7-Eleven owner Seven & i lifts first-half profit as fuel boosts its North American stores, and keeps its forecast

Seven & i Holdings, the Japanese owner of 7-Eleven, said Thursday that operating profit rose 11.5% to 232.3 billion yen in the six months to Aug. 31, as fuel profits at its North American chain more than made up for a 9.3% drop at Seven-Eleven Japan. The company kept its forecast for the year ending in February unchanged.

The results came out after the Tokyo market closed. Reported revenue fell 2.8% to 5.46 trillion yen because the figures no longer include York Holdings and Seven Bank, which the company stopped consolidating last year. Leaving those businesses out of last year's numbers too, the company said revenue rose 16.3% and operating profit 36.6%. A weaker yen helped: it added 311 billion yen to revenue and 9.4 billion yen to operating profit, with the dollar averaging 158.29 yen, against 148.40 yen a year earlier.

Ordinary profit, which also counts interest, earnings from affiliates and other items outside the core business, rose 19% to 221.9 billion yen. Net profit attributable to shareholders rose only 2.2%, to 124.4 billion yen, after 54.1 billion yen of special losses, including about 23 billion yen of impairments. A year earlier, the company had booked a 39.4 billion yen gain on property sales.

Fuel did most of the work in North America

Operating profit at 7-Eleven Inc., the North American chain, rose 45.8% to $1.32 billion in the first half. Of the $414 million increase, $398 million came from fuel, which the company credited to favorable fuel market conditions and progress in vertical integration of its fuel business; merchandise and other items added $25 million. Same-store merchandise sales in the U.S. rose 0.6%, and the gross margin on merchandise improved by 0.3 percentage point to 33.5%, which the company tied to selling more of its own products. Sales through 7NOW, its delivery service, rose 15.6% to $550 million, which the company said puts it ahead of the pace for its $1.1 billion target for the year.

The latest quarter was weaker in the stores. U.S. same-store sales slipped as fewer customers came in, which the company blamed largely on persistently high fuel prices, though shoppers spent more per visit. Operating profit for the quarter, before goodwill amortization, still rose 24.8% to 121 billion yen, helped by better pricing and promotions and fewer losses from spoiled and stolen stock. In yen, operating profit for the overseas convenience store business rose 87.7% to 150.4 billion yen for the half. The North American chain also has a new chief executive, Mauricio Leyva, after a search that was still under way in April.

Higher costs at home

At Seven-Eleven Japan, same-store sales rose 1.1%, with freshly prepared food such as hot meals, in-store coffee and tea, and smoothies accounting for 0.9 percentage point of that, and the merchandise gross margin held at 31.8%. But operating profit fell 9.3% to 110.2 billion yen as the chain spent more on next-generation store systems, in-store cooking equipment and advertising. Higher system costs accounted for 8.7 billion yen of the rise in expenses and advertising for 1.8 billion yen.

The June-August quarter was harder. Same-store sales were still higher than a year earlier, but slow sales of soft drinks pulled down the gross margin, and operating profit fell 13.7% to 57.8 billion yen. The company said spending for the half was in line with its plan and that the extra system costs should ease from the December-February quarter. It opened 210 stores in Japan in the half, for a net gain of 26, against a plan for 550 openings and a net 200 more stores over the full year.

A forecast that implies a slower second half

Seven & i still expects operating profit of 425 billion yen for the year ending Feb. 28, 2027, up 0.5%, on revenue of 10.43 trillion yen, about flat, with net profit down 5% to 278 billion yen. It raised those profit forecasts in July, by 20 billion yen for operating profit and 8 billion yen for net profit, after a strong first quarter, while assuming more normal fuel market conditions in the second half.

The first half came in close to that plan. Operating profit was 1.7 billion yen short of the 234 billion yen the company had penciled in, while net profit beat its plan by 6.4 billion yen. Keeping the full-year number means operating profit of about 192.7 billion yen in the September-February half, roughly 10% less than the 214.6 billion yen it made a year earlier.

Buybacks and a higher dividend

The interim dividend is 30 yen a share, up from 25 yen, payable from Nov. 13, and the company still plans 60 yen for the year, up from 50 yen. In August it bought back 400 billion yen of its own shares, 189.7 million shares at 2,109 yen each, most of them through an accelerated repurchase whose final price will be adjusted to the average market price over a set period. That month it also sold 300 billion yen of shares to new partners including the mobile payment service PayPay and Sumitomo Mitsui Card, so net repurchases came to 100 billion yen. The company said it has bought back 700 billion yen of shares since March 2025, toward a goal of 2 trillion yen by 2030.

The board also approved issuing up to 120 billion yen of domestic bonds between Oct. 23 and Dec. 31, with maturities of up to 10 years, to repay bonds and loans and for working capital.

Seven & i shares closed up 1% at 1,987.5 yen in Tokyo on Thursday, before the results came out, and will first trade on them on Friday.