Seven & i Holdings Q2 FY2025 slides: Operating profit up 11.4% despite revenue decline

Introduction & Market Context

Seven & i Holdings Co., Ltd. (TYO:3382), the Japanese retail conglomerate that operates 7-Eleven convenience stores globally, reported its second quarter fiscal year 2025 results on October 9, 2025, showing improved profitability despite revenue challenges. The company’s presentation highlighted strategic initiatives focused on fresh food offerings and digital transformation while also providing updates on its corporate restructuring plans.

The company’s stock closed at 1,982 yen on October 9, down 1.5 yen or 0.08% for the day, as investors digested the mixed results and downward revision to full-year forecasts.

Quarterly Performance Highlights

Seven & i Holdings reported operating income of 208.3 billion yen for the first half of FY2025, representing an 11.4% increase year-over-year and exceeding the company’s plan by 5.8%. This improvement in profitability came despite a 6.9% decline in revenues from operations, which fell to 5,616.6 billion yen.

As shown in the following consolidated results highlight, net income surged 133.1% year-over-year to 121.8 billion yen, primarily due to significantly reduced special losses compared to the previous year:

The company’s operating income improvement was driven by strong performance in its Overseas CVS (convenience store), Superstore, and Financial Services segments, which offset weakness in the Domestic CVS operations. The following waterfall chart illustrates the contributions from each business segment:

A key factor in the improved bottom line was the significant reduction in special losses, which decreased from 86.2 billion yen in the first half of FY2024 to 31.2 billion yen in FY2025. This reduction was attributed to the completion of the Group’s Structure Reforms and Business Structure Reforms implemented in the previous year:

Segment Performance

Seven-Eleven Japan (SEJ) reported mixed results with operating income of 121.4 billion yen, down from 127.6 billion yen in the previous year. While existing store sales grew by 0.8%, the merchandise gross profit margin decreased by 0.3 percentage points to 31.8%.

The company’s U.S. operation, 7-Eleven, Inc. (SEI), faced challenges with same-store sales declining by 0.9%, although merchandise gross profit margin improved by 0.2 percentage points to 33.2%. The company noted that its delivery service, 7NOW, showed strong growth with same-store sales up 21.3% and an average basket size of $15.4.

Strategic Initiatives

Seven & i Holdings is implementing several strategic initiatives to drive future growth, with a particular focus on enhancing its fresh food offerings and expanding its digital capabilities. The company provided details on its progress in these areas:

The company is rolling out SEVEN CAFÉ Bakery to 8,000 stores by the end of FY2025, up from the current 3,064 stores. This initiative is expected to add approximately 0.1% to the gross profit margin. Additionally, the 7NOW delivery service is showing strong growth, with a 75.3% increase in Japan and a 21.3% same-store sales growth in the U.S.

The company is also implementing a transformation program to improve profitability and return to its growth trajectory:

Revised Financial Outlook

Despite the improved first-half profitability, Seven & i Holdings revised its full-year financial forecasts downward. The company now expects revenues from operations of 10,560.0 billion yen, down from the initial forecast of 10,722.0 billion yen. Operating income is projected to reach 404.0 billion yen, down from the initial forecast of 424.0 billion yen:

Despite the downward revision in revenue and operating income forecasts, the company expects significant growth in earnings per share (EPS) due to net income growth and the completion of share buybacks:

The company announced an interim dividend of 25.0 yen per share, maintaining its policy of achieving consecutive dividend increases:

Corporate Restructuring Progress

Seven & i Holdings provided updates on its corporate restructuring initiatives, including the planned IPO of 7-Eleven, Inc. by the second half of 2026. The company reported that practical preparations for the IPO are progressing as scheduled:

The company also reported progress on its share repurchase program, with 352.5 billion yen already acquired. Additionally, it has completed the sale of its Superstore Business Group (announced on September 1) and the deconsolidation of Seven Bank (announced on June 24).

Forward-Looking Statements

In its key takeaways, Seven & i Holdings emphasized its commitment to returning to growth in the next fiscal year, primarily driven by the full-year gross profit uplift from the nationwide rollout of freshly prepared items in Japan. For its U.S. operations, the company plans to further advance its Transformation Program to strengthen profitability and drive growth through distinctive fresh food offerings, enhanced store network, and expanding 7NOW delivery service.

The company remains confident in delivering bottom-line growth and executing its share repurchase program as planned, which is expected to drive substantial EPS growth despite the revised revenue and operating income forecasts.

Full presentation:

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