Seven & I Holdings Co., Ltd. · TSE:3382
Seven & I — Seven & I Hldgs — Q3 2024 Earnings Presentation
54 slides from Seven & I's earnings presentation, Jan 11, 2025
Slide 1: Presentation for the Third Quarter of FY2024
Seven & i Holdings Co., Ltd. Presentation for the Third Quarter of FY2024 (Fiscal Year Ending February 28, 2025) January 9, 2025 Copyright(C) Seven & i Holdings Co., Ltd. All Rights Reserved. 1
Slide 2: Executive Summary
Executive Summary ✓ The efforts to address the challenges in the Domestic and Overseas CVS business for this fiscal year have shown results, providing confidence in medium- to long-term growth ✓ To achieve profit growth in FY2025 and beyond, we will complete the strategic reorganization of businesse
Slide 3: Today's Agenda
TODAY’S AGENDA 1 Q3 YTD Results 2 Status of Major Operation Strategies North American CVS Operations Global CVS Operations & Domestic CVS Operations 3 Efforts on Optimization of Group Structure Copyright(C) Seven & i Holdings Co., Ltd. All Rights Reserved. 3
Slide 4: Today's Agenda
TODAY’S AGENDA 1 Q3 YTD Results 2 Status of Major Operation Strategies North American CVS Operations Global CVS Operations & Domestic CVS Operations 3 Efforts on Optimization of Group Structure Copyright(C) Seven & i Holdings Co., Ltd. All Rights Reserved. 4
Slide 5: Q3 YTD Consolidated Results Highlight
Q3 YTD Consolidated Results Highlight (Billions of yen, %) FY2023 FY2024 YoY Change vs. plan Change Group’s total sales*1 13,344.6 13,958.5 104.6 +613.8) 99.6 (55.4) Revenues from operations 8,580.2 9,069.5 105.7 +489.3) 99.7 (25.4) Operating income 410.0 315.4 76.9 (94.6) 102.3 +7.1) Ordinary incom
Slide 6: Q3 YTD Revenues, Operating Income and EBITDA by Operating Segment (YoY)
Q3 YTD 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 105.7) 76.9) 93.4) Consolidated 9,069.5) +489.3) 315.4) (94.6) 743.8) (52.4) 98.2) 91.9) 94.8) Domestic CVS o
Slide 7: Q3 YTD Revenues, Operating Income and EBITDA by Operating Segment (vs. plan)
Q3 YTD Revenues from Operations, Operating Income and EBITDA by Operating Segment (vs. plan) (Billions of yen, %) Revenues from operations Operating income EBITDA vs. plan/change vs. plan/change vs. plan/change 99.7) 102.3) 100.7) Consolidated 9,069.5) (25.4) 315.4) +7.1) 743.8) +5.4) 99.6) 99.7) 99
Slide 8: Q3 YTD Special Losses
Q3 YTD Special Losses Structural changes, such as integrating York HD's systems and restructuring SST’s Last-Mile strategy, contributing to higher profits in the coming period (Billions of yen) FY2023 FY2024 YoY change Amount of transient special losses Special losses 177.5 178.9 +1.4) 133.4 Details
Slide 9: FY2024 Transient Special Gains and Losses
FY2024 Transient Special Gains and Losses Based on the action plan announced on April 10, 2024, complete divestment and impairment of underperforming businesses and assets within this fiscal year to maximize corporate and shareholder value (Billions of yen) FY2024 (Estimate) Major factors Transient
Slide 10: FY2024 Consolidated Financial Forecasts
FY2024 Consolidated Financial Forecasts (Billions of yen, %) FY2023 FY2024 YoY Change Group’s total sales*1 17,789.9 18,363.0 103.2 +573.0) Revenues from operations 11,471.7 11,879.0 103.5 +407.2) Operating income 534.2 403.0 75.4 (131.2) Ordinary income 507.0 356.0 70.2 (151.0) Net income attributa
Slide 11: EBITDA of SST Operations
