Seven & I Holdings Co., Ltd. · TSE:3382
Seven & I — Seven & I Hldgs — Q1 2024 Earnings Presentation
44 slides from Seven & I's earnings presentation, Jul 11, 2024
Slide 1: Presentation for the First Quarter of FY2024
Seven & i Holdings Co., Ltd. Presentation for the First Quarter of FY2024 (Fiscal Year Ending February 28, 2025) July 11, 2024 Copyright(C) Seven & i Holdings Co., Ltd. All Rights Reserved. 1
Slide 2: Executive Summary
Executive Summary ✓ All income items for FY2024 Q1 consolidated results were less than the previous year, but generally as planned ✓ Steadily execute initiatives to improve the number of customers mainly in Domestic and Overseas CVS Operations ✓ Making steady progress on Action Plans including funda
Slide 3: Progress of Strategic Initiatives
Progress of Strategic Initiatives To Become a World-Class Retail Group Centered Around Its “Food” April 16, 2024 July 1, 2024 Completed the acquisition of Completed the sale of Nissen Holdings Sunoco-Stripes (West Texas) April 1, 2024 September 1, 2023 Completed the acquisition of Completed the sale
Slide 4: Today's Agenda
TODAY’S AGENDA 1 Q1 Results 2 Status of Major Operation Strategies North American CVS Operations Domestic CVS Operations & SST Operations Copyright(C) Seven & i Holdings Co., Ltd. All Rights Reserved. 4
Slide 5: Today's Agenda
TODAY’S AGENDA 1 Q1 Results 2 Status of Major Operation Strategies North American CVS Operations Domestic CVS Operations & SST Operations Copyright(C) Seven & i Holdings Co., Ltd. All Rights Reserved. 5
Slide 6: Q1 Consolidated Results Highlight
Q1 Consolidated Results Highlight (Billions of yen, %) FY2023 FY2024 YOY Change vs. plan Change Group’s total sales*1 4,162.0 4,288.5 103.0 +126.5) 99.7 (11.4) Revenues from operations 2,650.6 2,734.7 103.2 +84.0) 100.5 +13.7) Operating income 81.9 59.3 72.4 (22.6) 98.3 (1.0) Ordinary income 73.7 55
Slide 7: Q1 Results by Operating Segment (YOY)
Q1 Revenues from operations, Operating Income and EBITDA by Operating Segment (YOY) (Billions of yen, %) Revenues from operations Operating income EBITDA YOY/Change YOY/Change YOY/Change 103.2) 72.4) 93.8) Consolidated 2,734.7) +84.0) 59.3) (22.6) 195.4) (12.8) 98.2) 95.6) 98.2) Domestic CVS operati
Slide 8: YoY Difference Factors - Operating income/Net income
YoY Difference Factors -Operating income/Net income SEI: Trend forSEI Q1 Sales & GP SEJ: Trend forSEJ Q1 Sales & GP Merchandise Sales/GP Fuel GP Merchandise Sales Merchandise GP 1,600 GPM Fuel GP CPG (Total) Total sales GP GPM (Billions of yen) (Millions of dollar) 1,400 (Millions of dollar) 1,200 3
Slide 9: Q1 Results by Operating Segment (vs. plan)
Q1 Revenues from operations, Operating Income and EBITDA by Operating Segment (vs. plan) (Billions of yen, %) Revenues from operations Operating income EBITDA vs. vs. vs. plan/Change plan/Change plan/Change 100.5) 98.3) 99.4) Consolidated 2,734.7) +13.7) 59.3) (1.0) 195.4) (1.2) 97.8) 95.3) 96.8) Do
Slide 10: Today's Agenda
TODAY’S AGENDA 1 Q1 Results 2 Status of Major Operation Strategies North American CVS Operations Domestic CVS Operations & SST Operations Copyright(C) Seven & i Holdings Co., Ltd. All Rights Reserved. 10
Slide 11: CSA: Macro Environment and Consumer Position
CSA: Macro Environment and Consumer Position Challenging Macro Environment Inflation Fed Action Unemployment Plateauing GDP Growth Inflation (CPI & PPI) Fed Funds Rate Projections Continuous Claims U.S. GDP Cost to Consumer & Producer; (Jan. 20=100) Higher for Longer Unemployed for Longer (% Growth
