7-Eleven Brand

Efforts toward Digitalization

Utilizing exceptional brand power built from theworld’s largest network of 83,579 retail stores to expand
into the global market

Seamlessly providing diverse services Groupwide
based on 7iD and its roughly 28 million members

18 countries andregions worldwide*2

83,579Europe409

Japanstores21,402*1

storesstoresThe Seven & i Group introduced the Groupwide
platform 7iD in 2018 and has since implementeddifferent initiatives to provide new experiencesand value to customers. As of February 28,
2023, total 7iD membership had reached 28
million across the Group companies. Throughthe 7iD platform, we offer Ito-Yokado’s online
supermarket service to 7-Eleven app users
and introduce the 7NOW delivery service tosupermarket customers (p. 32), allowing us tobetter understand each individual and propose
tailored products and services.
Moving forward, we will continue to use the7iD platform to expand our retail media business(p. 32) as well as strengthen services that integrate
retail and finance and enhance data utilization in
the food business.

North
America

15,400Asia/Oceania

46,368storesstores*1 As of February 28, 2023
*2 As of December 31, 2022, outside JapanIn 1927, in the small town of Oak Cliff, Texas, in the
United States, a company called Southland Ice,
which sold essential blocks of ice for refrigerators
during a time when households did not haveelectric refrigerators, laid the foundation for what
is now 7-Eleven. Today, 7-Eleven has expanded to
become the world's largest retail chain with 83,579
stores, establishing a strong brand image as an
indispensable part of local communities.
To further expand this brand value into theglobal market, SEVEN-ELEVEN JAPAN CO., LTD.,established 7-Eleven International LLC in 2021,
working in partnership with 7-Eleven, Inc., whichhandles licensee business in North America. This
new entity oversees support for existing markets
and expansion into new countries, while adhering to
the Group's philosophy that growth comes throughimproving quality. It is committed to promoting
a global strategy by maximizing the strengths ofboth Japan and the United States (p. 36).

7-Eleven
app users
Approx.

20.0 million

Seven & i Holdings
7-Eleven, Inc.

SEVEN-ELEVEN JAPANStrengths

Strengths• Value chain• Network• Product development capability• Trademark and brand management• Contract management• Utilization of digital technology

Collaboration witharea licensees

Human resource
exchange

7-Eleven International LLCSDGs

IT and digital
initiatives

Aiming to enhance the value of the 7-Eleven global brand23

Management Report 2023

Joint productdevelopment andprocurement

7iD customer data
7iD members
Approx.

28.0 million

LOFT
app users
Approx.

2.2 million

Ito-Yokado
app users
Approx.

2.7 million

Denny’s
app users
Approx.

1.6 million
Note: As of February 28, 2023

Management Report 2023

24

Business Strategy

Message from the CFO

We will proceed withsteady and swift reforms
to achieve the goals of our
updated Medium-Term
Management Plan.

Yoshimichi Maruyama
Director, Managing Executive Officer
Chief Financial Officer (CFO)

Drive reforms and bolster global
communication skills
The Seven & i Group has been committed toearnest and constructive dialogue with ourshareholders and a wide range of stakeholders
with the goal of fostering sustainable growth
for the Group and enhancing medium- to longterm corporate value. Based on the input andobservations received from these dialogues andthe evolving business landscape, the Group has
been consistently discussing the progress of
the Medium-Term Management Plan 2021–2025(MTMP) during Board of Directors’ meetings,
where outside directors now make up the
majority, since June 2022. The outcomes of these
discussions have been compiled into the “Updateto the Medium-Term Management Plan and theResults of the Group Strategy Reevaluation,”
which was presented to both internal andexternal stakeholders in March 2023.

25

Management Report 2023

This included a partial revision to the “IdealGroup Image for 2030” developed when weformulated the MTMP, with a greater emphasis
on our goal to become a world-class retail groupwith a focus on food. This transformation isdriven by a global growth strategy rooted in our
7-Eleven business and the active utilization oftechnology to foster innovation in logistics. We
have gained a tangible sense of progress towards
this ideal image through initiatives such as theacquisition of U.S.-based Speedway LLC andadditional investments in our Vietnam business.
At the same time, we have also made steadyprogress in our business portfolio reforms. As
a result, despite the cost pressures of inflation
driven by factors such as rising energy costs
and a weaker yen in FY2022, our consolidated
performance surpassed our expectations in termsof both revenues from operations and each profit
indicator, leading to record-breaking earnings.
The Group strategy update takes into

account the outcomes of these reforms.
Nevertheless, there remains a regrettabledisparity between the intrinsic value of the Groupand the shareholder value reflected by market
capitalization, with some expressing concerns
about the perceived sluggishness of the paceof the reforms. As our stakeholders know, this
aspect has been strongly pointed out, particularly
by international investors, and we must genuinely
acknowledge and address this matter. Against
this backdrop, the Group is striving to bolster
its communication skills while pursuing morethoughtful IR and SR activities, in conjunction
with the globalization of our business. For
instance, we aim to foster dialogue that considers
the nuances of communication culture, going
beyond mere post-reporting of executed plansby swiftly sharing our reform direction, plans, andtimelines, as we focus on ongoing reforms.

the Group’s “7iD” customer information platform
with various operational systems. Going forward,
we aim to achieve cross-promotion between
the 7-Eleven app and the Ito-Yokado online
supermarket, leveraging the membership dataof approximately 28 million individuals acrossthe Group to create synergies and new business
opportunities.
In SST operations, where structural reforms
have been a focal point, a significant endeavor
toward drastic transformation involves strategic
investment in large-scale process centers andcentral kitchens to bolster our food offerings,
including pre-cooked meals and frozen foods.
These facilities are gradually being brought into
operation, marking a substantial stride forward
for our SST strategy in the Tokyo metropolitanarea, and are expected to contribute to improved
profitability.

A year to strengthen foundations toward
goal achievement

Planning the optimal financial strategy fromthree focal points

Regarding the progress of our MTMP, ourapproach involves accomplishing structuralreforms during the first three years of the
five-year period, concentrating management
resources in growth strategy areas. In thelatter two years, we will look to enhancestrategic investments for new growth as well asshareholder returns.
FY2023, the third year of the MTMP, isconsidered a foundational period for achieving
the targets set in the plan, as the infrastructure
invested in starts to come into operation
gradually. We acknowledge that this is a criticalphase where the true potential for enhancing
corporate value will be put to the test, particularly
in anticipation of the following two years.
Specifically, as part of our core 7-Elevenbusiness, in North America we are enhancing
fresh food offerings through the launch of a
production facility for daily items in Virginia,
with plans for additional factories to follow.
In domestic 7-Eleven operations, the launchof the 7NOW delivery app will make it easierfor customers to purchase store products.
Additionally, we are advancing the integration of

In connection with these growth investments, we
also revised our capital reallocation policy in the
MTMP update.
In terms of broad direction, we aim toincrease operating cash flow and focus strategic
investments in the domestic and international
CVS businesses while improving shareholder
returns and maintaining financial health.
These three focal points—quantitative
expansion, qualitative improvement, and financial

Management Report 2023

26

Message from the CFO

soundness—remain unchanged in our financial
strategy.
From the perspective of quantitative
expansion, we prioritize the growth rate of EPS tobetter understand earnings growth and have also
positioned the expansion of free cash flow as a
key indicator. Due to the smooth progress madein building synergies from the integration with
Speedway and the enhanced cash generation
capacity of our domestic and international CVS
businesses, both operating cash flow and free
cash flow for FY2022 significantly exceeded our
initial projections.
In terms of qualitative improvement, weemphasize return on invested capital (ROIC)
spread, which is the difference between ROIC
and weighted average cost of capital (WACC),
as a key indicator that underpins each company
within the Group. Based on current favorable
business performance and reevaluation of theGroup strategy, we have raised the target values
for metrics such as ROE and ROIC in the MTMP.

Financial soundness was temporarily
eroded due to the procurement of interestbearing debt to cover the entire cost of the
Speedway acquisition. We therefore set the debt/
EBITDA ratio as an indicator to demonstrate
to both internal and external stakeholders ourcommitment to restore financial soundness as
quickly as possible. In this regard, we revised our
FY2025 target within the MTMP update fromlower than 2.0 times to less than 1.8 times.
In this way, our overall financial strategy isadvancing towards enhanced capital efficiency
and a healthier balance sheet. However,
we recognize that we still have room for
improvement, especially in terms of qualitative
aspects and investment efficiency, to align with
global standards.
The successful completion of the significant
investment in acquiring Speedway was facilitatedby our robust financial foundation at the time
(FY2019), characterized by a debt/EBITDA ratioof approximately 1.5 times and a predominant AA

Consolidated financial numerical targets
Quantitative expansion of finance (1)(Billions of yen)

1,200

Operating CF (excluding financial services)
EBITDA

1,000
800

626.8

600
400

751.4

Quantitative expansion of finance (2)1,100or more900
or more

832.8

EPS

600
Compound annual growth rate (CAGR) of 18%
or more (compared with that of FY2020)

400

318

300

630.8

200

456.7

203

238

100
2020

2021

2022

2023

2024

0

2025 (FY)

2020

2021

2022

2023

Qualitative improvement of finance

Ensuring of financial soundness(%)(Times)ROIC (excluding financial services)

ROE

12
10
8

11.5 or more

8.7
6.8

4

7.5
3

8 or more

4.7

4.8

5.2

2020

2021

Management Report 2023

2022

2023

2024

2025 (FY)2025 (FY)Debt/EBITDA ratio (consolidated)

3.9
3.0

2.8

2

Less than 1.8

1

2
0

2024

5
4

6

27

(Yen)

500

995.3

200
0

Note: Excludes impact of sale/leaseback transactions

0

2020

2021

2022

2023

2024

2025 (FY)

credit rating. Recognizing that the smooth andadvantageous funding execution was a major
contributing factor, it becomes apparent that
restoring financial health is crucial not only to
expand future strategic options but also to ensure
substantial shareholder returns moving forward.
At the same time, considering
management’s emphasis on capital efficiency,
including metrics such as ROE, we are now
entering a phase where we will delve into
discussions at a higher level, exploring whether
maintaining a debt/EBITDA ratio below 1.8 times
strikes the right balance.
Focusing on nurturing talent in support ofglobal management
It is becoming increasingly important toshare these financial perspectives with ouroperating companies. Since our transition toa holding company in 2005, we have playeda pivotal role in strengthening collaboration
among Group companies and actively fosteringsynergies. However, in terms of finance, while
the emphasis on operating income at the local
level is crucial and valued, there remains achallenge in fully embedding the concept of costof capital. In the context of our ongoing SST
business transformation, we have announced
a commitment to fund growth investments
for the next three years through cash inflows
by reducing assets in SST operations andstrengthening food infrastructure. This
underscores the importance of disciplined capital
allocation, taking into account the Group’s overall
financial position.
This also presents a challenge in terms of
cultivating the human resources responsible fordriving Group management. In conversations withshareholders and investors, they acknowledge
that we have nurtured talent with strong productdevelopment and operational capabilities tosupport our retail operations. However, theyalso note that we lack the required personnel tohandle the capital policy and investment planningfor the Group, where overseas operations
contribute to the majority of sales, underscoring
this as an important area for strategic investment.

In consideration of both corporate value andshareholder value
Amid the global rise in prices driven by soaring
energy costs and raw material expenses,
compounded by the expansion of geopoliticalrisks, consumer confidence remains clouded
by uncertainty.
Against this backdrop, the Group pledges
to enhance both corporate value and shareholder
value through further growth driven by creatingGroup synergies centered around food.
To fulfill this commitment and instill
confidence in our ability to do so, the Group will
diligently pursue businesses that address theneeds and wants of local communities, which
are the essence of our retail origins. Additionally,
as mentioned earlier, we will create anticipation
around the Group by globally showcasing thesynergies, strategies, progress, and achievements
in food, manifested not only in Japan but acrossthe world. The Seven & i Group will continue
striving to generate value that meets andexceeds expectations.

