Seven & i Holdings Deep Dive: So, what is going on? SoftBank for defense, Żabka for growth

Research evidence excerpt

Seven & i Holdings Deep Dive: So, what is going on? SoftBank for defense, Żabka for growth

erlying merchandise business shows negative leverage, not positive. Merchandise same-store sales

have been negative since FY2023, gross margin has declined 0.8 ppt, and direct-store operating costs have risen. Operating

profit holds up only because fuel CPG has stabilized at elevated levels (40¢ range), SG&A discipline kicked in during FY2025

(at 99.0% of the prior year), and fuel vertical integration added roughly $70M in EBITDA (earnings before interest, taxes,

depreciation, and amortization). The core issue is that performance is driven by external market variables, not by internal

operating improvements — a 10¢ move in CPG translates to a $1.2B swing in gross profit. The merchandise business alone is

structurally negative-leverage; the overall business holds positive momentum only because fuel-market tailwinds offset the

weakness underneath (Exhibit 17 and Exhibit 18).

Putting the two segments together, topline growth is not translating into structural expansion of parent-level operating profit —

that is the conclusion five years of data support. Domestic chain-wide sales grow at a 2.0% CAGR while parent operating profit

flatlines; overseas operating revenue grows at a 3.1% CAGR but operating profit swings within a ±25% range depending on

fuel markets. The clearest proof is consolidated operating profit: ¥420.9bn in FY2021, ¥422.9bn in FY2025 — essentially flat

over five years despite significant topline growth in both segments.

Improvement paths exist, but they remain at the planning stage, not the track-record stage. At SEJ, IT investment efficiency

and franchisee-support cost optimization could deliver results. At SEI, merchandise gross margin improvement (FY2026