Seven & i Holdings has raised its operating profit forecast for the fiscal year through February 2027 to ¥425 billion ($2.6 billion) from a prior forecast of ¥405 billion. Revenue is now expected to be ¥10.4 trillion, up from ¥9.5 trillion. These new forecasts comfortably exceed analysts' estimates. The company reported a 61% jump in first-quarter operating profit to ¥105 billion, driven by improved fuel margins in North America and the positive impact of a weaker yen. CEO Stephen Dacus stated that the first quarter showed steady progress through disciplined execution of their transformation strategy.
The revised outlook comes as Seven & i seeks to re-establish itself as a focused global convenience-store operator, having divested non-core retail businesses in Japan following a takeover bid from Alimentation Couche-Tard. However, the company remains cautious about its overseas convenience store business, cutting its second-half profit forecast by ¥24 billion due to concerns about economic uncertainty potentially affecting gasoline sales. CFO Tetsuya Takagi highlighted that weaker economic conditions could impact fuel demand in overseas operations, even as the company relies on these markets for growth.
Several factors contributed to the updated projections, including a revised full-year exchange rate assumption of 157 yen against the US dollar, up from 150 yen, which boosts the value of overseas earnings when converted to yen. Stronger-than-expected fuel profits in North America and favorable yen exchange rates were also cited. Despite ongoing consumer caution among low-income demographics, the firm reported growth in U.S. same-store merchandise sales on a dollar basis compared to the previous year. To manage shareholder equity concerns, the board plans to cancel treasury stock, a measure to mitigate future share dilution, especially as the stock has seen a nearly 10% decline year-to-date.
In terms of strategic shifts, Seven & i plans to close 645 North American locations while opening 205 new stores in fiscal year 2026. They are also prioritizing their 7NOW delivery service and expanding proprietary food offerings. The company has delayed the initial public offering (IPO) of its North American unit, originally planned for late 2026, until at least the fiscal year beginning in March 2027, citing rising oil prices linked to Middle East instability impacting the broader demand outlook for gasoline. This delay also suggests the company is being prudent in a challenging market, aiming for a stronger valuation when conditions are more favorable.