Management Report 2023

28

Business Strategy of Domestic Convenience Store Operations

We will leverage our strengths in food achieved through Groupsynergy to accelerate growth in both existing and new businesses.
Domestic 7-Eleven stores have received high praise for their food offerings. This success is underpinned byextensive food-related capabilities, encompassing procurement, development, and merchandise assortment
developed through superstore operations, along with the product appeal of the private brand Seven Premium,created by leveraging the Group's advantages. In domestic convenience store operations, we will harness thiscollective strength to accelerate growth in both existing and new businesses.
In our existing stores, we will continue to bolster our food offerings, with a focus
on Seven Premium products. Moreover, we will undertake initiatives across businesscategories in response to recent changes in the social structure and consumer
trends. We will also expand our 7NOW delivery service and promote new
businesses by utilizing retail media.
Through these strategies, we aim to grow our operating income toapproximately ¥300 billion in FY2025 and enhance our ROIC.

Existing
businessStrengthen food sector

Prioritize food assortment centered on Seven Premium to achievesustained and stable growth
In the food sector, Seven Premium has a significant

introduce merchandise that promotes health andadvantage due to its wide range of pricing and value

environmental consciousness, as well as items madeoptions. The sales ratio has been increasing annually,

from locally sourced ingredients. At the same time, weand even during the recent period of high inflation,

seek to enhance average daily sales and gross profit

average daily sales at existing stores have risen

margins by striking a balanced approach between ancompared to the previous fiscal year.

effective store opening strategy tailored to the

Building on these achievements, we will continue

characteristics of the area, a sales strategy that includes

to strengthen the food sector at existing stores, withholding appealing events, and a store operation strategy,

a focus on Seven Premium. In addition, we will actively

which also encompasses supporting franchisees.

Increase in composition of Seven Premium infood area

Sales growth of existing stores under recent
inflationary pressure■Seven Premium food revenue■Food revenue excl. Seven Premium−Sales ratio of Seven Premium

Fumihiko Nagamatsu
Representative Director and President of SEVEN-ELEVEN JAPAN CO., LTD.
Director and Senior Managing Executive Officer of Seven & i Holdings Co., Ltd.

FY2022 sales ratio: 30%

Daily sales in existing stores−YoY (existing stores)−YoY (Seven Premium)

101% 102%

FY2009sales ratio:
6.1%

Growth strategy of domestic convenience store operations

94%

94%

2022
Mar.

Apr.

108%

103% 103%

96%

97%

104%

99%

109% 109%105% 105%106% 106% 105%
100% 100%

Store opening strategy
Optimize store types to suit thecharacteristics of each area

Changes inthe social
structureUrban
location

Accelerated
shift tosmallercommercial
areas anddiversificationof needs

Suburbanlocation

Sales
promotion strategy

Store
operations strategy

Hold local product fairs with strong
customer appeal throughout the year

Strengthen support measures for
franchisees, counseling, andenvironmental initiatives

To enhance average daily sales

To boost gross profit margin

Growth rate of existing store sales (%)

Merchandise margin (%)

6.0

Pre-COVID-19 average*
1.0%
3.0

Annual growth
of 2%

32.2
32.0

0.0

31.8

-3.0

31.6
2016

2019

* Average from FY2016 to FY2019

Management Report 2023

2022

2025
(FY)

Annual growthof 0.2%

2016

2019

2022

2025
(FY)

Our strengths in the food cycle

Further bolster food lineup
Merchandise assortment focused on health, community,
and the environment

COVID-19 impact

11

12

13

14

15

16

17

18

19

20

21 2022
(FY)

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Impact of our competitive advantage in food

Product strategy and merchandise assortment

COVID-19
pandemic

29

Residential
location

2009 10

Strengths in food cultivatedin superstore operations

Seven Premium
development

SEVEN-ELEVEN JAPAN’s
strong customer support• Overwhelming number of
products and SKUs
• Procurement and supplier network• Large-scale sales floor to test
products• Customer understanding andinnovative development
capability in food• Combine the Group’s strengthfor development• Approximately 70% of personnel
are nurtured within superstore
operations• Private-brand (PB) productrange that is 1.7 times larger
than the competition• Removing geographical reasons,close to half (46%) of consumers
actively choose 7-Eleven• Two-thirds of customers
choosing SEVEN-ELEVEN
JAPAN provide “variety andquality of food” as a reason

General food SKUs

Number of private-brand food items

Choice of CVS brand other than location(majority share accounted for byfood merchandising)Supermarkets (SM)Convenience stores (CVS)
2,000(4 categories)*2

15,000(7 categories)*1*1 SM: Fruit and vegetables, meat, fish, daily
items, processed food, prepared food, andbakery items*2 CVS: Fruit and vegetables, daily items,
processed food, and prepared food

46%

1,330
Company A

Company A

Company B

Company B

Based on Company research as of June 2022

Based on a survey of contracted companies asof September 2022
Sample size (n) = 1,060

Management Report 2023

30

Business Strategy of Domestic Convenience Store Operations

Existing andnew businessesNewbusiness

Initiatives across business categories

Promoting the SIP Project with Ito-Yokado to address changes in social structure

Development of two new businesses that leverage contact with customers
based on 7iD

SEVEN-ELEVEN JAPAN (SEJ) is intensifying its

prefectures nationwide. To illustrate, in the products

collaboration efforts with Group companies acrossand services domain, this collaboration enables us

In the area of new business, we aim to expand the2017, the service has evolved, and both the number ofdiverse business categories to adapt to shifting social

to meet the one-stop shopping needs of elderly

7NOW delivery service and enter the advertisingusers and stores have increased. Upon the release of

dynamics and ensure the sustained growth of its

individuals, working women, and single households

business to increase revenue.

stores. A symbolic case for this is the SIP Project*,

through EASE UP, an original frozen food brandthe 7NOW app in September 2023, we anticipate

7NOW is a home delivery service that allows

enhanced integration with 7iD, leading to improved

which was initiated in August 2022 in partnership with

developed by IY. It also facilitates the expansion of ourcustomers to order products from 7-Eleven storesuser-friendliness and an increased number of

Ito-Yokado (IY) (see diagram below). This project is

product lineup and the joint development of locallythrough their smartphones and have them delivered incustomer touchpoints. We will continue expanding

one of the strategic actions encapsulated within

produced and consumed products by harnessing theas little as 30 minutes. Since its experimental launch inthe 7NOW service through initiatives such as these.

Synergy 2.0 (p. 21) with the aim of harnessing

expertise of SEJ’s manufacturing partners. In thesynergistic effects. Within this initiative, the strong

operational domain, we join forces with IY to hostprocurement and development capabilities of SEJ invarious fairs. Additionally, we have ambitious plans tofresh and frozen foods, featuring a vast range of

inaugurate a groundbreaking retail concept store

Stock Keeping Units (SKUs; the smallest unit for

called the SIP Store, which combines conveniencemanaging products), are combined with the ability tostore and superstore elements, in Chiba Prefecture

attract customers, drive sales, and develop daily items

during FY2023.

at more than 21,000 7-Eleven stores across all 47* SIP is an abbreviation denoting the SEVEN-ELEVEN
JAPAN/Ito-Yokado partnership.

Operations
Subcommittee

Data Coordination
Subcommittee

SIP Store• Mutual provision ofmerchandise• Joint promotions andmutual customer
referrals through useof app and social
media• Collaboration withlocal governments
and human resource
exchange, etc.

• Various analyses
through Point of Sale
(POS) and 7iD data
integration• Development of newstore format

Galbi Gukbap(beef rib soupwith rice)

Gomtang Gukbap(beef bone soupwith rice)

SIP Store positioning

Store area

Approx. 1,000 m2
More than 20,000 SKUs

Cheese risottoManagement Report 2023

●

●

●

Integration of 7NOW app with 7iD
Addition of productrecommendation feature

Strengthening of delivery infrastructure through multiple
vendors in one area
● Increase in the number ofdelivery partners

Enhanced merchandise assortment in new store format combining convenience
store and superstore elements
Fresh produce

Improvement in usability
Usability that resembles
selecting merchandise in-store
Expansion of customer
contact
Data expandability basedon 7iD

Improvement in usability by enabling use of the app in placeof the store terminal

TOPIC

Announced future aim and four visions for the 50th anniversary
SEJ celebrated its 50th anniversary in 2023. On the occasion of its 50th anniversary, SEJ has not only
expressed its commitment to enhancing its adaptability to change in its future aim but is also actively
pursuing four visions to bring this commitment to life.
Future aim

Paving the way to the next level ofconvenience for more comfortable living
worldwide

Approx. 130 m2
Approx. 2,500 SKUs

Frozen food●

Build a joyful future, together

SIP Store

Variety
Meat rice gratin

Second half

Integration of 7NOW
app with 7iD

Strengthening the framework for nationwide expansion in FY2024

In contrast to 7-Eleven stores measuring approximately 130 square meters withapproximately 2,500 SKUs, SIP Stores are expected to measure approximately 330–500
square meters with more than double the variety at over 5,000 SKUs. In terms ofmerchandise assortment, we will expand our offerings not only of fresh produce but alsofrozen foods and Seven Premium products, which hold further growth potential.

Approx. 330–500 m2
More than 5,000 SKUsFirst halfStore
operational
efficiency

Sales Promotion
Subcommittee

EASE UP products
developed in collaboration
with SEJ’s manufacturing
partners

FY2023 store expansion initiatives

Developmentof delivery
infrastructure

Products and Services
Subcommittee• Joint procurement
and purchasing, etc.

Expansion of 7NOW delivery by SEVEN-ELEVEN JAPANImprovementin usability

Themes of SIP Project initiatives

31

Expanding the 7NOW delivery service and entering the advertising business

Non-refrigerated
fruit andvegetables

SEJ will foster a corporate culture centered oncollaboration with all stakeholders that embraces
diversity and mutual recognition of each individual's
work to generate new values that benefit society.

Seven PremiumThis is the vision SEJ strives for, to build a joyful
future, together.

Four visions• Health

Provide merchandise and services that contribute tohealthy living and society• Community

Contribute to the resolution of social issues andcommunity revitalization as infrastructure for daily life

• Environment

Contribute to the creation of a circular economy by
reducing environmental impact• Human resources

Realize an environment in which everyone involved inour business can fully leverage their capabilities

Management Report 2023

32

Business Strategy of Overseas Convenience Store Operations

Expanding SEVEN-ELEVEN JAPAN’s strengths in food globally
Based on Seven & i Group's market analysis both domestically and internationally, convenience store
operations have seen an increase in customer visits due to a higher sales ratio of fresh food and otherproprietary products. As a result, we intend to further refine SEVEN-ELEVEN JAPAN (SEJ)'s strength in fresh
food and expand it globally.

Director and CEO
7-Eleven, Inc.
Director and Senior Managing Executive
Officer
Seven & i Holdings Co., Ltd.

increasingly sophisticated, with a growing desire fortrends, we have been able to achieve improvements
strengthening the development and sale of proprietaryproducts such as fresh food, special beverages, andThe high composition of fresh food*directly contributes to an increase in the
average number of customers
Sales composition of fresh food (%)

Joseph M. DePinto

In North America, customer demands have become

Sales ratio of fresh food, special beverages,
and private-brand products as a percentageof average daily sales at existing stores in the
United States
Approx.
34%

in merchandise margins and average daily sales by

We will achieve sustainable business growth through four
strategic initiatives.

50

Expanding the value chain for food to meet increasingly
sophisticated needs

fresher and higher-quality food products. Amid theseNorth American convenience store operations/7-Eleven, Inc.