EBITDA of SST Operations Accelerate the Foundation Laying for Further Growth of SST Operations (Billions of yen, %) Q3 YTD Full-year results YoY vs. plan plan YoY Ito-Yokado 11.4) 150.2 85.1 27.9 152.2 SHELL GARDEN (0.10) - - 0.14 - Tokyo metropolitan area SST operations 12.1) 168.8 89.1 28.2 150.8
Slide 12: Fundamental Transformation Roadmap of Tokyo Metropolitan Area SST Operations
Fundamental Transformation Roadmap of Tokyo Metropolitan Area SST Operations On Track to Achieve JPY 55.0Bn+ EBITDA and 4%+ ROIC FY2022 FY2023 FY2024 FY2025 Q3 YTD plan Q3 YTD results Full-year plan Number of stores with self-planned apparel* [All stores excluding Shokuhinkan] 113 stores 98 stores 7
Slide 13: Today's Agenda
TODAY’S AGENDA 1 Q3 YTD Results 2 Status of Major Operation Strategies North American CVS Operations Global CVS Operations & Domestic CVS Operations 3 Efforts on Optimization of Group Structure Copyright(C) Seven & i Holdings Co., Ltd. All Rights Reserved. 13
Slide 14: SEI FY2024 Q3 YTD Performance Overview
SEI FY2024 Q3 YTD Performance Overview FY2024 Revised Forecast FY2024 Q3 YTD (as of Oct. 10) Results YoY (%) YoY Change Plan YoY (%) YoY Change (Millions of dollars unless otherwise noted) (1) Total Store Sales 52,845) 95.9 (2,234) 69,740) 96.2 (2,773) Revenues from Operations (JGAAP) 43,525) 95.9 (
Slide 15: Progress on Sales
Progress on Sales Focus on Balancing Sales, Traffic, and Margin with Strong Value Offers and Improved Product Assortment SEI Sales Implemented Strong Value Offers and Enhanced Assortment to Balance Sales, Traffic, and Margin SS Sales ex Cig / Tobacco SS Sales 102% CrowdStrike Outage SS Prop Produc
Slide 16: Short / Intermediate-term Tactics
Short / Intermediate-term Tactics Driving Sales, Traffic, and Margin by Increasing the Frequency of Visits & Attracting New Customers 1 VALUE / TRAFFIC DRIVING 2 PROPRIETARY PRODUCTS Value Food Offerings • Food & Beverage Modernization • Enhancing Value Chain with Warabeya Traffic Driving (Growing M
Slide 17: Value / Traffic Driving
①Value / Traffic Driving Value Food Offerings Traffic Driving (Growing Modern Nicotine) 53% of Adult Smokers 21+ Interested in Completely Switching From Cigarettes to a Non-combustible Nicotine Product $6.99 Buy 5 $3 Large Launched pipeline of Modern Get 5 Free Backbar Expansion Coffee and a Nicotin
Slide 18: Proprietary Products – Food & Beverage Modernization and Warabeya
②Proprietary Products – Food & Beverage Modernization and Warabeya Food & Beverage Modernization Enhance Value Chain with Warabeya Texas Virginia Warabeya category APSD ($) Warabeya category APSD ($) 848 Stores 1,341 Stores +6% +17% Grab and Go Hot Cases Specialty Beverages 82.0 104.0 77.0 89.0 Q3’2
Slide 19: Proprietary Products – Restaurants and Private Brands
②Proprietary Products – Restaurants and Private Brands Restaurants Private Brands 1,068 Restaurants * Launching 215 New Items Private Brands Margin in FY2024 215 137 51% 99 (8th largest Mexican food chain in U.S) 33% 18% Stores with Restaurants Drive Higher Sales & Traffic 30 Total Store APSD Sales
Slide 20: 7NOW Delivery
③7NOW Delivery Driving Sales with Industry Leading Delivery Program Expanding to 7,500 stores & Targeting $1B in Sales by FY2025 7NOW Results & Forecast 25% of 7NOW Top Selling 20 Items are Fresh Food & Prop Bev Strong 7NOW Performance #1 Gatorade #6 Slurpee #11 Dr. Pepper #16 Celsius +24% $15.73 #2
