operations Operating income YOY Variance YOY Variance Consolidated 3,646.4 130.8 +858.0 186.1 103.6 +6.4 Domestic CVS operations 445.8 104.0 +17.0 123.3 104.3 +5.0 Overseas CVS operations 1,887.8

  38. Slide 38: 1H Operating Income of Major Operating Companies

    1H Operating Income of Major Operating Companies (Billions of yen, %) Operating income Existing store Merchandise YOY Variance sales growth GPM variance Seven-Eleven Japan 123.1 104.1 +4.8 +1.5 (0.1) 7-Eleven, Inc. 78.2 148.5 +25.5 +7.6 +0.4 [Millions of dollar] [725] [149.0] [+238] Ito - Yokado 1.0

  39. Slide 39: Quarterly Operating Income of Major Operating Companies

    Quarterly Operating Income of Major Operating Companies (Billions of yen, %) Q1 Q2 1H FY2022 YOY / Variance YOY / Variance YOY / Variance 115.6 95.0 104.1 Seven-Eleven Japan 60.3 62.7 123.1 +8.1 (3.2) +4.8 7-Eleven, Inc. 106.8 167.6 148.5 17.7 60.5 78.2 [Billions of yen] +1.1 +24.4 +25.5 7-Eleven, I

  40. Slide 40: Quarterly Existing Store Sales Growth and GPM

    Quarterly Existing Store Sales Growth and GPM of Major Operating Companies (%) Q1 Q2 1H FY2022 Existing store GPM / Existing store GPM / Existing store GPM / sales growth Variance sales growth Variance sales growth Variance 31.8 31.8 31.8 Seven-Eleven Japan +3.3 (0.3) +1.5 (0.2) ±0.0 (0.1) 34.3 34.5

  41. Slide 41: Special Losses (1H)

    Special Losses (1H) (Billions of yen) FY2021 FY2022 Variance Major factors for the variance Special losses 61.5 27.2 (34.3) Mainly decrease in loss related to COVID-19 Loss on disposals of SEI[+0.80]：Increase due to store renovation, etc. property and equipment 4.4 6.5 +2.1 IY[+0.58]： Same as above

  42. Slide 42: Consolidated B/S Summary (As of August 31, 2021)

    Consolidated B/S Summary (As of August 31, 2021) (Billions of yen) Assets Feb 28 Aug 31 Liabilities and net assets Feb 28 Aug 31 Variance Variance 2021 2021 (Main items only) 2021 2021 (Main items only) Current assets 3,350.2 2,646.3 (703.8) Total liabilities 4,115.4 5,700.6 +1,585.1 Cash and bank d

  43. Slide 43: 1H Consolidated Statements of Cash Flows

    1H Consolidated Statements of Cash Flows CF from operating actives (left axis) CF from investing actives (left axis) 500.0 CF from financing actives (left axis) Free cash flow (right axis) 300.0 (Billions of yen) (Billions of yen) 250.0 150.0 0.0 0.0 (250.0) (150.0) (500.0) (300.0) (Billions of yen)

  44. Slide 44: FY2022 Consolidated Financial Results Forecast (Revised 2H Forecast)

    FY2022 Consolidated Financial Results Forecast (Revised 2H Forecast) (Billions of yen, %) 1H (results) 2H FY2022 YOY / YOY / YOY / Change Variance Variance Variance 117.6 132.2 125.1 Group’s total sales* 6,376.4 7,435.5 +161.5 13,812.0 +955.2 +1,811.8 +2,767.1 130.8 156.6 144.1 Revenues from operati

  45. Slide 45: FY2022 Forecast for Major Operating Companies

    FY2022 Forecast for Major Operating Companies (Billions of yen, %) Existing store Merchandise GPM Operating income sales growth variance YOY / Revision of Before revision After revision Before revision After revision Variance amounts 105.0 Seven-Eleven Japan 245.0 - +2.0 +1.8 +0.1 (0.1) +11.6 7-Elev

  46. Slide 46: With Livings - Seven & i Group

    With Livings - Seven & i Group The information disclosed by the Company may contain forward-looking statements. These statements are based on management’s judgment in accordance with materials available to the Company at the time of disclosure, with future projections based on certain assumptions. T

Seven & I Hldgs — Q2 2022 Earnings Presentation on 6ix