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*Calculated on total revenues, not net sales.
Source: Company reports/Coresight Research[/caption] FY19 Results Japan-based retailer Seven & i reported net sales up 14.6% to ¥5,509 billion in FY19, ended February 28, 2019. Operating income came in at ¥411.6 billion, up 5.1%. The gross margin on net sales decreased by 161 basis points to 19.9% and the operating margin fell by 43 basis points to 6.1%. Diluted EPS was ¥229.31, up 12.1%. Below, we outline the performance of the company’s domestic convenience store operations, overseas convenience store operations, superstore chain Ito-Yokado, supermarket chain York-Benimaru, department-store chain Sogo & Seibu and specialty store operations. Domestic Convenience Store Operations Seven-Eleven Japan (SEJ) recorded operating income of ¥245.1 billion, up 0.4% year over year. Same-store sales increased 1.3%, which management attributed to the company’s quick response to changes in customers’ needs as well as the introduction of new store layouts and new products. Overseas Convenience Store Operations Seven-Eleven’s overseas convenience store business recorded operating income of ¥111.1 billion, up 22.3% year over year. In US dollars, 7-Eleven North America grew net sales by 29.4%, which included a 49.3% increase in gasoline sales and a 13.0% increase in merchandise sales. As reported, in Japanese yen, 7-Eleven North America grew net sales by 27.4%, with a 47.0% increase in gasoline sales and an 11.3% increase in merchandise sales. In the US, same-store merchandise sales increased 1.9%, which the company attributed to continuous efforts in developing and selling its private label range “7-Select” in the US market. This segment’s fiscal year ended December 31, 2018. Superstore Ito-Yokado Superstore Ito-Yokado recorded operating income of ¥4.7 billion, up 53.0% year over year. Net sales decreased 0.6% to ¥1,206 billion. Same-store sales decreased 1.1% year over year, driven by a 4.7% decline in same-store apparel sales. York-Benimaru Supermarket York-Benimaru recorded operating income of ¥12.8 billion, down 9.0%. Net sales grew by 1.9% to ¥437.2 billion and same-store sales fell by 1.0% year over year. Department Store Sogo & Seibu Department store Sogo & Seibu recorded operating income of ¥3.3 billion, down 35.7%. Net sales fell 10.4% to ¥604.4 billion, and same-store sales decreased 1.0% year over year. Specialty Store Business Seven & i Food Systems recorded operating income of ¥1.3 billion, up 53.3% year over year due to growth in average spending per customer and newly implemented product policies that management said meet customers’ needs. Nissen Holdings recorded an operating loss of ¥193 million, easing from an operating loss of ¥5,363 million in the prior year, due to an improved business structure. Outlook The company expects operating income to reach ¥420.0 billion in FY20, up 2.0% year over year.
*Calculated on total revenues, not net sales.Source: Company reports/Coresight Research[/caption] FY19 Results Japan-based retailer Seven & i reported net sales up 14.6% to ¥5,509 billion in FY19, ended February 28, 2019. Operating income came in at ¥411.6 billion, up 5.1%. The gross margin on net sales decreased by 161 basis points to 19.9% and the operating margin fell by 43 basis points to 6.1%. Diluted EPS was ¥229.31, up 12.1%. Below, we outline the performance of the company’s domestic convenience store operations, overseas convenience store operations, superstore chain Ito-Yokado, supermarket chain York-Benimaru, department-store chain Sogo & Seibu and specialty store operations. Domestic Convenience Store Operations Seven-Eleven Japan (SEJ) recorded operating income of ¥245.1 billion, up 0.4% year over year. Same-store sales increased 1.3%, which management attributed to the company’s quick response to changes in customers’ needs as well as the introduction of new store layouts and new products. Overseas Convenience Store Operations Seven-Eleven’s overseas convenience store business recorded operating income of ¥111.1 billion, up 22.3% year over year. In US dollars, 7-Eleven North America grew net sales by 29.4%, which included a 49.3% increase in gasoline sales and a 13.0% increase in merchandise sales. As reported, in Japanese yen, 7-Eleven North America grew net sales by 27.4%, with a 47.0% increase in gasoline sales and an 11.3% increase in merchandise sales. In the US, same-store merchandise sales increased 1.9%, which the company attributed to continuous efforts in developing and selling its private label range “7-Select” in the US market. This segment’s fiscal year ended December 31, 2018. Superstore Ito-Yokado Superstore Ito-Yokado recorded operating income of ¥4.7 billion, up 53.0% year over year. Net sales decreased 0.6% to ¥1,206 billion. Same-store sales decreased 1.1% year over year, driven by a 4.7% decline in same-store apparel sales. York-Benimaru Supermarket York-Benimaru recorded operating income of ¥12.8 billion, down 9.0%. Net sales grew by 1.9% to ¥437.2 billion and same-store sales fell by 1.0% year over year. Department Store Sogo & Seibu Department store Sogo & Seibu recorded operating income of ¥3.3 billion, down 35.7%. Net sales fell 10.4% to ¥604.4 billion, and same-store sales decreased 1.0% year over year. Specialty Store Business Seven & i Food Systems recorded operating income of ¥1.3 billion, up 53.3% year over year due to growth in average spending per customer and newly implemented product policies that management said meet customers’ needs. Nissen Holdings recorded an operating loss of ¥193 million, easing from an operating loss of ¥5,363 million in the prior year, due to an improved business structure. Outlook The company expects operating income to reach ¥420.0 billion in FY20, up 2.0% year over year.
- The company expects Japan’s economy to continue to recover at a moderate pace, and noted that a consumption tax hike is scheduled to take place in October 2019.
- The company pointed to the challenges of a shrinking population in Japan, the uncertainty of overseas economies, and fluctuations in the financial markets.
- The company plans to revamp a total of 12,000 stores by end of FY20.