Slide 21: Cost Leadership
④Cost Leadership FY2024 Cost Leadership Actions OSG&A Reduction vs. Prior Year FY2024 Savings Roadmap $350M Original FY2024 $79M $34M $500M +0.2% Target $231M +$12.2M Q3 $(39.6)M $156M YTD $500M Revised FY2024 Target Merch & Store G&A/ Other Financial FY2024 (1.7)% Fuel COGS Expenses Direct Fees Tar
Slide 22: Acceleration of Profitability Improvement in FY2025
Acceleration of Profitability Improvement in FY2025 Launch a Company-Wide Program to Further Accelerate Profitability Improvement in FY2025 1 US Same Store Sales 2 Gross Profit Margin 3 OSG&A % vs. Net Sales KPI Target in 2025 +1.5% 34.1% 16.4% (FY2024 Forecast: (3.0)%) (FY2024 Forecast: 33.3%) (FY2
Slide 23: Today's Agenda
TODAY’S AGENDA 1 Q3 YTD Results 2 Status of Major Operation Strategies North American CVS Operations Global CVS Operations & Domestic CVS Operations 3 Efforts on Optimization of Group Structure Copyright(C) Seven & i Holdings Co., Ltd. All Rights Reserved. 23
Slide 24: 7-Eleven International (7IN) Q3 YTD Results
7-Eleven International (7IN) Q3 YTD Results Proceed as Planned for 7-Eleven Australia (SEA): Steady Growth in Merchandise Sales 7IN consolidated results (Millions of dollar, ％) FY2023 FY2024 Change ◼ Operating income increased, excluding YoY Change vs. plan from plan the impact of the one-time expen
Slide 25: 7IN: Global Growth Strategy
7IN: Global Growth Strategy Further Accelerate the Growth of the 7-Eleven Brand in Global Markets Role of 7IN Equity Model Penetration 7-Eleven Corporation (Tentative) Implemented strategic investments and financing after full-scale launch of 7IN in January 2022 SEJ SEI 2022 Full-scale launch of Jan
Slide 26: Investment Market: Growth of SEA (1)
Investment Market: Growth of SEA (1) Driving Growth through Strengthening Fresh Food (FF) and Expanding the Merchandise Assortment Differentiation and APSD growth by FF Number of FF focused stores 100 Number of 80 SKUs 21 stores*1 March September Growth original FF SKUs items APSD 150 97.6％ 105.0％ +
Slide 27: Investment Market: Growth of SEA (2)
Investment Market: Growth of SEA (2) Achieve Growth by Developing “Close-by Convenient” Stores to Meet the Needs of Local Communities Renovation and assortment changes (Tarneit North store) Trend on sales（YoY） Differentiation by Assortment catering to Tarneit North Store strengthening FF one-stop sh
Slide 28: Improving Profitability FY2025 (SEA)
Improving Profitability FY2025 (SEA) Achieve Sustainable Growth by Leveraging Our CVS Business Strengths Cultivated in Japan and the U.S. KPI target of Strategies toward sustainable growth FY2025 1 APSD ✓ Improve customer experience through ✓ Develop differentiated fresh food apps Existing store 7,0
Slide 29: Today's Agenda
TODAY’S AGENDA 1 Q3 YTD Results 2 Status of Major Operation Strategies North American CVS Operations Global CVS Operations & Domestic CVS Operations 3 Efforts on Optimization of Group Structure Copyright(C) Seven & i Holdings Co., Ltd. All Rights Reserved. 29
Slide 30: Trend on Sales and Number of Customers
Trend on Sales and Number of Customers Number of customers Number of Customersisison on recovery trendbyby Recovery Trend various Various initiatives Initiatives COVID-19 pandemic (Behavioral restrictions) Transition to Category 5 Infectious Disease for COVID-19 (Lifting of behavioral restrictions)
Slide 31: Pricing Strategy
