2019 Q1 results: big four in Japan

Date : 11 July 2019

Japan's four largest retailers, Seven & i Holdings, Aeon, FamilyMart and Lawson, have posted their results for the first quarter.

Seven & i Holdings: total sales up 1.5%

Seven & i recorded a 1.5% increase in total group sales to JPY2,894.8bn (US$26.6bn), with operating profit rising 4.6% to JPY90.3bn (US$832.6m) year-on-year (yoy) for the three months ending 31 May. 

Domestic convenience store operations recorded a modest increase in revenue, up 1.1% yoy to JPY236.4bn (US$2.1bn). 7-Eleven Japan's key growth measure, existing store sales, increased 0.3% in the first quarter. This was despite a slight fall in customer numbers, offset by stronger average spending per customer. The retailer added 89 stores to its convenience network in Japan during the quarter, reaching 20,965 outlets.

Total store sales operations at 7-Eleven Inc (U.S and Canada) increased 2.8% to JPY893bn (US$8.2bn), driven by strong processed food, fast food and non-food sales. Gasoline sales, however, fell 0.7% to JPY449.5bn (US$4.1bn).

The retailer’s main supermarket banner, Ito-Yokado, posted decline in merchandise, lifestyle and foods sales yoy. This had a significant impact on consolidated superstore revenue, which fell 1.8% to JPY467.6bn (US$4.3bn).

Aeon: revenue up 1.3%

Aeon has posted a 1.3% increase in operating revenue to JPY2,130.9bn (US$19.6bn), with operating profit rising 6.7% to JPY42.2bn (US$389m) for the first quarter yoy. Operating revenue at both its General Merchandise Store and Supermarket operations were largely flat.

Operating revenue from operations in Japan increased 1.1% to JPY1,930.7bn (US$17.8bn). Growth was much stronger overseas for the retailer’s ASEAN business, with revenue rising 7.9% to JPY99.4bn (US$916.3m). Revenue from China was flat at JPY72.8bn (US$670.2m).

Aeon's Health & Wellness Business, which operates under Welcia Holdings Co., Ltd. continued to perform strongly. Operating revenue increased 10.5% to JPY214.2bn (US$1.9bn), supported by the addition of 35 net new stores during the first quarter (total network 1,913), as well as 5.9% LFL sales growth in existing stores.

FamilyMart: total store sales flat

FamilyMart posted total stores sales of JPY744.4bn (US$6.8bn) for the three months ended May 31, up 0.1% yoy. Operating profit was up 47.6% to JPY19.5bn (US$179m) yoy.  The retailer ended the first quarter with a total network of 23,820 stores, down 182, mainly due to store consolidation in Japan.

FamilyMart's largest overseas market, Taiwan (3,406 stores), posted a challenging set of results. Revenue fell 3.3% to JPY15.2bn (US$139.6m)  yoy, despite a net increase of 201 new stores.

This fiscal year, it will work towards four strategic pillars: enhancing support for franchised stores, strengthening the profitability of its stores, moving forward with the shift to digital, and promoting business collaboration with Pan Pacific International Holdings Corporation (PPIH).

There are approx. 1,000 FamilyMart stores in Japan equipped with self-checkout registers. Like its competitors, FamilyMart is already testing shorter operating hours (at approx. 25 stores). It plans to increase this to about 700 stores from October, and will subsequently review its around-the-clock store policy.

For its moving forward with the shift to digital strategy, the retailer recently launched the FamiPay smartphone app, which uses the Group’s digital FamiPay electronic money. In addition to T-POINT, which can be used for shopping already, FamilyMart plans to introduce d POINT and Rakuten Point in November.  

An increasing number of operators in Japan have announced environmental-friendly policies and FamilyMart is no different. It hopes to reduce food waste by developing its products so they can have a longer shelf live. It has also shifted to a reservation only system for Doyo no Ushi (eel), which is a seasonal product.

The merger of FamilyMart UNY Holdings Co., Ltd. and FamilyMart Co., Ltd. to FamilyMart Co., Ltd is still expected to go ahead and effective from September 1, 2019.

Lawson: revenue up 4.9%

Lawson has recorded a 12.4% increase in operating profit to JPY14.2bn (US$131.3m) for the three months ending May 2018. Operating revenue increased 4.9% to JPY178.8bn (US$1.6bn) and consolidated net sales of convenience stores increased 5.6% to JPY623.8bn (US$5.7bn) yoy.

In the first quarter, existing-store-sales in Japan increased 1.3% yoy. This was mainly driven by stronger average spend per customer, with improved evening and night time product ranges popular.

The Group increased its total stores network by 174 stores to 17,043 in the first quarter. Expansion was mainly in China (net 146 stores to 2,153), the retailer’s second largest market. Just outside the reported period, (in June 2019) Lawson became the first Japanese convenience store operator to enter Hunan province, opening five stores in Changsha.

Last month, Lawson launched the Another Choice program at its stores in Ehime and Okinawa prefectures. The initiative aims to both reduce food loss and donate food to children in need. Under the program, Lawson awards Ponta members and d point card members points on purchasing products approaching their sell-by dates, and donates 5% of the total purchase to initiatives that support children.

Looking ahead, Lawson remains committed to introducing initiatives to make store operations more efficient, and is introducing self-cash register and smartphone cash register facilities at its stores.

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