Seven & i Holdings Co Ltd (TSE:3382)

QUOTE AND NEWS
Forbes  Jan 8  Comment 
Behind the bullishness is continued net buying by foreign investors and, especially, strong profit and growth performance by many stocks in highly disparate sectors.
Wall Street Journal  Jan 7  Comment 
Seven & i Holdings said freshly brewed drip coffee at its convenience stores in Japan helped the retailer post a record profit.
Benzinga  Jan 7  Comment 
Japanese Seven & I Holdings Co (OTC: SVNDY) reported a 32% rise in its profit for the nine-month period. Seven & I's net profit climbed to Y128.02 billion ($1.2 billion), versus a year-ago profit of Y96.96 billion. Its revenue rose 13.8% to...
Reuters  Dec 24  Comment 
* Seven & I Holdings CEO Suzuki shifts focus to e-commerce
Japan Today  Oct 6  Comment 
Cashmere sweaters at Uniqlo. Gourmet coffee and ice cream at 7-Eleven. These incongruously premium offerings by two of Japan's biggest retailers are part of a strategy to lift profit margins by enticing thrifty shoppers to splurge on little...
MarketWatch  Oct 3  Comment 
Japanese retail giant Seven & i Holdings Co. reports strong profit growth for its fiscal first half on brisk sales of own-brand products at its convenience stores.
Wall Street Journal  Jul 4  Comment 
Japanese retail giant Seven & i Holdings reported a 14.9% on-year gain in net profit, powered by a comeback in consumer spending.
Wall Street Journal  Jul 4  Comment 
Wall Street Journal  Apr 4  Comment 
Seven & i Holdings, which operates 7-Eleven convenience stores in Japan and the U.S. as well as Seibu and Sogo department stores, expects a double-digit percentage rise in profit this fiscal year.




 
TOP CONTRIBUTORS

Seven & i Holdings Co Ltd. (TSE:3382) engages in various retail businesses in Japan, China, and North America. The company operates convenience stores, superstores, supermarkets, specialty shops, and department stores, including 7-Eleven convenience stores globally. Seven & I Holdings operates approximately 37,300 stores globally and is dependent upon consumer spending in Asia and North America.[1] The company was founded in 2005 and is headquartered in Tokyo, Japan.[2]

Company Overview

  • Convenience stores (40.6% of revenue, 75.9% of operating income): Convenience store operations are composed of 7-Eleven convenience stores in Japan, North America, and Beijing, China. 7-Eleven, Inc., based in the United States, provides 7-Eleven area franchise rights to area licensees around the world.
  • Superstores (8.8% of revenue, 37.3% of operating income) Superstore operations are composed

of superstores that provide apparel, household goods, and food in Japan and China—Beijing and Chengdu, Sichuan Province. In addition, superstore operations include food supermarkets in Japan and Beijing and specialty stores.

  • Department stores (17.5% of revenue, 6.5% of operating income) Department store operations are

composed of department stores and miscellaneous goods specialty stores. These stores include brands such as Millennium Retailing, Sogo, and SEIBU.

  • Food services (1.8% of revenue, -1% of operating income) Food services are composed of restaurant

operations, meal provision services (for company cafeterias, hospitals, and schools), and fast food operations in Japan.

  • Financial services (2.2% of revenue, 9.1% of operating income) Financial services are composed of ATM

operations, credit card operations, electronic money services, leasing operations, insurance operations, change delivery service, and change machine service in Japan.

  • Other (0.6% of revenue, 0.7% of operating income) Others are composed of Internet-related

services, meal delivery services, publishing, property management businesses, and community school business in Japan.


Trends and Forces

Expectation of Future Tax Hikes and Higher Electricity Bills Drags Spending

The Japanese government is considering a few tax measures as means of financing post-quake reconstruction. These measures include (i) a 10% increase in income tax for 3-5 years (yielding an ¥1.3 trillion annually), (ii) a modest increase in consumption tax (a 2-3% increase from FY2012 onward for two-three years only; each 1% increase would raise around ¥2.5 trillion), and (iii) a possible increase in electricity charges related to the nuclear power plant problems and a higher burden for the public. On the other hand, recovery may continue as aggregate retail same-store sales in Japan recovered to 1.4% year-over-year growth in April from a 3.5% decline in March following the earthquake.[3]

Japanese Slowdown from Earthquake

Consumers may continue to rein in spending if the Japanese economy remains lackluster for the time being. Consumer spending could remain weak for a longer period in light of deteriorating employment and income coupled with rapid cooling of consumer sentiment. Sales of discretionary goods will likely be sluggish as this trend continues. Some analysts see consumer sentiment as unlikely to recover until 2012, given the nuclear power plant issue and political uncertainty.[4]

Competition

Seven & I competes in the Japanese consumer goods retail space in Japan, as well as several other countries. Selected competitors include:

  • Aeon Co Ltd (TSE:8267) operates general merchandise stores, supermarkets, convenience stores, and department stores in Japan, North America, and Asia.
  • Daiei Inc (TYO:8263) owns 2000 stores including department stores, supermarkets, discount stores, restaurants, and hotels.
  • UNY Co (TSE:8270) operates in the retail, financial, and real estate business in Japan and Hong Kong.
  • Izumi CO LTD (TYO:8273) operates 85 supermarkets and stores in Chugoku, Kyushu, and other regions in Japan.

References

  1. Seven & I 2009 annual report
  2. Capital IQ, “Seven & I Holdings”
  3. JP Morgan analyst report, 27 May 2011
  4. Daiwa Capital Markets, “Future slowdown in personal consumption a concern”
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