North America-based 7-Eleven, Inc. (SEI), which boasts theleading store share in the U.S. convenience store market, ispursuing four strategic initiatives for further growth: (1) growproprietary products, (2) accelerate digitalization anddelivery business, (3) generate synergies from the SEI andSpeedway integration, and (4) grow the business throughboth M&A and organic new store openings. Going forward,
we will focus on increasing the sales ratio of food-related
products, aiming to improve average daily sales andmerchandise margins, and thereby
enhance the business' ROIC.

North American convenience store operations/7-Eleven, Inc.

private-brand items. Our plan is to increase the share of
proprietary products in the sales of existing stores in
the United States to approximately 34% by FY2025.

●The size of the circle represents the number ofstores.

40

Japan
Hawaii24%

2022*1

2023
forecast

2024
forecast

2025
forecast*2(FY)*1 The figure for FY2022 excludes results from Speedway stores.
*2 The figure for FY2025 includes results from existing SEI stores andSpeedway stores that have been fully integrated.

The Lone Star
SliderHam andcheese sweet
bread

Mexican riceand beanburritoSesame cold
noodle salad

30

20

To strengthen our proprietary products, SEI has
enhanced collaboration with Warabeya Nichiyo

U.S.

10

Holdings Co., Ltd., a long-standing partner of SEJ in
product development. Warabeya North America, Inc.

0

200

400

600

800

1,000

1,200

Average number of customers in 2022
* Fresh food refers to fast food and daily foods

plans to establish new factories for producing suchitems as sandwiches in Virginia and Ohio in 2024, andto expand its existing facility in Texas. Further, in 2025,

Value chain management

partners from the Nihon Delica Foods Association*
are planning to expand into Southern California. We

Global convenience store operations/7-Eleven International LLC

will continue to increase production capacity, andWe will leverage the strengths of Japan and the United States to drive
global growth.

improvement in merchandise margins.

In Japan, North America, and China (Beijing, Tianjin, and Chengdu), 7-Eleven stores are operated by Seven & i
Group subsidiaries. In other countries and regions, prominent local corporate groups run 7-Eleven stores aslicensees. Although we are experiencing continued growth in various countries and regions, differences in sales
have emerged between regions. To address this, we established 7-Eleven International LLC (7IN) to support
growth in existing markets, provide strategic investment to existing licensees, and facilitate entry into newmarkets. 7IN commenced its operations in 2022. We will further strengthen our strategic investments inlicensees to enhance our the presence of our convenience store operations in the global market.

strengthen the food value chain to maintain a sustained* Refers to the 63 manufacturers (as of May 31, 2023) who jointly
develop and manufacture proprietary daily products for
SEVEN-ELEVEN JAPAN CO., LTD.

Strengthening 7NOW with a view to achieving annual sales of US$1 billion
In the 7NOW delivery service, we continuously evolve
includes achieving swift delivery times of an average ofless than 28 minutes in the United States. We will
strengthen the subscription-based delivery service,

Shinji Abe
Co-CEO
7-Eleven International LLC
Director and Executive Officer
SEVEN-ELEVEN JAPAN CO., LTD.
Executive Officer
Seven & i Holdings Co., Ltd.

33

Management Report 2023

Annual sales from 7NOW delivery service

our service offerings to meet customer needs. This

7NOW GOLD PASS, and introduce it to Speedway

US$1 billion or more
Aim to reach US$1 billion
in sales in FY2025
CAGR 73%(2020–2025)

stores, further accelerating growth with the aim of

Ken Wakabayashi
Co-CEO
7-Eleven International LLC
Director and Executive Officer

reaching US$1 billion in sales in FY2025.
2020

2021

2022

2023
2024
2025
(FY)
forecast forecast forecast

Management Report 2023

34

Business Strategy of Overseas Convenience Store Operations

Integration synergies delivered faster-than-expected results, leading tomajor upward revisions of FY2023 targets
In 2021, SEI acquired Speedway, which has

we have yielded tangible results by introducing SEI's

Global convenience store operations/7-Eleven International LLC

Drive ongoing growth through enhanced business engagement and thetransfer of business innovation methods from Japan and the United States

approximately 3,000 stores and operates the thirdprivate-brand products into Speedway to enhancelargest convenience store chain in the United States. As

merchandise assortment, realizing cost reductions by

In the countries where we are already operating, we

a result, its total number of stores in North America

leveraging SEI and Speedway's purchasing power, andaim to enhance our engagement in business operations

now exceeds 13,000. Currently, we have a network of

expanding SEI's delivery business into Speedway.

and increase income through strategic investment instores in 47 out of the top 50 major cities in the United

Since the effects of the synergies have been growing

our licensees.

States, achieving a store density that places stores

faster than initial projections, we have raised the target

As one of our initiatives, we have decided to

Store development• Realize concentrated store openings based on
urban planning• Localize the expertise of SEJ and SEI for local
customers

within a two-mile radius of approximately 50% of thefor integration-related income for FY2023 fromprovide additional investment in Vietnam, where futureStore development (planned)

total U.S. population.

US$650 million to US$800 million.

economic growth and population expansion are

FY2022 (Result)

79

By ensuring the realization of integration

expected. In Vietnam, we opened our first store in 2017,

FY2023115

on creating synergies in four key areas: merchandise,synergies with Speedway, we will realize income

and as of the end of FY2022, we have expanded to 79

FY2026275

scale, fuel logistics, and digital strategies. For instance,

growth for SEI.

stores. We will focus on concentrated store openings in

FY2028500

Since the integration, we have primarily focusedstrategic target areas based on urban planning, whileleveraging the business innovation methods of SEJ andSpeedway integration synergies drive SEI's income growth
FY2022 plan

SEI, with the goal of expanding to a scale of 500 stores
FY2023 plan
(before revision)

FY2022 result

US$450 million US$682 million

FY2023 plan
(after revision)

US$650 million US$800 million(+US$232 million vs. budget)(+US$150 million before revision)

Additional investment in Vietnam

by FY2028. We will also collaborate with our Japanesebusiness partners to build a value chain, expanding our

Additional
investment

market share through differentiation with high-quality

Japanesevendors
VietnamPartner

proprietary products. We will use our efforts in
Vietnam as a model case and expand into othercountries and regions.

Milestones completed in FY2022

Merchandise relatedHarnessed economies
of scale
Cost leadership

Integration offuel logistics
Integration ofdigital strategies

Driving continuous investment with a focus on global growth potential

Optimized assortment with vault and center ofstore resets

The 7-Eleven convenience store network is the largest

7IN will therefore actively promote expansion into

in the global market. As of January 31, 2023, 7-Elevennew markets. We aim to expand our network to over

Leveraged scale through national contracts

stores operated in 19 countries and regions, with ample

50,000 stores outside of Japan and North America byopportunity to generate significant growth throughFY2025 and extend our presence to 30 countries andCompleted organizational right-sizing

new store openings.

regions by FY2030.

Transitioned in-house maintenance to more than
3,600 7-Eleven stores
Expanded speedway fuel transportation coverage
to 390 7-Eleven stores

Launched delivery in more than 1,200 stores

Global expansion of 7-Eleven stores and growth areas(as of January 31, 2023)
North America

Asia-PacificU.S.
MexicoCanadaJapan
21,323
South Korea 14,179
Thailand
13,838
Taiwan
6,683
China
4,450
Philippines 3,400
Malaysia
2,472
Australia
738
Singapore
460
Vietnam
79
Cambodia
44
India
22

12,854
1,886
606

Europe/Middle East

Enhancing our share in the fragmented North American market
The convenience store market in the United States isGiven this environment, SEI will continue to pursue

highly fragmented, with stores belonging to small

strategic M&A and new store openings, leveraging thechains, including independently-owned stores with 10

strength of its proprietary products, in order toor fewer locations, accounting for approximately 63%

expand market share, improve the efficiency of storeof the total, in stark contrast to the Japanese market

operations, and enhance logistics infrastructure.

Denmark
NorwaySwedenIsrael

176
134
81
1

Countries/Regions

Stores30 countries and regions
by FY2030

Over 50,000 stores
outside ofJapan and North America
by FY2025

where the top three companies occupy over 90%.

35

Management Report 2023

Management Report 2023

36

Superstore Operations Strategy

In superstore operations (SST operations), we have particular strengths in food in terms of merchandise
assortment, procurement, supplier network, product innovation, and private brands (Seven Premium) that
support the Group’s overall competitiveness. These strengths will become increasingly important competitive
advantages propping up the Group’s growth.
While SST operations contribute to the entire Group, enhancing profitability and capital efficiency is anurgent priority. To this end, we are implementing various structural reform measures in the Tokyo metropolitan
area. We have made strategic store closures, optimized personnel policies, and enhanced productivity throughthe use of IT. Going forward, in addition to harnessing the benefits of these reforms, we will pursue furthertransformation initiatives toward regrowth.
In the Tokyo metropolitan area, we will undertake four drastic transformation initiatives over a period of
three years: (1) Exit from the in-house developed apparel business and focus on food; (2) Accelerate focus on
the Tokyo metropolitan area with strategic store closures; (3) Merge Ito-Yokado and Yorkand consolidate SST operations in the Tokyo metropolitan area; and (4) Establish theGroup’s strategic infrastructures in terms of process centers, central kitchens, and large
online supermarket centers. As a fifth measure, we will appoint external advisors toensure the successful completion of these initiatives. They will manage thetransformation process while the Board of Directors and the Strategy Committee will
monitor progress to ensure transparency and objectivity. In SST operations in theTokyo metropolitan area, our goal for FY2025 is to achieve EBITDA of ¥55 billion
or more and return on invested capital (ROIC) of 4% or more.

Seiichiro Ishibashi

1

Focus on food as
the center of ourGroup strategy

Food
Synergies

52• Accelerate focus on theTokyo metropolitan areawith Ito-Yokado• Strategically close storeswith low profitability or
strategic fit even inTokyo metropolitan area

3

Consolidate SST
operations in Tokyo
metropolitan area

Consolidate SST operationsin the Tokyo metropolitan
area to maximize synergies
and operational efficiency

4

Establish the Group’s
strategic
infrastructures

Realize a profit structurethat can achieve further
profit growth utilizing
strategic infrastructures:process centers, central
kitchens, and large online
supermarket centers

Ensure complete execution and monitoring with visibility• Ensure complete execution of initiatives and process management by retaining external advisors• Monitoring by the Board of Directors and the Strategy Committee and progress update to shareholders with visibility

FY2025

EBITDA of ¥55 billion*

ROIC of 4% or more

* Figures for SST operations in the Tokyo metropolitan area

37

Management Report 2023

seafood, and meal kits, thereby enhancing efficiency

value chain by integrating production and sales andin store operations. At the same time, we will look tofocus on appealing to the price and quality that

reduce costs and reform the profit structure throughcustomers desire in an effort to provide new value. In

centralization of merchandise development and head

the Tokyo metropolitan area, we will further enhance

office costs. By successfully accomplishing these

the immediate consumables category by developing

transformations, we aim to establish a unique position

and manufacturing differentiated, prepared dishes atin the supermarket/general merchandise store sector in

our central kitchens. We will also make use of ourterms of scale and profitability.

process centers to provide high-quality fresh meat,

Uplift of profitability of the entire SST segment*1
Comparison of domestic supermarket/general merchandise store sector and SST operations byprofitability and scale
EBITDA margin(%) 10Bubble size = EBITDA size
9

Large scale with high profitability

Evolve into the only player in Japan with large scale and high profitability
2025 Targets

8

Tokyo Metropolitan SST operations*2: ¥55 billion or more

7

SST operations*3: ¥85 billion or more

6
5

Tokyo Metropolitan
SST operations*2
SST operations*343
22021 Actual

1
0

500

1,000

1,500

Scale

2,000

2,500

3,000
3,500
Revenue from operations (Billions of yen)

Promoting the Group’s Last Mile measures with a large online supermarket center

Overall picture of SST transformation
Accelerate focus on
the Tokyo metropolitan
area with additional
store closures

In SST operations, we will embark on reform of the*1 For companies with multiple segments, each segment is shown as one bubble.
*2 Tokyo Metropolitan SST operations encompass Ito-Yokado Co., Ltd. (including York Co., Ltd.), and SHELL GARDEN CO.,LTD.
*3 SST operations encompass Ito-Yokado Co., Ltd. (including York Co., Ltd.), SHELL GARDEN CO.,LTD., and York-Benimaru Co., Ltd.