Slide 12: SEI's Response
SEI’s Response Merchandise Same Store Sales Growth SEI’s Approach to Drive Traffic & Sales +10.0 Existing store sales growth • Identifying new, innovative, high-potential categories and (%) items to grow the business Existing store sales growth (ex. Cigs) +5.7 • Driving sales and traffic through val
Slide 13: Grow Proprietary Products
Grow Proprietary Products Investing in Store Enhancements in 2H 2024 Innovating with Warabeya Virginia Food & Beverage Modernization Opened Summary Rollout Plan Sep. 2023 • Bake In-Store Food & Beverage Modernization • Self-Serve Roller Grill Supporting Full Food & Beverage Modernization • Grab & Go
Slide 14: Grow Proprietary Products - Private Brands
Grow Proprietary Products – Private Brands Private Brand – Process Improvement Private Brands Driving Value Launching 215 New Items Private Brands Margin Strategy In 2024 • Innovate & Create Demand: 215 New Items (+60% vs. 2023) (Items) • Improve Quality & Value for Core Items – Relaunch +50 Items 2
Slide 15: Accelerate 7NOW Delivery
Accelerate 7NOW Delivery 7NOW Competitive Advantage Strong 7NOW Performance Store & Delivery Infrastructure Strong Q1 2024 7NOW Performance • 95%+ Footprint Coverage • >50% US Population within 2 miles of a store ~$312 $15.83 3.1% • ~30 min Delivery time: Industry best Sales composition vs. APSD Avg
Slide 16: Cost Leadership & RIS/DEX
Cost Leadership & RIS/DEX Cost Structure Efficiencies Revised 2024 Target Strategy Q1 Progress Key Focus Areas: ✓ Established Cost Leadership Committee $500M Merch COGS Fuel Logistics ✓ Benchmarking for Opportunity Sizing (Focus on sourcing (Focus on supply negotiations) optimization) $350M ✓ Holist
Slide 17: Today's Agenda
TODAY’S AGENDA 1 Q1 Results 2 Status of Major Operation Strategies North American CVS Operations Domestic CVS Operations & SST Operations Copyright(C) Seven & i Holdings Co., Ltd. All Rights Reserved. 17
Slide 18: Initiatives to increase items purchased and number of customers
Initiatives to increase in number of items purchased and number of customers (prior implementation in Hokkaido) Strategies Number of items purchased/customers Induce store visits through sales promotion of Effects of initiatives in Hokkaido Zone merchandise with high customer contact Number of items
Slide 19: Initiatives for new merchandise to increase customers and GPM
Initiatives for new merchandise to increase number of customers and GPM Smoothie Fresh baked breads Male/Female composition (May 2024) Male/Female composition (May 2024) 100% 100% Male Male Male Male Female ratio Female ratio 50% 50% +26% +21% APSD effects (Q1) Female APSD effects (Q1) Female Female
Slide 20: Prepare to Expand 7NOW deployment
Prepare to Expand 7NOW deployment Sales trend and challenges for nationwide deployment Initiatives to increase awareness • Sales increase steadily in response to Change in new users due to TV commercials (Hokkaido area) expansion of suggested deployment area Promotion Total number of orders Number o
Slide 21: 7NOW Competitive Advantage
7NOW Competitive Advantage 7NOW top selling items (Jun. 2024) 7NOW advantage Seven Premium Natural Mineral ✓ Deliver Seven Eleven merchandise in 20 minutes at 1 Seven Premium Milk 1L 11 Water 2L the earliest 2 Spicy Fried Chicken 12 Rice Ball (Tuna Mayonnaise) ✓ Real-time inventory linkage (approx.
