Seven & i stock may offer solid entry point after Q3 results: Macquarie

Seven & i Holdings Co., Ltd. (TYO:3382 ) reported its third-quarter financial results for fiscal year ending February 2025, which showed operating profit (OP) falling short of Visible Alpha consensus by 6%.

The convenience store segment, particularly in North America and Japan, underperformed during this period. The company's North American convenience store business, Seven Eleven Inc. (SEI), witnessed a 22% year-over-year decline in operating profit for the quarter ending September 2025.

Despite the challenging external environment in North America, SEI reported an improvement in in-store same-store sales. Management is actively implementing strategies to revive the business, including introducing reasonably priced foods, expanding product categories, optimizing value chains, and shutting down underperforming stores.

These efforts aim to position SEI for a better performance moving forward. In Japan, Seven & i is focused on enhancing the gross profit margin of Seven Eleven Japan (SEJ). The margin dipped slightly from 32.3% in the third quarter of the previous fiscal year to 31.9% in the same quarter of the current fiscal year.

This was mainly due to SEJ's emphasis on lower-priced items to attract customers. To combat this, the company plans to boost higher-margin Fast Foods to improve profitability.

Looking ahead, Seven & i is expected to make announcements in May 2025 regarding its future direction and potential responses to Management Buyout/Takeover Bid (MBO/TOB) proposals during its annual shareholder meeting.

However, Macquarie analysts noted that despite the progress made by SEJ and SEI, there appears to be no clear path to a rapid, V-shaped recovery in either the Japanese or North American markets.

Additionally, the company's domestic and overseas convenience store businesses, as well as its Super Store segment, have not met targets for the nine-month period on an accumulated basis in fiscal year 2025.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Source: Investing.com