TOKYO -- 7-Eleven Inc. helped Seven & i Holdings Co. Ltd., the parent of Seven-Eleven Japan Co. Ltd. and of 7-Eleven in the United States, report a record first-quarter fiscal 2019 profit that beat analyst expectations, said the Nikkei Asian Review. Overseas convenience-store business, including in the United States, drove the results.
This year, Seven-Eleven became the first c-store chain in Japan to surpass 20,000 locations, but it faces an increasingly saturated market, the report said.
Seven & i said July 5 that group operating income rose 2.7% to $782 million from $762 million the previous year for the three months ended May 31, marking a second straight all-time high for that quarter. The figure topped analyst expectations of $773 million, the report said.
Seven-Eleven Japan, which generates more than 60% of Seven & i's group operating income, saw its earnings slide 6% to approximately $504 million.
Frozen foods, daily foods and “counter foods” such as desserts, fryer foods and delicatessen items led sales growth, helped by a new layout, according to Seven & i. Seven-Eleven Japan expanded the counter area and frozen-food area in 60 existing stores during the quarter, with a total of 600 remodels planned for fiscal 2019, and 240 new stores, with a total of 1,100 planned for the year. It is also rolling out Yakitori skewered grilled chicken to 9,200 stores that sell fryer foods, contributing to a nighttime sales increase.
7-Eleven Inc.'s operating income for the quarter grew 47%, from $88 million to $130 million.
Merchandise and gasoline sales both increased, “trending firmly” even when excluding the effect of the Sunoco acquisition, Seven & i said. Sunoco performed “as planned,” boosting operating income by $14.8 million.
U.S. merchandise sales increased by $10 million, up 1.9% year over year. Gross-profit margin declined by $5.5 million, down 0.2% year over year. Gasoline sales volume increased by $2.2 million, despite a rise in retail prices. Gasoline gross profit rose $25 million year over year, up $1.99. Citing credit-card fee increases caused by a rise in gas prices, the company reported that expenses were down by $5.7 million for 7-Eleven Inc. for the period.
- Based in Irving, Texas, 7-Eleven operates, franchises or licenses more than 66,000 stores in 17 countries, including 11,600 in North America and nearly 9,100 in the United States. It is No. 1 on CSP’s 2018 Top 202 ranking of c-store chains by U.S. company-owned retail outlets.
It is a tough time to be in retail, with rapid and profound changes in the business environment that Seven & i President Ryuichi Isaka described as "once in a century," according to the Nikkei Asian Review. Brick-and-mortar retailers must compete with Amazon.com and other online rivals while fighting for shoppers with drugstores and supermarkets, which offer deep discounts on food, he said.