Shares of Seven & i Holdings, the Japanese operator of 7-Eleven and other retail stores, plunged on Friday morning following the release of its first-quarter financial results. The company reported a 35% decline in net profit, primarily due to weakness in its overseas convenience-store business.
Disappointing Results
Seven & i Holdings stated that its net profit for the quarter ended May 31 fell to Y42.18 billion ($305.5 million) from Y65.04 billion in the same period last year. This figure fell short of analysts’ expectations, with a poll conducted by FactSet estimating a net profit of Y61.08 billion.
Impact on Share Prices
As a result of the disappointing earnings report, the company’s shares plummeted by 6.1% to 5,788 yen, reaching a low of 6.4% earlier in the day.
Factors Contributing to Decline
The decline in operating profit for Seven & i Holdings’ overseas convenience-store business played a significant role in the drop in net profit. Operating profit for this segment decreased by 52% to Y20.98 billion. The decline can be attributed to falling retail gas prices and a narrower profit margin for gas sales.
However, the company did mention that the profit margin for gas sales has shown improvement since April.
Future Projections
Despite the disappointing results, Seven & i Holdings has maintained its revenue and net profit projections for the fiscal year ending in February 2024. The company anticipates a 5.6% decrease in revenue to Y11.154 trillion, while projecting a 1.4% increase in net profit to Y285.00 billion.
Conclusion
The first-quarter financial results for Seven & i Holdings reflect a notable decline in net profit, primarily driven by weakness in its overseas convenience-store business. While the company’s stock prices have taken a hit, it remains optimistic about the future, as indicated by its unchanged projections for the fiscal year ending in February 2024.