Pricing Strategy Increase number of customers Optimize Assortment and Dispel “Expensive” Image to Attract Foot Traffic and New Customers Pleasant Value (balance price and value) Change in foot traffic (Nov. vs. Aug.) Change in foot traffic & spending (YoY Change) Aug. Nov. Nov.-Aug. Reliable quality
Slide 32: Expansion of New Merchandise (New Counter Merchandise)
Expansion of New Merchandise (New Counter Merchandise) Rise GP Boost Earnings by Increasing Gross Profit Amount from Just-Made & Fresh Counter Merchandise Curry Bread to Seven Café Donuts Seven Café Bakery “Baked in store” series New merchandise Sequential launch from Jan. 2025 Maple Fluffy Melon Br
Slide 33: Today's Agenda
TODAY’S AGENDA 1 Q3 YTD Results 2 Status of Major Operation Strategies North American CVS Operations Global CVS Operations & Domestic CVS Operations 3 Efforts on Optimization of Group Structure Copyright(C) Seven & i Holdings Co., Ltd. All Rights Reserved. 33
Slide 34: Footprint of Our Group Strategy Evolution
Footprint of Our Group Strategy Evolution Continue to commit to taking actions to pursue best interests of our shareholders and other stakeholders Apr. 1, 2024 Jan. 24, 2018 Completed the partial acquisition of Sunoco Completed the acquisition of 7-Eleven Australia May 14, 2021 Strategic Apr. 17, 20
Slide 35: Efforts on Optimization of Group Structure
Efforts on Optimization of Group Structure*（Extract from Oct. 10 th Material) Achieve a new group structure in which the CVS, SST and financials, each have capital and strategic independence 7-Eleven Corporation（tentative） YORK Holdings Co., Ltd. Financials Plans to change the holding company name
Slide 36: Appendix
Appendix Copyright(C) Seven & i Holdings Co., Ltd. All Rights Reserved. 36
Slide 37: External Environment (Japan)
External Environment (Japan) Domestic PPI/CPI (Comprehensive)*1, 2 CPI (Food)*1 (YoY Growth) (YoY Growth) 12.0 12.0 (％) CPI (％) 10.0 PPI 10.0 7.4 7.8 8.0 8.0 7.3 6.0 6.0 4.8 4.8 3.7 4.0 4.0 2.8 2.7 3.2 2.9 2.0 2.0 0.6 0.0 0.9 0.0 (2.0) (2.0) Feb. May Aug. Nov. Feb. May Aug. Nov. Feb. May Aug. Nov. F
Slide 38: External Environment (US)
External Environment (US) CPI(Food) /PPI(Comprehensive)*1 Crude oil price (WTI) /Fuel retail price*2 (YoY Growth) 15.0 CPI (Food) 120 WTI 6.50 (％) PPI (Comprehensive) ($) Fuel retail price (right) ($) 10.1 10.0 89.4 90 5.00 78.1 5.7 70.2 74.2 70.0 5.0 3.7 60 3.84 3.50 3.0 2.6 2.3 1.8 3.34 3.21 3.08
Slide 39: Consolidated B/S Summary (As of Nov. 30, 2024)
Consolidated B/S Summary (As of Nov. 30, 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 Nov. 30, 2024 (Main items only) Feb. 29, 2024 Nov. 31, 2024 Current assets 3,035.6 2,962.7 (72.9) Total liabilities 6,691.4 7,053.8
Slide 40: Consolidated Results (1H and Q3)
Consolidated Results (1H and Q3) (Billions of yen, %) 1H Q3 YoY YoY change YoY YoY change Group’s total sales*1 9,287.0 106.8 +593.1) 4,671.5 100.4 +20.7) Revenues from operations 6,035.5 108.8 +488.5) 3,034.0 100.0 +0.86) Operating income 186.9 77.6 (54.1) 128.4 76.0 (40.4) Ordinary income 167.2 73
Slide 41: Operating Income by Segment (1H and Q3)
Operating Income by Segment (1H and Q3) (Billions of yen, %) 1H Q3 YoY YoY change YoY YoY change Consolidated 186.9) 77.6 (54.1) 128.4) 76.0 (40.4) Domestic CVS operations 127.7) 92.2 (10.7) 55.2) 91.3 (5.2) Overseas CVS operations 73.3) 65.0 (39.5) 83.6) 70.6 (34.8) Superstore operations 3.5) 79.3