Managing Executive Officer, Head of Superstore Operations
Seven & i Holdings Co., Ltd.

Exit from thein-house developed
apparel business

Enhancement of value chain

Become the only player in the domestic supermarket/general merchandise
store sectors in terms of scale and profitability

Economic value

Promote business structure reforms aligned with the Group’s
growth strategy centered around foodAiming to achieve EBITDA of over ¥85 billion in superstore
operations in FY2025

Reform ofprofit structure

As one of the Group’s Last Mile measures, we opened acenter like this will not only expand delivery area based

new center in Yokohama for the Ito-Yokado online

around existing stores but also make it possible tosupermarket in summer 2023. The new center will

deliver to places in the Tokyo metropolitan area where

function as a base with delivery areas for approximately

there are no Ito-Yokado stores nearby. We will continue

30 Ito-Yokado stores around and locations up toto respond to ever-growing customer demands androughly 30 kilometers from the center. Opening a large

raise convenience.

Realizing common Group infrastructure for food with Peace Deli
Peace Deli, a food manufacturing subsidiary establishedcenter for handling fresh produce. From both thein 2021 as common Group infrastructure, plays a crucial

Nagareyama and Chiba kitchens, we plan to supply

role in strengthening our food offerings. Peace Delimerchandise not only to

Nagareyama Kitchen started operation in March 2023,

Ito-Yokado and York

processing fresh meat, seafood, and meal kits that are

stores but also to

supplied to Ito-Yokado and York stores in the Tokyo

7-Eleven stores as well as

metropolitan area. Plans are in place to commence

merchandise exclusively

operation of Peace Deli Chiba Kitchen in February 2024.

for the Ito-Yokado online

This kitchen will include a central kitchen for processing

supermarket.

and manufacturing prepared dishes and a process

Peace Deli Nagareyama Kitchen(Chiba Prefecture)

Management Report 2023

38

Financial Services Strategy

We will advance our integrated retail and finance strategies
centered on 7iD to deepen relationships with customers.
In financial services, we will continue to focus on expanding our ATM platform strategy as well as our e-money
and credit card businesses. Additionally, under the Group financial strategy, we seek to develop distinctive
financial services based on 7iD, an ID that customers can use across the Group, and to provide new value.
As part of such efforts, we have decided to consolidate Seven Card Service Co., Ltd., into Seven Bank,
Ltd. in order to pursue synergies through the integrated management of banking
and non-banking businesses. This will enable us to meet diverse needs throughthe integrated management of banking, credit card, and e-money services.
Moving forward, we will continue to leverage four key strengths of theGroup, namely the best customer base in Japan, attractive economic points ofcontact, overwhelming payment volume, and ownership of core financial
functions, in order to offer distinctive financial services.

Tsuyoshi Kobayashi

Futuredevelopment

Provide services that leverage strengths

Leverage the Group’s management assets to expand financial services
unique to retailing
Strengths

Approach and measures

Best customer basein JapanCustomers per day in domestic stores
Approx. 22.2 million*1
7iD members Approx. 28.0 million*1

Room to further increase the attractiveness of theeconomic zone and significantly expand the cross-use rate*2
and spending per customer

Attractive economic
points of contact

Convenience stores + supermarkets
Approx. 22,000 stores*1

Possible to provide a unique economic zone strategy throughproduct offerings without relying on point competition

Overwhelming
payment volume

Annual money flow ofApprox. 22.0 trillion

By expanding the ratio of in-house payments through suchmeans as the e-money card nanaco, it is also possible touse payment fees that would be paid to other companies as
resources for marketing

Ownership of corefinancial functions□ Bank□ Credit card
□ E-money

In expanding financial services in the future, it is possible topursue rapid development by leveraging existing assets*1 As of February 28, 2023
*2 Purchases by a single customer both in a physical store or an e-commerce platform, or across multiple business formats within the Group.

Managing Executive Officer, Head of Financial Services
Seven & i Holdings Co., Ltd.

Combining 7iD with payment services to boost revenue in retail andfinancial sectors(1) Gross profit from increased retail sales

Growth strategy of financial services (summary)Effects of higher spending per 7iD member by connecting payment services

Enhance customer relations through an integration of retail and financial services through 7iD
7-Eleven
app members

Feed information toretail businessApprox. 20.0 million

Ito-Yokado
app members

Effects of revenue from merchant fees (increased gross profit) due to increased external use of 7&i payment
services by increasing the attractiveness of 7iD outside the Group

7NOW(4) Increased financial fees

SST

Effects of an increase in the number of users of financial services entering through the use of ATMs and 7&ipayment services

Financial Services

Retail MediaBank

Non-Bank

Effects of increasing the ratio of commissions retained internally rather than paying them externally by expanding
the ratio of in-house payments(3) Increased merchant fees due to increased external use

Approx. 2.7 million

CVS(2) Cost reduction from internalization of commission fees

Moreover, through these four areas, we can enhance retail and financial data centered on 7iD, and utilize it forbusiness strategies based on a deeper understanding of our customers.

Scale of the Group’s financial services in terms of money flow
Synergies achieved bylinking the large
amount of high-quality
information to financial
services such as thebank and credit cards

7iD customer data
7iD members

Achieve further profit
growth by leveraging
the mass high-quality
information inadvertising media

Approx. 28.0 million

Note: As of February 28, 2023(1), (2), (3), and (4) represent the areas we can expect revenue growth by combining retail and financial services.

Customers of the Seven & i Group

Customer’ssalary (income),
etc.

Feed information toretail business(4) Deposit/credit of approx. ¥22 trillion(4)
Payment ofapprox. ¥15 trillion

ATM usage fees

External financial
institutions

The Seven & i Group’s financial services(Banking + non-banking)
(2)
(1)
(2)
In-house Group(3)
Deposit of sales of Internalization of payments ofMerchant fees
approx. ¥9.4 trillion settlement fees approx. ¥3.4 trillion

Retail merchants(outside theGroup)(1) Seven & i Group’s
retail business
External
payments

39

Management Report 2023

Individual Number
Card Points, etc.

Benefits,
Individual
Number Card
Points, etc.

Governments,
municipalities, etc.

Feepayments
Management Report 2023

40

Sustainability Strategy

Message from the CSuO

Continuing to improve thequality of management, seeing
business with a focus on social
solutions to be our mission as a
global enterpriseJunro Ito
Representative Director and Senior Managing
Executive Officer
Chief Sustainability Officer (CSuO)

Reidentifying the material issues that
support Seven & i Group's
sustainable growth
In 2022, the Seven & i Group reviewed its
material issues, to further enhance its sustainable
management.
Behind this move were changes in the social
conditions in which we do business. The largest ofthese was growing interest in issues concerning
the environment, including global warming, andhuman rights. People's interest in these subjects
continues to grow with the spread of the United
Nations Sustainable Development Goals (SDGs),
and today we feel that doing business with afocus on social solutions is one of the missions ofany global enterprise.
In light of these changes, we've identifiedsocial topics that we should consider, referring
to sources including global frameworks suchas the SDGs and evaluation items used byenvironmental, social, and governance (ESG)41

Management Report 2023

rating agencies. We also surveyed more than
5,000 stakeholders, including 7-Eleven franchise
store owners, about the topics that the Seven & i
Group should address. Through these efforts andexpert dialogue, we revised our material issues
over a period of about one year.

Focusing on the people essential to theretail industry
In revising our material issues, the management
team focused above all on people.
Together with product lineup and price, how
to ensure that customers can enjoy the shopping
experience is of utmost importance to the retailindustry. The Seven & i Group enjoys the supportof more than 160,000 employees in Japan andglobally—even more when we include 7-Elevenfranchises around the world. To deliver new
shopping experiences every day it is essential
to maintain workplace environments where all
employees can do their work with good healthand positive attitudes and to provide them with
opportunities to improve their abilities. Based on
this point of view, management has pledged to“improve work engagement and environment forpeople working in Group businesses.”

Improving the quality of management
together with all stakeholders, to realize
our vision for the organization
As it plays a role in responsibly delivering tostakeholders the value generated by
raw materials producers and manufacturers,
the Seven & i Group comes into contact every
day with approximately 60 million stakeholders
around the world. They include customers,
business partners, and franchise store owners.
Aiming to be a world-class retail group focusedon food, the Seven & i Group currently is growing
its value chain around the world, identifying the
CVS business in Japan and other markets as a
growth driver.
Aiming in this way to be a global leader,
the Seven & i Group believes that we must lead
not only in quantitative aspects such as sales
and profit but also in the qualitative aspects ofmanagement. Toward this end, it is vital that theGroup promote environmental and community
sustainability together with the customers,
business partners, franchise store owners, andemployees that make up our global value chain.
Based on this concept, we have added the newmaterial issue “achieve a sustainable society
through partnerships.”
Our efforts to enhance these partnerships
include the CSR audits that we have conducted
together with our business partners in Japan andaround the world since 2012, the Seven & i Group
Business Partner Sustainable Action Guidelines
revised in 2019, and enhancements to our
structure for human rights due diligence basedon the Guidelines. In the area of the environment,
we are advancing initiatives under our GREEN
CHALLENGE 2050 environmental declaration
together with 7-Eleven, Inc., in North America, andwe plan to expand them worldwide.
While enhancing sustainability together
with our customers, we also emphasize saleof sustainability-certified seafoods. By 2050,
we aim to use 100% accredited sustainable
ingredients in our private brands, including Seven
Premium. Furthermore, in the area of community
engagement we are concluding comprehensive
alliance agreements with local governments inJapan in a wide range of areas including local
production/local consumption, support forseniors, improving health, and environmental
protection. We plan to expand these agreementsin the future.

As our businesses grow, we must neverforget engagement with customers in
the community
The retail industry has deep roots in the lives ofcustomers in the community. Even amid active
globalization, as a member of the retail industry
we must never forget to propose solutions basedon a close look at the issues, concerns, anddissatisfactions of the individual customers wholive and work in our communities. These concernsand dissatisfactions represent potential needs.
We consider addressing each of them individually,
to realize solutions to social issues through ourbusinesses, to be the fundamental essence of theSeven & i Group’s sustainability management.
While numerous global enterprises dobusiness around the world, there is no suchthing as a global consumer. Our customers livein their own communities, with their own familiar
customs and cultures. Keeping this in mind,
we will continue to strive store by store toward
solutions for important social issues such as theenvironment and human rights, based on thespirit of “think globally, act locally.”

Management Report 2023

42

Material Issues

After selecting 35 items, we surveyed stakeholders
including 7-Eleven franchise store owners and employeesof 7-Eleven, Inc. More than 5,000 surveys werecompleted and returned, and these included morethan 1,000 comments.

Through various opportunities for dialogue withstakeholders, in 2014 the Seven & i Group identified
material issues to be addressed by the Group asa whole in order to meet the expectations anddemands of our stakeholders as we strive toward the❸ Dialogue with experts

sustainable development of society and sustainable

Group management engaged in dialogue with experts
knowledgeable on a wide range of sustainability topics,
to exchange opinions on the social issues that the Seven& i Group should address.

growth of the Company. Seven years later, in 2021,
we revised these issues through a six-step processthat began with selection of social issues, to reflect
developments such as changes in the Group'sbusiness environment (p. 13) and globalization of our❹ Identification of material issues reflecting
diverse voices
The nine Seven & i Group companies considered
importance to stakeholders and to the companies
themselves. They summarized these in a matrix for theSeven & i Group (at right). We used this to decide onseven material issues, referring to survey comments,
dialogue with experts, and interviews with managementof operating companies.