Slide 22: EBITDA of SST Operations
EBITDA of SST Operations (Billions of yen, %) FY2024 Q1 results YOY vs. plan plan YOY Ito-Yokado 4.3) 93.4 133.9 27.9 152.2 SHELL GARDEN (0.06) - - 0.14 - Tokyo metropolitan area SST operations 4.5) 114.1 141.1 28.2 150.8 York-Benimaru 7.0) 99.5 96.2 30.1 104.5 SST operations* 11.3) 98.0 110.9 56.6
Slide 23: SST Operations Progress as planned, with a focus on structure reforms
Fundamental Transformation Roadmap of Tokyo Metropolitan Area SST Operations # Further structural changes # Growth strategy Major initiatives Major KPI Status of progress FY2024 FY2024 As of May 31, 2024 1 Exit from the apparel business FY2022 FY2025 Q1 Full year • Optimize directly operated All ini
Slide 24: Status of the Action Plans
Status of the Action Plans Action items in each area has kicked off based on the action plan announced on April 10, 2024 Action plan based on recommendations from the Strategy Committee Status of Initiatives up to Date A Formulation of concrete action plans to accelerate growth Monitored by the newl
Slide 25: Appendix
Appendix Copyright(C) Seven & i Holdings Co., Ltd. All Rights Reserved. 25
Slide 26: External Environment (Japan)
External Environment (Japan) Domestic PPI/CPI (Comprehensive)*1、2 CPI (Food)*1 (YoY growth) (YoY growth) 12.0 12.0 (％) CPI (％) 9.5 9.6 10.0 PPI 10.0 8.6 7.4 7.8 8.0 8.0 6.0 5.1 6.0 4.8 4.1 4.1 4.0 4.0 3.4 2.7 2.8 3.2 3.2 2.0 2.4 2.0 2.5 1.2 0.9 0.0 0.0 (2.0) (2.0) Jan. May Sep. Jan. May Sep. Jan. Ma
Slide 27: External Environment (US)
External Environment (US) CPI(Food) / PPI(Comprehenive)*1 Crude oil price (WTI) / Fuel retail price*2 15.0 (YOY growth) CPI (Food) 120 WTI 6.50 (％) 11.7 PPI (Comprehensive) 108.5 Fuel retail price (right) ($) ($) 10.1 10.1 10.0 8.8 8.5 90 5.00 81.3 7.0 78.1 83.2 80.1 5.7 4.22 73.3 74.2 5.0 3.60 60 3
Slide 28: Consolidated B/S Summary (As of May 31, 2024)
Consolidated B/S Summary (As of May 31, 2024) (Billions of yen) Assets As of As of Liabilities and net assets As of As of Change Change (Main items only) Feb. 29, 2024 May 31, 2024 (Main items only) Feb. 29, 2024 May 31, 2024 Current assets 3,035.6 2,952.5 (83.0) Total liabilities 6,691.4 7,232.2 +5
Slide 29: Q1 Consolidated Statements of Cash Flows
Q1 Consolidated Statements of Cash Flows CF from operating activities CF from investing activities CF from financial activities Free cash flow 300 (Billions of yen) 150 0 (150) (300) (Billions of yen) FY2020 FY2021 FY2022 FY2023 FY2024 vs. FY2023 CF from operating activities 195.5) 249.9) 280.1) 317
Slide 30: Q1 Superstore Operations & Others - Change in Operating Income
Q1 Superstore Operations & Others - Change in Operating Income Superstore operations Others (Billions of yen) (Billions of yen) 2.1 (1.1) +0.33 Note) IY: Ito-Yokado, YB: York-Benimaru Note) 7FS: Seven & i Food Systems, AH: Akachan Honpo Copyright(C) Seven & i Holdings Co., Ltd. All Rights Reserved.
Slide 31: Q1 Results of Major Operating Companies
Q1 Results of Major Operating Companies (Billions of yen, %) Operating income Existing store Change in merchandise sales growth YOY YOY change GPM Seven-Eleven Japan 61.1) 94.9 (3.2) ±0.0) ±0.0) 7-Eleven, Inc.*1 29.9) 68.6 (13.7) (4.1) (2.0) [Millions of dollar] [201] ) [61.1] [(128)] *2 (Former IY)
Slide 32: Seven-Eleven Japan (1)
Seven-Eleven Japan (1) Existing store sales & GPM Trend in income of franchised stores Income of franchised stores (monthly amount) YOY Impact of unit price increase has run its course +4.9 110 1,400 +4.5 106.6 +1.0 +5.0 (%) (Thousands of yen) (％) (％) 104.5 +2.1 100.2 98.5 +0.4 100 1,200 +0.4 ±0.0 9
Slide 33: Seven-Eleven Japan (2)