Slide 42: Q3 YTD Consolidated Statements of Cash Flows
Q3 YTD Consolidated Statements of Cash Flows CF from operating activities CF from investing activities CF from financial activities Free CF 800 (Billions of yen) 400 0 (400) (800) (Billions of yen) FY2020 FY2021 FY2022 FY2023 FY2024 vs. FY2023 CF from operating activities 391.4) 481.5) 581.5) 486.1)
Slide 43: Q3 YTD Superstore Operations & Others - Change in Operating Income
Q3 YTD Superstore Operations & Others - Change in Operating Income Superstore operations Others (Billions of yen) (Billions of yen) 2.0 (0.34) +1.8 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 Reserve
Slide 44: Q3 YTD Results of Major Operating Companies
Q3 YTD Results of Major Operating Companies (Billions of yen, %) Operating income Existing store Change in merchandise sales growth YoY YoY Change GPM Seven-Eleven Japan 182.9) 91.6 (16.7) (0.1) (0.2) 7-Eleven, Inc.*1 242.4) 80.8 (57.7) (3.4) (1.1) [Millions of dollar] [1,600]) [73.7] [(570)] *2 (Fo
Slide 45: Seven-Eleven Japan (1)
Seven-Eleven Japan (1) Existing store sales & GPM Trend in income of franchised stores Impact of unit price increase Income of franchised stores (monthly amount) YOY 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 96.5 98.5 +0.4 100 1,200 +0.4 +
Slide 46: Seven-Eleven Japan (2)
Seven-Eleven Japan (2) SG&A Change in operating income (Billions of yen, %) (Billions of yen) Q3 YTD Major factors YoY YoY change for change SG&A 459.5 102.8 +12.3) Advertising Enhanced sales expense 29.5 106.2 +1.7) promotion Salaries and Optimized directly wages 58.5 97.2 (1.6) operated stores 199
Slide 47: 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 +1.0 +4.7 +1.0 34.0 +1.7 +0.1 +0.9 ±0.0 (2.4) (3.5) ±0.0 33.0 (0.2) (0.
Slide 48: 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 +3.4 1,000 +1.1 +2.2 +0.4 ±0.0 ±0.0 (1.0) (1.3) (4.4) (1.1) (3.9) (2.1) 500 (2.6) (10.0) (6.9) (10.0) (9.3) Speedwa
Slide 49: 7-Eleven, Inc. (3)
7-Eleven, Inc. (3) SG&A Change in operating income (Millions of dollar, %) (Billions of yen) Q3 YTD Major factors YoY YoY change for change SG&A 7,102 103.2 +218) Advertising Decrease due to expense 97 77.2 (28) advertising timing Salaries and Increase due to wages 2,303 100.9 +19) Sunoco acquisitio
Slide 50: 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 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 Note) The cha
Slide 51: Eliminations/Corporate Expenses and Capex for Group Strategy
Eliminations/Corporate Expenses and Capex for Group Strategy Q3 YTD Results (Billions of yen, %) Expenses Capex vs. vs. YoY Full-year YoY Full-year Results vs. plan full-year Results vs. plan full-year change plan change plan plan plan DX, system, security, etc. (39.6) (0.20) +0.43 72.8 (54.5) 8.0 (
Slide 52: Promotion of Sustainable Management (1)
Promotion of Sustainable Management (1) Achieving sustainable society with global perspectives 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 Env
Slide 53: Promotion of Sustainable Management (2)
Promotion of Sustainable Management (2) Further strengthen efforts to achieve the targets set out in the environmental declaration by 2050 1 Reduce CO2 emissions Reduction in emissions 2 Measures against plastic from store operations 100 100% Reduced by 34.4% Reduce used by 50% 50% Net 39.1% Less us
Slide 54: 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