❺ Risks and opportunities related to material
issues
We consolidated risks and opportunities related tomaterial issues, to create new initiatives and reduce risks.

core CVS business. In March 2022, we announced the❻ Formulating action plansseven revised material issues both inside and outside

Using the SDG Compass* process, we formulated concrete
initiatives to contribute to solutions to material issues
through each operating company’s business.

the organization.
❶ Selection of social issues* A guide for how companies can work toward achieving the SDGs preparedjointly by the Global Reporting Initiative, the United Nations Global Compact,
and the World Business Council for Sustainable Development

We identified 480 social issues reflecting inputs• Use water resources effectively• Preserve biodiversity• Strengthen disclosure of anddialogue regarding ESG-related
information• Contribute to enhanced laborproductivity• Strengthen information security

Degree of importance to stakeholders❷ Survey of more than 5,000 stakeholders

Revising material issues through asix-step process

High• Provide services thateliminate disparities

Mediumincluding the SDGs, the World Economic Forum's Global
Risks Report, and evaluation items used by ESG rating

Low

43

MediumHigh

Degree of importance to Seven & i Group (management)

considered in the Medium-Term Management Plan.

Seven material issues• Animal welfare (physical andmental)Low

agencies, as well as external environmental changes• Develop and provide environmentally and socially friendly
merchandise and services• Develop and provide merchandise and services that
contribute to people’s health• Contribute to local community development• Address spread of infectious diseases• Create workplaces where workers are autonomous and feela sense of satisfaction• Expand partnerships toward a sustainable society• Promote waste reduction and recycling• Reduce CO2 emissions• Use renewable energy• Ensure merchandise quality and safety• Provide safety and security when disasters strike• Create workplaces where diverse people, including womenand LGBT employees, can actively participate• Support active participation by people with disabilities,
non-Japanese, and seniors• Disseminate information to consumers and support
education related to social and environmental
considerations• Request that business partners take into account social andenvironmental problems• Develop and provide merchandise • Strengthen fair business relationships with partners
and services that meet the needs of • Use digital technologies to innovate business models
an aging population• Strengthen response to globalization of society and• Strengthen risk managementbusiness• Strengthen corporate governance • Support and dialogue with the next generation
including social and environmental • Support people for whom shopping is inconvenientissues• Create workplaces where workers can demonstrate• Contribute to the creation of safe
their abilities
and secure communities• Address human rights• Disclose merchandise information• Provide environments that make raising children easysought by consumers

Examples of concrete initiatives to address issues

Risks

1

Create a livable society withlocal communities throughvarious customer touchpoints

Management that aims to address community issues including
an aging and decreasing population• Decline in sales opportunities from decrease in the infrastructure of daily life,
leading to population decrease, depopulation, and aging population• Failure to open new stores as planned because of insufficient coordination
with local communities resulting in inability to provide new value, etc.

• Gain stakeholder trust through expanded social role asinfrastructure for daily life
• Increase sales opportunities through community
revitalization, etc.

2

Provide safe, reliable, andhealthier merchandiseand services

Support for an abundant and safe society• Loss of customers because of merchandise issues or in-store accidents• Decline in trust due to violations of laws such as quality control and labeling• Loss of customers from delayed development of health-related merchandise,etc.

• Increase customer loyalty through rigorous safety andquality control• Expand sales opportunities by offering health-oriented
merchandise and other new merchandise that matches
customers’ needs, etc.

3

Realize decarbonization,
circular economy, andsociety in harmony
with nature, throughenvironmental efforts

Environmentally friendly management• Physical damage to stores/distribution network due to increase in natural
disasters caused by climate change• Sharp increases in purchasing prices due to changes in demand and supply
or changes in prices of crude oil and other raw materials caused by unusual
weather• Loss of customers due to corporate image with a large environmental
footprint in areas including food waste and greenhouse gas emissions, etc.

• Cut costs by saving energy, reducing waste, recycling,
and changing energy sources• Create brand value as a company at the forefront ofenvironmental measures, etc.

45Achieve a society in which
diverse people canactively participate

Realizing a society that accepts diverse values and lifestyles• Damage to corporate image, loss of customers, decline in employee
engagement from tolerance of discrimination and prejudice• Difficulty in retaining human resources, outflow of human resources, etc.

• Acquire future customers and develop new services
through dialogue with and development of the next
generation, the young generation, and people with various
values, etc.

Improve work engagement
and environment forpeople working inGroup businesses

Becoming a company that provides job satisfaction and senseof accomplishment• Decline in employee engagement from lack of improvement in work
environments• Difficulty in retaining human resources, outflow of human resources, etc.

• Promote diversity to enhance competitiveness• Increase productivity by enhancing employees’ skills andautonomy• Develop new businesses and acquire talented personnel,
etc.

6
7

Create an ethical society
through dialogue and collaboration
with customers

Working with customers to make communities thrive• Inability to offer new value through merchandise and services from delayed
response to changes in consumer lifestyles and diversification of values, etc.

• Expand sales opportunities by offering merchandise andservices addressing ethical consumption• Work with customers to increase customer loyalty, etc.

Achieve a sustainable
society throughpartnerships

Working with business partners to achieve a thriving society• Interruption of merchandise supply, deterioration of merchandise quality, orboycotts associated with labor environment or human rights problems orcompliance violations in the supply chain, resulting in loss of social trust, etc.

• Increase resilience through sustainable raw material
procurement• Provide new merchandise and services in cooperation withbusiness partners, other industries, same industry, etc.

Management Report 2023

•E
 xpand online convenience store, online supermarket, and mobile
supermarket vehicles• Administrative services (issuance of official documents)• Work with local governments to develop local merchandise• Expand development and sales of health-oriented merchandise• Strengthen quality control structure• Develop health management app• Develop environmentally friendly stores• Recycle plastic bottles, increase use of environmentally friendly containers• Reduce food loss/waste and recycle organic waste• Expand lineup of certified merchandise• Support child-raising and education of next generation• Normalization, universal design• Promote diversity and inclusion• Increase engagement through human resource development and dialogue• Promote DX to improve work environments•P ublic awareness and cooperation with customers (food drives, turning off
lights, etc.)• Improve services using customer opinions• CSR audit of business partners (eradication of forced labor and child labor)•W ork with NPOs and NGOs, have joint projects with business partners,
other industries, and same industry

Opportunities

Management Report 2023

44

Environmental Initiatives

Formulated the environmental declaration, GREEN CHALLENGE 2050,
aiming to reduce the Group’s environmental burden

Reduction of CO2 emissions

In order to respond to various changes in the social
environment, the Seven & i Group has established
GREEN CHALLENGE 2050, its environmental
declaration, to promote further reduction ofenvironmental impact and pass on a plentiful earth
to future generations. We are working together withall our stakeholders to realize a rich and sustainable
society. In order to achieve the goals set forth in
the declaration, we have identified four themes,

Approximately 95% of the Seven & i Group’s CO2
emissions are attributed to electricity use in store
operations. For this reason, we are first focusing on
implementing energy-saving measures andReducing electricity consumption from store operations and expanding the use of renewable energy

established innovation teams, and are promoting
initiatives across the Group.

subsequently expanding the use of renewable energy
through energy creation and renewable energy
procurement to effectively reduce CO2 emissions.

Emissions from the Group store operations
Reduction of
CO2 emissions

Target for 2030

2050 Vision(Compared with FY2013)

50% reduction

Net zero

We aim to reduce emissions across our entire supply chain (Scope 3) in addition to
our own emissions (Scope 1 and Scope 2).
Measures against
plastic

Containers used for original merchandise (including Seven Premium merchandise)2050 Vision

Target for 2030

Eco-friendly materials(Biomass, biodegradable andrecycled materials, and paper, etc.)50%

Eco-friendly materials(Biomass, biodegradable andrecycled materials, and paper, etc.)

We aim to use sustainable and natural
materials such as paper for the shoppingZerobags we use.
We aspire to reduce overall plastic materials related to sales.
Target for 2030

Food loss/waste Basic unit of generation (waste generated per million yen in sales)
Target for 2030
(Compared with FY2013)

50% reduction

2050 Vision(Compared with FY2013)

75% reduction

Organic waste recycling rate
Target for 2030

2050 Vision

100%

70%
Sustainableprocurement

Solar panels have been installed in a
total of 8,889 stores (as of February 28,2023) in the Group, including SEVENELEVEN JAPAN, Ito-Yokado, YorkBenimaru, and York.

Renewable energy
procurement
Renewable energy is being procured
through off-site power purchaseagreements (PPA) in three different
regions across Japan.

In addition, in June 2023 we initiated a pilot
experiment at the 7-Eleven Misato-Hikonari 2-chome
store with the goal of developing new eco-friendly
stores by harnessing advanced technologies fromour business partners. In the experiment, we arepromoting energy efficiency and the effective
utilization of renewable energy by implementing new
refrigeration and freezing equipment, next-generation
solar panels, movable storage batteries (Battery
Cubes), and introducing an energy management

system (EMS) for optimizing overall energy use. The
aim is to reduce CO2 emissions by approximately 70%
compared to FY2013 levels.
Percentage of reduction of CO2 emissions
from store operations(compared with FY2013)
100

22.7%
24.2%
reduction reduction

50%
reduction(target)Net zero(target)Raw food ingredients withguaranteed sustainability

50%

100%

Note: We will review our targets in response to changes in the social environment.

7-Eleven MisatoHikonari 2-chome store(Eco-friendly store)

2020

2021

2030

2050

(FY)

Note: The period of the calculations was from April to March. Totals are for 12
companies (SEVEN-ELEVEN JAPAN CO., LTD., Ito-Yokado Co., Ltd.,
York-Benimaru Co., Ltd., Life Foods Co., Ltd., York Co., Ltd., SHELLGARDEN CO., LTD., IY Foods K.K., Sogo & Seibu Co., Ltd., Akachan
Honpo Co., Ltd., Barneys Japan Co., Ltd., Seven & i Food Systems Co.,
Ltd., and THE LOFT CO., LTD.).

Decarbonization of the entire supply chain

Four innovation teams
Seven & i Holdings Environment Subcommittee
CO2 Emissions
Reduction Team2013

2050 Vision

Raw food ingredients withguaranteed sustainability

Plastic Reduction Team

MissionMission[Decarbonization]
Reduction of CO2 emissions[Circular economy]
Measures against plastic

Management Report 2023

Measures are being implemented tovisualize electricity usage in more than
20,000 stores throughout the Group,
including at SEVEN-ELEVEN JAPANand York-Benimaru. Based on thisusage data, we are undertaking energysaving initiatives for the stores.

Raw food ingredients used in original merchandise (including Seven Premium merchandise)
Target for 2030

45

Energy creation

100%

Use of plastic shopping bags

Measures against
food loss/
waste and for organic
waste recycling

Energy saving

Food Loss/Waste Reduction andOrganic Waste Recycling Team

Sustainable
Procurement Team

MissionMission[Society in harmony with nature][Circular economy]
Sustainable procurement
Measures against food loss/
waste and for organic waste recycling

To decarbonize the entire supply chain, it isessential to foster a unified approach that integrates
manufacturing, distribution, and sales.
For this purpose, we launched a project inApril 2023 aimed at developing a circular modelfor decarbonizing the retail industry supply chain
through the use of renewable energy,* with a pilot
experiment set to get underway. In the experiment,

we are demonstrating energy management practices
in the utilization of renewable energy sources,
including electric trucks, solar power generation, andbiomass power generation. The initiative is based in
the Group's Tokyo stores and our business partners’
food production facilities and distribution centers.
* The initiative has been selected as a project supporting the development oftechnologies for promoting new energy conducted by the Tokyo metropolitan
government and Tokyo Environmental Public Service Corporation.

