Seven & i’s Q1 profit below estimates

TOKYO: Japan’s Seven & i Holdings Co Ltd said yesterday that its operating profit rose 3.3% in the three months through May, just shy of analyst estimates, boosted by strong demand for own-brand products at its domestic convenience stores.

Profit reached 84.1 billion yen ($743.66 million) for the first quarter. That compared with a 85.91 billion yen Thomson Reuters Starmine SmartEstimate, based on forecasts of three analysts.

The convenience store operator stuck with its 386.5 billion yen forecast for the year ending February, versus the 391.53 billion yen SmartEstimate of 19 analysts.

SmartEstimates give greater weight to recent forecasts by top-rated analysts.

Seven & i also yesterday announced a business tie-up with mail order firm Askul Corp as it looks to drive more customers to its e-commerce platform.

Convenience store operators are looking to defend their central position in the daily lives of Japanese consumers as a wealth of new internet businesses emerge offering products delivered directly to shoppers’ homes.

The operator of Japan’s largest convenience store chain is expanding its network at home and in the United States, where it is spending $3.3 billion to acquire 1,100 convenience stores from Sunoco LP, bringing its total number of stores in the country close to the company’s 10,000 goal.

Sunoco operates about 1,350 retail fuelling sites and convenience stores under brands such as APlus and Stripes.

Operating profit at convenience stores abroad fell 31.5% in the first quarter.

At home, the opening of the first 7-Eleven store in the southern island prefecture of Okinawa in 2019 will give the chain a presence in every prefecture in Japan, where convenience stores remain a bright spot in an overall sluggish retail landscape.

The retail industry is facing a shortage of labour, with 7-Eleven Japan easing the financial burden on franchisees by cutting royalty fees from September and introducing labour-saving measures in stores.