Seven-Eleven Japan (2) SG&A Change in operating income (Billions of yen, %) (Billions of yen) Q1 Major factors for change YOY YOY change SG&A 149.0 101.6 +2.4) Advertising Enhanced sales expenses 10.0 118.4 +1.5) promotion Salaries and Optimization of directly wages 18.3 90.3 (1.9) operated stores L
Slide 34: 7-Eleven, Inc. (1)
7-Eleven, Inc. (1) Merchandise Same Store Sales Growth Merchandise Margin Existing store sales growth Merchandise margin (right) +20.0 +3.0 36.0 Existing store sales growth vs. FY2019 YOY change (left) (%) (%) (%) +2.0 35.0 +10.0 +4.7 +1.0 34.0 +1.7 +1.0 +0.9 ±0.0 ±0.0 33.0 (0.2) (1.7) (3.3) (1.9) +
Slide 35: 7-Eleven, Inc. (2)
7-Eleven, Inc. (2) Total Fuel Volume & Margin (Total CPG*) Fuel Gross Profit Fuel sales volume growth (left) YOY change in CPG (right) +20.0 +20.0 (￠) 1,500 (%) (US$M) +10.0 +10.0 +4.0 +2.2 1,000 +1.1 +0.4 ±0.0 ±0.0 (1.0) (4.4) (1.1) (2.6) 500 (10.0) (6.9) (10.0) (9.3) Speedway (20.0) (20.0) 0 Q1 Q2
Slide 36: 7-Eleven, Inc. (3)
7-Eleven, Inc. (3) SG&A Change in operating income (Millions of dollar, %) (Billions of yen) Q1 Major factors for change YOY YOY change SG&A 2,315 102.3 +52) Advertising Decrease due to expenses 31 91.6 (2.9) advertising timing Salaries and Increase due to wages 749 102.8 +20) inflation 43.7 Land an
Slide 37: 7-Eleven, Inc. (4)
7-Eleven, Inc. (4) Fuel sale volume / CPG (Retail) 5,000 70 Fuel sales volume per store (gallon) (left) Retail CPG (¢) (right) (Gallon) (¢) 4,000 50 3,000 30 Speedway 2,000 10 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 Note) The chart sho
Slide 38: FY2024 Consolidated Financial Forecasts
FY2024 Consolidated Financial Forecasts (Reposting of the presentation materials on April 10, 2024) (Billions of yen, %) Amount YOY YOY change Group’s total sales 17,815.0 100.1 +25.0) Revenues from operations 11,246.0 98.0 (225.7) Operating income 545.0 102.0 +10.7) Ordinary income 502.0 99.0 (5.0)
Slide 39: FY2024 Forecasts by Operating Segment
FY2024 Forecasts by Operating Segment (Reposting of the presentation materials on April 10, 2024) (Billions of yen, %) Revenues from operations Operating income EBITDA YOY/Change YOY/Change YOY/Change 98.0) 102.0) 104.5) Consolidated 11,246.0) (225.7) 545.0) +10.7) 1,102.0) +47.0) 102.3) 103.8) 104.
Slide 40: FY2024 Financial Forecasts of Major Operating Companies
FY2024 Financial Forecasts of Major Operating Companies (Reposting of the presentation materials on April 10, 2024) (Billions of yen, %) Operating income Existing store Change in merchandise YOY YOY change sales growth GPM Seven-Eleven Japan 260.0 103.6 +8.9 +2.5) +0.2) 7-Eleven, Inc.*1 424.9 107.2
Slide 41: Eliminations/Corporate Expenses and Capex for Group Strategy
Eliminations/Corporate Expenses and Capex for Group Strategy Q1 results (Billions of yen, %) Expenses Capex vs. vs. YOY FY2024 YOY FY2024 Results vs. plan FY2024 Results vs. plan FY2024 change plan change plan plan plan DX, system, security, etc. (13.5) +0.09) (0.22) 24.9 (54.5) 2.5 (0.77) (2.3) 11.
Slide 42: Promotion of Sustainable Management (1)
Promotion of Sustainable Management (1) Sustainable management efforts are the basis for the “Medium-Term Management Plan 2021 – 2025” Promote group-wide efforts to address climate change ① 1 Reduce CO2 emissions ② 2 Measures against plastic Environmental Target net zero emissions through group’s In
Slide 43: Promotion of Sustainable Management (2)
Promotion of Sustainable Management (2) Further strengthen efforts to meet the targets by 2050 in the Environmental Declaration 1 Reduce CO2 emissions 2 Measures against plastic 100 100% Reduced used by 32.5% Reduce by 50% (Plan) Net 50% zero 34.5% used Less FY2013 2013年 FY2022 2021年 FY2030 2030年 FY
Slide 44: Forward-looking statements disclaimer
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. The forward-looking statements t