Management Report 2023

46

Environmental Initiatives

Measures against plastic

The Group is engaged in activities including
resource collection at stores, recycling, andthe use of reusable materials, in cooperation
with customers, business partners, and local
governments, with the aim of achieving a circular
economy, which uses resources effectively.
We are also working on environmentallyconscious design for the packaging of our original
merchandise and promoting the reduction of plastics
used in sales.

Reducing food waste generated
in stores

Ratio of eco-friendly materials in containers fororiginal merchandise (weight-based)*100%(target)50%(target)Less than
1%
2013

28.9%

32.5%

2021

2022

2030

2050

(FY)

* Ratio of eco-friendly materials (biomass, biodegradable and recycled materials,
paper, etc.) used in containers for original merchandise (including Seven
Premium merchandise). The scope of calculations covers eight companies
handling original merchandise (SEVEN-ELEVEN JAPAN CO., LTD., Ito-YokadoCo., Ltd., York-Benimaru Co., Ltd., York Co., Ltd., IY Foods K.K., Akachan Honpo
Co., Ltd., Seven & i Food Systems Co., Ltd., and Barneys Japan Co., Ltd.).

Plastic bottle recycling
The Group has been installing plastic bottle collection
machines at stores since 2012.
When a bottle is put into a machine, sensors
detect and remove foreign matter, and the bottle iscompressed or crushed to reduce volume to enable
recycling as a high-quality resource. In addition,transporting a large quantity from the stores to therecycling facilities in a single trip reduces the numberof deliveries.
Some of these recycled plastic bottles are turnedback into plastic bottles or items such as clothing or
merchandise packaging. As of February 28, 2023, a
total of 3,174 collection machines had been installedat four companies: SEVEN-ELEVEN JAPAN, ItoYokado, York-Benimaru, and York.

47

Management Report 2023

Food recycling rate*2
100%

100%

(target)18.2% 22.1%
reduction reduction

70%

50%
reduction(target)57.1% 58.7%
47.9%

75%
reduction(target)(target)

2013

2021

2022

2030

2050 (FY)

2013

2021

2022

2030

2050 (FY)*1 Amount of food waste generated per million yen in sales*2 The period of the calculations was from April to March. Totals are for the six food-related
operating companies (SEVEN-ELEVEN JAPAN CO., LTD., Ito-Yokado Co., Ltd., York-Benimaru
Co., Ltd., York Co., Ltd., SHELL GARDEN CO., LTD., and Seven & i Food Systems Co., Ltd.).

Temaedori ProjectWith the cooperation of our customers, theequivalent of roughly 470 million plastic bottles
was collected and recycled during FY2022.
Working with customers, business partners, andlocal governments, we are steadily expanding theloop of plastic resource circulation.

Together with the Consumer Affairs Agency, theMinistry of Agriculture, Forestry and Fisheries, theMinistry of the Environment, and other convenience
store operators, SEVEN-ELEVEN JAPAN has beenrolling out the Temaedori Project since June 2021.
This project aims to reduce food waste by displaying
merchandise in a way that encourages customers topurchase food they intend to consume immediatelyby placing these items at the front of a display.

Promoting and raising awareness of mottECO

Adoption of easy-to-recycle containers
SEVEN-ELEVEN JAPAN is changing containers used
for items such as boxed lunches and pre-cooked
meals to ones that have reduced petroleum-based
inks and coloring agents.
The containers we have adopted are designed
to be more recyclable by reducing the use of ink andcoloring agents. Furthermore, this change allows us
to reduce approximately 800 tons of CO2 emissions
annually, including emissions from container
production and during their life cycle.
We initiated a pilot program at 7-Eleven storesin Hokkaido in December 2022, and we have beenassessing it from various perspectives. Based on the
results, we are currently rolling out the containers
gradually across all stores nationwide.

In the Seven & i Group, where foodaccounts for 60% of sales, we are
actively working to reduce foodwaste generated in our stores. We areworking with customers to reduce foodloss with initiatives on the sales floor,
fostering a collaborative approach tominimize waste.
We also strive to recycle any foodwaste that does occur.

Amount of food waste
generated*1, *2(compared with FY2013)

Features of the new containers
Before change
Container
for boxedlunches, etc.

Container
for noodles,
etc.

After change

Use ofcoloring
agentsReducedcoloring
agentsTransparent
film +
printing ink

Reducedprinting
ink

Seven & i Food Systems jointly applied for the FY2023
Model Project for Promoting Creation of Zero Food
Loss and Waste Areas being undertaken by the Ministryof the Environment and was selected as a model
project for introducing mottECO. Under this program,restaurant customers who wish to take uneaten
food back home are given informational leaflets andcontainers to ensure safe consumption. This campaign
is promoting and raising awareness of “a culture oftaking home leftovers as one’s own responsibility.”

Food drives
Ito-Yokado (IY) encourages customers to donate
any food items they may not be able to use athome. IY then distributes these donations to foodbank organizations free of charge from its stores,
ensuring that they reach such places as children’s
cafeterias as well as individuals in need, including
those requiring food assistance.
As of February 28, 2023, IY has implemented
these community-based initiatives aimed at reducing
food waste in 75 stores.

DonateFood drive
Ito-Yokado
store

Surplusfood, etc.
at home

MOTTAINAI!

Food bank (NPO, etc.)

Resource collection at stores, promotion ofrecycling, and use of reusable materials

Measures against food loss/waste and for organic waste recycling

DeliverFood bank(NPO, etc.)

Thank you!

Management Report 2023

48

Environmental Initiatives

Sustainable procurement

Response to TCFD recommendations

Achieving a society in harmony with nature throughout the supply chain

The Seven & i Group has a diverse range of customer
contact points, including clothing, food, housing, andfinancial services, and we serve more than 22.2 million
customers through approximately 22,800 stores
every day in Japan. Our business thrives thanks to
the role it plays in our customers' daily lives, and we
consider it our responsibility to drive sustainablebusiness practices that contribute to the long-termwell-being of our communities.
The Group recognizes climate change as achallenge that must be addressed for the sustainable
development of our business, and we are committed
to achieving the greenhouse gas emissions reduction
targets set out in the Paris Agreement. In May 2019,
we issued the environmental declaration, GREEN
CHALLENGE 2050, positioning it as a roadmap
toward the future society we should aspire to. In the
declaration, we have identified the reduction of CO2
emissions as one of the key themes to address, andare implementing measures to achieve this goal.
The Group expressed support for the Task Forceon Climate-related Financial Disclosures (TCFD)

With society directly facing numerous environmental
problems such as climate change, depletion of natural
resources, and the loss of biodiversity, as well as otherissues including human rights and labor problems, theGroup is working with stakeholders to incorporate
sustainable procurement throughout the entire
supply chain.
In April 2022, we revised the Seven & i Group
Sourcing Principles and Policies and have beenstrengthening our efforts in alignment withthese guidelines.

Raw food ingredients with guaranteedsustainability used in original merchandise
100%(target)50%(target)Less than
1%

20.3%

19.1%

2013

2021

2022

2030

2050

(FY)

Note: Ratio of sustainably sourced raw food ingredients used in original
merchandise (including Seven Premium merchandise). The scope of
calculations covers six food-related operating companies (SEVENELEVEN JAPAN CO., LTD., Ito-Yokado Co., Ltd., York-Benimaru Co.,
Ltd., York Co., Ltd., IY Foods K.K., and Seven & i Food Systems Co.,
Ltd.).

Enhancing the handling of vegetables with GAP certification
We are expanding the handling and sale ofagricultural produce with Good Agricultural Practice(GAP) certification. GAP certification is a designation
awarded to agricultural produce made throughsustainable farming practices that prioritize foodsafety, labor safety, and environmental considerations.
To support our expansion efforts, we areencouraging product development personnel in theGroup to obtain the Japan GAP (JGAP) instructor
qualification and collaborate with our business

partners and producers. As of February 28, 2023, 150
individuals had obtained this qualification.
In recognition of our efforts, SEVEN-ELEVEN
JAPAN received the GAP Popularization Award in 2022.

Business unit

main marine products.
We will continue to expand the marine products wehandle that have been certified by such organizations as
MSC and ASC, and work toward increasing awareness ofsustainable marine product choices.

49

Management Report 2023

Seven & i Group

Domestic
convenience store
operations
Superstore
operations

FY2019 to FY2021

FY2022•E
 ndorsed the TCFD • U
 pdated disclosure content(Website / Management Report)
recommendations•C onducted scenario
analysis(Domestic CVS
business)D eepened analysis•C onducted scenario analysis
in FY2021
on results of analysis of•M ade first disclosure (Baseddomestic CVS business)

Overseas convenience
store operations(7-Eleven, Inc.)
Financial services

cultivated lettuce, grown at MISATO GREEN
BASE run by BUTAI FARM in Misato Town, Miyagi
Prefecture, for the pre-cut vegetable products westarted selling at 7-Eleven stores in the Tohoku
region. In collaboration with our business partners,
we have been using it as a raw ingredient for salads
and pre-cooked meals since July 2023 and are also
progressing with expansion of the sales area.

FY2023•D isclose transition plans (Website)•D isclose results of analysis (Website /Management Report)•U pdate scenario analysis
and check progress on
countermeasures•U pdate scenario analysis
and check progress on
countermeasures•C ontinue conducting scenario analysis(Based on results of analysis of domestic CVS
business and superstore operations)•E ndorsed the•C onducted scenario analysis
TCFD recommendations • M ade first disclosure(Seven Bank website)

Using “factory vegetables” for eco-friendly and sustainable crop production
The Seven & i Group actively adopts “factory
vegetables,” which enable stable production
unaffected by weather conditions. The technologydriven cultivation systems have the distinctive featureof low environmental impact, with reduced water andfertilizer usage, while also achieving high yields perunit of land area.
Since 2022, we have been using factory-* Scenario analysis related to climate change based on the TCFD
recommendations. The same description applies below.

Background and future implementation plans regarding TCFD

Achieving MSC’s and ASC’s CoC certification and increasing awareness ofcertified marine products in our stores
In October 2022, Seven & i Holdings obtained
Chain of Custody (CoC) certification, a standard
for the distribution and management of certified
environmentally sustainable marine products,
accredited by the international NPOs, Marine
Stewardship Council (MSC) and Aquaculture
Stewardship Council (ASC). Following thecertification, as of January 31, 2023, we had certified
marine products available for sale in 453 stores
across three supermarket companies in the Group,
including processed sashimi and fillet products under
the Seven Premium Fresh brand, which handles ourrecommendations in August 2019 and joined the
TCFD Consortium, which was established to promotecollaborative efforts among companies, financial
institutions, and other stakeholders in addressing
climate-related challenges. The Group conducts
scenario analysis* based on TCFD recommendations,which involves identifying risks related to climatechange and opportunities anticipated for eachbusiness unit by 2030 and considering measures
to mitigate these risks and maximize opportunities.
We will further integrate these measures with
our management strategy, leveraging them forsustainable management.
In efforts concerning natural capital, we endorse
the principles of the Taskforce on Nature-related
Financial Disclosures (TNFD) and participated in the
TNFD Forum in January 2023 and Science Based
Targets Network (SBTN)’s Corporate Engagement
Program in February. We are preparing for analysis
and disclosure based on the TNFD framework.

