Food inflation reveals structural challenges

研报英文原文证据摘录

Food inflation reveals structural challenges

Macquarie Equity Research Seven & i

Earnings changes

We forecast a 2.8% OP CAGR over FY2/27–29E. We lower our OP forecasts by 8.2% for

FY2/27E (to ¥407.0bn, YoY -3.8%) and by 13.6% for FY2/28E versus our previous estimates.

Our previous forecasts included the superstore and financial services businesses; however,

following the divestment of non-core operations in FY2/26 - including the sale of the

superstore business to Bain Capital and the deconsolidation of Seven Bank -the company’s

earnings from FY2/27E onward reflect a pure Japan and North America CVS business. Given

the relatively low profitability of the superstore and financial segments, we estimate that the

removal of these businesses has a limited impact on operating profit, despite a double-digit

reduction in revenue.

1. Domestic CVS: Margin pressure emerging: The cut in FY2/27E OP is primarily driven

by a reassessment of the domestic CVS business, where we expect a decline in

competitiveness and lower gross margins than previously assumed. Same-store sales

growth for March–May averaged +2.0%, broadly in line with the company’s full-year

guidance of +2.5%. However, with customer traffic remaining in negative territory, we

do not view this performance as particularly strong.

2. North America: Shift to profitability-focused model: We also incorporate ongoing

restructuring in North America, where the business is transitioning from volume

expansion toward a stronger focus on profitability. On the supply side, the company

has delayed the planned start-up of a key supplier facility (Warabeya Nichiyo’s Ohio

plant), originally scheduled for summer 2026, citing a review of its product supply

system. On the store network side, the company plans to close 645 stores in FY2/27,