Seven & i Holdings reported net income surged 129% to ¥49.0 billion ($321 million) in the first quarter as the convenience store operator capitalized on asset disposals while simultaneously spinning off its lucrative banking unit.
Operating income rose a more modest 9.7% to ¥65.1 billion ($427 million) for the three months ended May 31, reflecting underlying business challenges despite the headline earnings boost. Revenue increased just 1.6% to ¥2.78 trillion ($18.2 billion).
The earnings surge stemmed largely from a ¥37.2 billion gain on property sales by subsidiary Ito-Yokado, masking operational struggles at the 7-Eleven parent. The company also avoided a ¥5.4 billion subsidiary transfer loss recorded in the prior year.
Notably absent from the quarter was Seven Bank, which the company deconsolidated in June after reducing its stake to below 40%. The move eliminates a consistent profit contributor as Seven & i pursues what it terms “shareholder value creation” through asset sales.
Japan’s convenience store segment underperformed with operating income declining 11% to ¥54.5 billion, while overseas operations showed strong growth with income soaring 94% to ¥8.7 billion.
The restructuring continues as Seven & i faces takeover pressure from Canada’s Alimentation Couche-Tard. Credit rating agency Moody’s downgraded the company to A3 with negative outlook in May, citing increased risk tolerance evidenced by planned ¥2 trillion share buybacks.
The deconsolidation of cashflow-generating businesses will slow operating profit recovery over the next 12-18 months, according to analysts.