The Seven & i Group conducted scenario analysis
targeting domestic convenience store operations(SEVEN-ELEVEN JAPAN) from FY2019 to FY2021.
The results of this analysis were disclosed, providing
valuable insights into the specific risks associatedwith the convenience store business. We conducted
the analysis using various scenarios, including thoserelated to decarbonization and warming. As a result,we identified several key risks with significant financial
impacts, including “imposition of carbon taxation,”“damage from natural disasters,” and “increased raw
material costs.” We have compiled these three risks•D isclose results of analysis (Seven Bank)(Integrated Report/Annual Report, Securities
Report, website)

related to climate change, along with other significant
risks, opportunities, and corresponding measures, andare working to align them with our strategies.
In FY2022, we conducted scenario analysis forour domestic superstore operations (Ito-Yokado, York,and York-Benimaru), which operate under similar
geographical conditions. We plan to disclose theresults of this analysis in FY2023. Moreover, in FY2023
we are leveraging the results of scenario analysis in
our domestic operations to conduct more effective
and efficient scenario analysis for 7-Eleven, Inc., in ouroverseas operations.

Management Report 2023

50

Environmental Initiatives

Key climate change risks for SEVEN-ELEVEN JAPAN (impact in 2030)
Scenario

Item

Decarbonization scenario Imposition of carbon(1.5C°–2.0C°)
tax

Business impact¥12.6 billion

Note: In FY2022, we recalculated risks using the latest parameters.

Damage from natural¥11.2 billion
disasters

Warming scenario(2.7C° to 4.0C°)

Increased raw
material costs

Assumptions for calculations• C arbon tax: U.S.$135/ton-CO2 (Maximum amount from the International Energy Agency (IEA)’s “World Energy Outlook 2022”)• E xchange rate: ¥131.62/U.S.$1 (rate as of February 28, 2023)¥5.7 billion• E stimated flood damage to stores in the Tokyo metropolitan area (assuming flooding of the Arakawa River)• E stimated based on past flood damage Estimates were made without factoring in insurance coverage in order to determine the extent
of damage.
• E stimated cost increase solely due to lower yields from climate change• T he items selected for estimation included rice, seaweed, and livestock products (beef, pork, chicken, and eggs).
Rice: ¥2.2 billion, seaweed: ¥1.9 billion, livestock products (beef, pork, chicken, and eggs): ¥1.6 billion.

Information regarding TCFD initiatives up until
FY2021, including scenario analysis results anddisclosure items as per TCFD recommendations, hasbeen disclosed on our website and in this report.

Significant risks, opportunities, and countermeasures

Transition risks and opportunities (decarbonization scenario 1.5°C–2.0°C)
Significant risks andopportunities

ConcreteexamplesPolicies and Carbon
regulation emissions
targets andpolicies
in eachcountry

Introductionof a carbon
tax

The Group considers the issue of climate change to
be one of the most important issues to be tackled
across the Group companies. We have therefore
established a governance structure centered on
the CSR Management Committee and supervisedby the Board of Directors. The CSR Management
Committee, which includes representatives fromall three superstore companies, is chaired by the

Operatingcost• I ntroduction of a carbon tax with taxation based on
CO2 emissions, leading to increased costs related tostore operations, etc.

To reduce CO2 emissions, the Group primarily focuses on the following in line with
GREEN CHALLENGE 2050:• P romote energy efficiency and use energy-efficient equipment in stores(Optimize lighting/refrigeration and freezing equipment temperatures, and use
LED, etc.)• U se renewable energy in stores (Solar power, off-site PPAs, biomass power, etc.)• E mploy food waste disposal machines to reduce the collection and transportation
costs for leftovers and CO2 emissions• C ost increase due to carbon taxation at various
stages of the supply chain (procurement,
merchandise, packaging materials, store
construction and equipment, sales, logistics,etc.), primarily focusing on fuel expenses fortransportation• I ncreased investment costs for transitioning toelectric delivery vehicles in line with a low-carbon
society• P rovide support for business partners to expand energy-saving measures andrenewable energy usage• E xpand the use of eco-friendly vehicles such as EVs• P romote logistics efficiency and green logistics initiatives(Review the distribution system, implement shared delivery and modal shift,and expand doorstep delivery, etc.)• R educe costs by promoting local production for local consumption

Operatingcost• R ising retail electricity prices due to the shift
toward renewable energy sources• C ost increases throughout the supply chain(procurement, merchandise, packaging materials,
store construction and equipment, sales, logistics,etc.)• P romote energy efficiency and introduce energy-efficient equipment in stores• S upport the introduction of energy-efficient equipment by business partners

Popularization Operatingof EVscost• C ost increases for the installation and maintenanceof EV chargers in store parking lots

• E xpand EV charging services in store parking lots with the expectation ofincreased customer numbers

Fluctuations
in retailelectricity
pricesGovernancePresident and Representative Director of theCompany, with CSR officers from Group companies(including presidents and representative directors)
and managers of CSR-related departments in the
Company serving as members. The committee meets
twice a year.

Reputation

Sustainability Management
https://www.7andi.com/en/sustainability/organization.html

Business
opportunities

Scenario

Below, we will explain TCFD initiatives related
to superstore operations, for which scenario analysis
was conducted in FY2022.

TCFD initiatives in superstore operations (Ito-Yokado, York, and York-Benimaru)

Businessrisk

ImpactChanges in Changes in
consumersales duepreferences to sales ofsustainablemerchandise

Sales• I ncreased store visits due to EV charging services instore parking lots

Sales

• H eightened consumer interest in sustainablemerchandise and increased sales by selling
merchandise that meets this interest• H eightened customer interest in sustainable services,leading to higher foot traffic driven by initiatives
such as resource collection and recycling, resulting in
improved reputation

Main countermeasures• E xpand merchandise with certified raw ingredients such as organic agricultural
produce and certified marine products (in line with the goal of “sustainableprocurement” under GREEN CHALLENGE 2050)• E xpand the selection of alternative meat products such as soy-based meat
• Introduce eco-friendly containers and packaging such as non-tray andlabel-less options and promote plastic bottle collection and recycling(in line with “measures against plastic” under GREEN CHALLENGE 2050)• Introduce shopping baskets made from recycled materials

Strategy•S cenario analysis framework
Within each of the three superstore companies, wehave established scenario analysis frameworks, withparticipation from key departments in management
and those related to climate change. Discussions

were held in each department regarding risks andopportunities and countermeasures, enabling analysis
that is consistent with actual conditions, which helped
to enhance our preparedness for climate change.

Physical risks and opportunities (warming scenario 2.7°C–4.0°C)
Significant risks andopportunities
Acute

ConcreteexamplesDecarbonization scenario (1.5°C–2.0°C), warming scenario (2.7°C–4.0°C)
Note: The two scenarios were set by referencing scenarios given in the IEA's “World Energy Outlook,” including Stated Policies Scenario (STEPS) and Net Zero Emissions by 2050
(NZE2050), as well as reports and other forecasts published by governments and international agencies.

Scope

Operation of Ito-Yokado, York, and York-Benimaru stores in Japan

MethodIn addition to the physical impact on stores, the analysis covers costs in store operations and merchandise supply chain issues (raw materials, factories manufacturing
merchandise, merchandise shipping) that significantly affect store operations, and customer behavior.

Target year

Impact as of 2030

•S
 ignificant risks and opportunities (business
impact assessment and countermeasures)
Using the analysis of domestic convenience store
operations in FY2021 and various reports as reference,different departments of the three companies discussed
and identified specific risks and opportunities that could
affect superstore operations. We examined the magnitudeof the impact of these risks and opportunities on financial
aspects such as sales and profits, as well as strategic
aspects such as store operations and merchandiseprocurement. As critical items among the identified
risks and opportunities, we evaluated the impact on ouroperations of factors such as “carbon emissions targets
and policies in each country,” “changes in consumer
preferences,” “increase in severity and frequency of
extreme weather events,” and “changes in precipitation
and weather patterns.” These evaluations were conducted
qualitatively and quantitatively, and corresponding
measures were formulated.

Operatingcost• Increased costs due to store and merchandise damage
caused by higher frequency and intensity of natural disasters,such as flooding from heavy rains and typhoons, as well as
loss of sales due to store closures, restoration costs, and costs
to ensure employee safety, etc.
• S hortages and missed opportunities due to supply chain
disruptions in production areas and logistics networks• Increased investment costs for disaster preparedness• D evelop store expansion strategy and construct stores in consideration of potential waterrelated disasters• E stablish resilient logistics hubs and supply networks for disaster resilience• T urn stores into disaster response centers utilizing store infrastructure based on disasteragreements (evacuation centers for local residents, etc.)• P revent flood damage by expanding the installation of watertight panels and flood barriers• C ontinue operations during disasters with “Phase Free (a concept of securing an adequate
quality of life, regardless of phases such as daily life and emergencies)” facilities, including
improved performance of storage batteries• P repare fuel reserves for emergency supply delivery• Install water wells for emergency water supply (Ito-Yokado)

Sales• Increased demand for disaster preparedness products due toheightened consumer awareness• E xpand the selection of emergency supplies, provisions, and convenient ready-to-eat products

Insurance cost
Operatingrelated to natural costdisasters• Increased insurance cost related to natural disasters due toincreased frequency and intensity of natural disasters• M itigate losses using various damage prevention measures

Price fluctuations Operatingof raw
cost
ingredients for
agricultural,
livestock, andmarine products• H igher raw ingredient costs and increased procurement costs
due to declines in yields and quality of agricultural, livestock,and marine products• D iversify and consolidate raw material production locations• E nsure stable procurement by expanding the sourcing of climate-resistant raw ingredients suchas factory vegetables, land-based aquaculture, and improved crop varieties• U tilize digital technology and AI• D iversify the selection of frozen and processed food merchandise that are less susceptible toclimate fluctuations

Rise in averagetemperatures

Operatingcost• H igher average temperatures increase electricity use for air
conditioning and refrigeration and freezing equipment,
particularly in summer, resulting in higher electricity fee payments• P romote energy efficiency and introduce energy-efficient equipment in stores• R educe operational costs during winter, including heating and snow removal expenses(York-Benimaru: cold regions)• Increase customer visits during winter (York-Benimaru: cold regions)

Sales• R educed frequency of outings due to extreme heat
• Increased demand for delivery and e-commerce services• E xpand delivery services and e-commerce offerings (Ito-Yokado: increase delivery capacity
through large centers)• E ncourage people to visit stores for use as cooling shelters

Sales• C hanges in customer preferences due to rising temperatures• E xpand product range for hot weather, including items used for cooling and refreshing items,
as well as sunscreen

Increase in severity Damage fromand frequency of natural disasters
extreme weather
eventsEnhanced trustand sales due
to increased
resilience

Chronic

Changes inprecipitation andweather patterns

Business
opportunities

Scenario•S cenario analysis assumptions
ScenarioBusinessrisk

ImpactGenerationand expansionof salesopportunities

Main countermeasures

Note: The scenario with the larger impact was referred to in assessing each business impact.

51

Management Report 2023

Management Report 2023

52

Environmental Initiatives

Transition risks, opportunities, and countermeasures
Decarbonization scenario (1.5°C–2.0°C)

We conducted the following analysis regarding carbon
tax, which is projected to have the most significant
impact, considering the introduction of various
regulations aimed at achieving the 1.5°C target.

particularly in the context of the warming scenario.
Furthermore, it is anticipated that the aforementioned“imposition of carbon tax” and “increase in severity
and frequency of extreme weather events” will also
have an impact, and we are actively promoting
mitigation measures.

Transition risks in the decarbonization scenario*1 The variation in harvest volume was estimated based on data fromgovernment agencies and research institutes.
*2 We plan to increase the range of raw ingredients analyzed in the future.

1

Impact of carbon tax
Item
Carbon tax

Business impact

Ito-Yokado car park (Ito-Yokado has a total of 2,337 EV charging ports)¥7.4 billion

Assumptions• Carbon tax: U.S.$135/ton-CO2(Maximum amount from IEA’s “World Energy Outlook 2022”)• Exchange rate: ¥131.62/U.S.$1(adjusted to the rate used at the time of financial settlement for FY2022)

Based on simple calculation, the carbon tax for thethree superstore companies would amount to ¥10.7
billion when CO2 emissions increase in line with thegrowth of business activities. However, if we reduce
CO2 emissions by 50% compared to FY2013 levels
by 2030 as stated in our environmental declaration,
GREEN CHALLENGE 2050, we can expect toreduce carbon taxes by ¥3.3 billion to ¥7.4 billion.
Furthermore, we expect that this carbon tax burden
will eventually be eliminated by promoting efforts toachieve our 2050 net zero CO2 emission target.

2

Physical risks, opportunities, and countermeasures
Warming scenario (2.7°C–4.0°C)

We have conducted the following analysis regarding
an “increase in severity and frequency of extreme
weather events” and “increased raw material costs,”
which are projected to have a significant impact.
Physical risks in the warming scenario• Increasing demand for products related to disaster
preparedness and cooling• Reduced outings due to extreme heat, accompanied
by increasing use of delivery services and e-commerce
services such as online shopping

Impact from natural disasters

Countermeasures in the warming scenario

Item
Store damage, merchandise
damage, loss of sales due toclosures, restoration cost, etc.

Business impact¥5.5 billion

Assumption: A disaster of the same scale as in 2019 (Typhoon Hagibis) occurs
Notes: 1. Estimates are based on the damage records from the 2019 disaster andpredictions of increased frequency of disasters and floods.
2. Estimates were made without factoring in insurance coverage in orderto determine the extent of damage.

Business opportunities in the
decarbonization scenario
We believe that customers' strong interest in
sustainable products and services can translate
into opportunities.
• Expanding EV charging services in store parking lots
• Eco-friendly packaging for original merchandise• Promoting plastic bottle collection and recycling• Expanding sustainable product offerings such as certified
raw ingredients

Countermeasures in the decarbonization scenario
We are implementing various measures based on
our environmental declaration, GREEN CHALLENGE
2050. See pages 45 to 49 for details of our initiatives.
• Reduce electricity costs by promoting energy conservationin stores (equipment, education)• Significantly mitigate the impact of carbon tax throughenergy efficiency measures and promoting renewableenergy utilization, such as solar panel installation• Increase the number of customers by stimulating interest
with a greater range of sustainable products and services(certified raw ingredients, plastic bottle collection)• Introduce EV charging services in store parking lots
Charging ports installed: 2,373 (total for three companies
as of June 30, 2023)

53

Management Report 2023

Business opportunities in the warming scenario
We view the increased awareness of disaster
preparedness among customers and changes in
preferences and behavior due to rising temperatures
as business opportunities.

It is difficult to predict natural disasters, and once
they occur, they can cause extensive damage. In
recent years, there has been an increase in theoccurrence of extreme weather events, such as
heavy rainfall leading to disasters, and this scenario
envisions a further intensification of this trend.
Consequently, we have considered a scenario in
which a massive and widespread disaster, similarin scale to the one caused by Typhoon Hagibis in
2019, which resulted in planned temporary closures,
occurs. Under this scenario, we have estimatedtotal damages for the three superstore companies,
including store and merchandise damage, loss ofsales due to closures, and restoration cost, to be¥5.5 billion.
Impact of increased raw material costs
We analyzed the impact of rising raw material
costs due to “changes in precipitation and weather
patterns.” We calculated the extent of the increaseby assuming a reduction in harvest volume*1 due toclimate change would result in higher purchasing
costs. It was found that the procurement of “rice,
tomatoes, and pork*2” would be significantly affected,

Disaster response
We aim to enhance disaster response measures toensure the swift reopening of stores in the event of
a disaster. Additionally, by functioning as disaster
relief centers that provide essential services suchas infrastructure and shelter, we will continue
contributing to the local community.
• Construct stores in consideration of potential water-related
disasters and build a logistics network that is resilient todisasters (Phase Free facilities such as watertight panels,
flood barriers, storage batteries, etc.)• Turn stores into disaster response centers utilizing store
infrastructure based on disaster agreements

In February 2023, York-Benimaru entered into an agreement with
Nasu-Shiobara City, focusing on carbon neutrality promotion andcollaboration during major power outages caused by disasters.

Number of comprehensive collaboration agreementswith local governments(Related to diverse fields such as local production for local consumption,
support for the elderly, environmental conservation, and disaster relief)

End ofFeb. 2020

End ofFeb. 2021

End ofFeb. 2022

Ito-Yokado

56

56

79

York-Benimaru

10

10

11

York

4

4

4

Group total

270

279

332

Extreme heat measures
We will expand our range of products related tocooling, enhance our e-commerce services such asdeliveries and online shopping, as well as provide
cooling shelters.

In response to the growing demand for delivery services from ourcustomers, we opened the Ito-Yokado Shin-Yokohama Center online
supermarket in August 2023. This serves as a large-scale base withdelivery areas for approximately 30 Ito-Yokado stores in the vicinity
and up to roughly 30 kilometers from the center.

Actions regarding raw material procurement
We will continue to work on sustainable procurement,
including strengthening collaboration with suppliers, toensure a stable supply of raw materials (p. 49).
• Diversify and consolidate raw ingredient production
locations• Expand the variety of factory vegetables, land-based
aquaculture, and climate-resistant crop varieties• Expand the range of certified products, including marine
products and agricultural produce

Risk management
The Group has established a risk management systemwith the Risk Management Committee at its core,
based on the basic rules for risk management. EachGroup company identifies its own risks based on theGroup’s common risk classification, and evaluatesthem from quantitative and qualitative perspectives,
taking into account their degree of impact andlikelihood of occurrence. The risks and mitigation
measures are compiled into risk assessment sheets
and submitted to the Risk Management Committee
Secretariat. The risk assessment sheets include risks
related to climate change such as CO2 emission
regulations.
Risk Factors
https://www.7andi.com/en/ir/management/risks.html

Indicators and targets related to climate change
The Group formulated the environmental declaration,
GREEN CHALLENGE 2050, in May 2019, setting
numerical targets for reduction of CO2 emissions, andwe are advancing Groupwide efforts to achieve them(pp. 45 to 49).

Management Report 2023

54

Social Initiatives

Enhancement of human capital

Promotion of diversity and inclusion

Human resource measures linked to the business strategy
The driving force behind the Group’s growth is its
human resources, and cultivating a workplace andcorporate culture where a diverse range of employees
feel both motivated and comfortable is key. We
believe that providing a place for every individual
to excel will in turn contribute to our growth as acompany. We transitioned to a Chief Human Resource
Officer (CHRO) system in April 2023 to effectively
execute the Group's management strategy. This
move aims to vigorously promote human capitalmanagement, facilitate the assimilation of ourcorporate philosophy, and expedite the development
and implementation of a human resource strategyaligned with our business strategy.
As part of our efforts to transform culture, theGroup is advancing human resource measures centeredaround “improvement of employee engagement”
and “promotion of diversity and inclusion.” To boost
motivation, we provide support for individual employees
to experience personal growth through capacity
development and self-directed learning.
To drive these initiatives forward, we are committed
to articulating our direction and the significance of ourexistence in society. We also actively create opportunities
for dialogue, allowing the sentiments of employees andtheir individual aspirations to align. Moreover, we areadvancing work-style reforms and promoting productivity
and health management across all business operations.
We are committed to cultivating comfortable work
environments where everyone can work with peace ofmind regardless of age, gender, gender identity, nationality,
or any other factor.

Improvement of employee engagement
The Group is striving to improve employee engagement
to create comfortable and motivating workplaces fordiverse human resources. We conduct an employee
engagement survey annually to visualize the state of theorganization. Through the survey, we aim to grasp thechallenges faced by both the company and employees,
and subsequently carry out improvement activities. We
believe that improving engagement and motivation
to contribute for each individual will energize ourorganization and enhance corporate competitiveness.
To bolster the effectiveness of these efforts, eachGroup company has established an Engagement
Improvement Committee. The committees are primarily
chaired by human resource department managers anddiverse employees are selected as members. Withineach Group company, these committees take the lead informulating action plans for enhancing engagement andregularly monitor the progress of their implementation.
Survey results are reported at the management
meetings of Seven & i Holdings and the specific Group
company through the Engagement Improvement
Committees to be analyzed and so any issues can be
identified. By sharing best practices and promoting
mutual understanding, each company is better armed
to advance their own initiatives.
In FY2022, we expanded the employee
engagement survey into the employee engagement

55

Management Report 2023

and culture survey covering approximately 72,000
employees, including monthly salaried, part-time, andhourly employees, across 32 companies in Japan. In
addition to gauging engagement across the entire
organization, we introduced seven additional questions
that measure the state of culture in each workplace,covering aspects such as sincerity, respect forindependence, encouragement to take on challenges,
and open communication. The engagement score was
51%, and there was an average of 72% positive ratings forthe culture-related questions (both for monthly salaried
employees). We are committed to fostering a corporate
culture in which both the company and its employees
experience sustainable growth, feel motivated andcomfortable, and diverse opinions are respected.

The Group promotes diversity and inclusion (D&I),
enabling individuals with diverse backgrounds,
experiences, and abilities to thrive in a motivating
environment. Driving D&I not only enhances
productivity and attracts top talent but also
contributes to increased customer satisfaction andfosters innovation.
To ensure steady progress in our efforts, weestablished the Diversity and Inclusion Promotion
Project in 2012. Under this project, we haveformulated Groupwide policy guidelines and provide
ongoing support for the initiatives of each company.
We regularly convene D&I promotion meetingscomprising major Group companies to share policies,
progress on initiatives, and challenges related to
D&I. This facilitates the swift horizontal expansion of
successful practices. The details of these activities
are regularly reported to the Corporate Ethics
and Culture Subcommittee, which gathers the
personnel managers of Group companies, and to
the CSR Management Committee, attended by the
management team.
Currently, a key focus of our D&I initiatives
is the promotion of women's empowerment andparticipation. We have set a Groupwide target toachieve a female executive officer ratio and a female
manager ratio of 30% by the end of February 2026.
To drive these efforts, each Group company has
established numerical targets and action plans
related to the ratio of female managers, as well as
the recruitment, attrition, and promotion of female
employees. We are working to reach these targets byimplementing a plan-do-check-act (PDCA) cycle ateach Group company and on a Groupwide basis.
Since 2021, we have been holding Women
Encouragement Seminars, a cross-Group training
program aimed at nurturing female candidates

for managerial positions. Participants have theopportunity to hear from the president and othermanagement members on the Management Policy
and Management Philosophy while receiving
encouraging messages. Through discussions among
the participants, we have observed an increased
motivation to take on managerial roles. In 2022, we
initiated a program empowering women leaders inorder to further encourage the appointment of female
executive officers.
In addition, we continue to implement awarenessraising activities aimed at bridging generational gaps
and addressing unconscious biases, among otherinitiatives aimed at creating an environment in which
diverse talents can thrive.

Diversity promotion targets
1. Ratio of female executive officers: Raise to 30%
Ratio of female managers (section manager andteam leader): Raise to 30%(both by the end of February 2026)
2. Encourage male employees to participate inhousework and childcare
3. Eliminate retirements resulting from need toprovide family care
4. Promote normalization
5. Encourage understanding of LGBT

Trends in the ratio of female executive officers andmanagers*1(%)
40Team leader
Section manager
Executive officer*2, *3
Corporate officer*2, *4
Division manager

36.8

32.8

32.4

32.4

30.4

23.1

22.3

22.1

23.3

11.8

11.1

13.6

14.4

30
20

Results of the FY2022 employee engagement andculture survey (monthly salaried employees)

100

Culturescore

Engagement
score
51%
Engaged72%
Positiveassessmentof workplacecultureNote: The survey measures the state of culture in each workplace, covering
aspects such as sincerity, respect for independence, encouragement totake on challenges, and open communication, in addition to gauging
engagement across the entire organization.

Women Encouragement Seminar

10.1

11.3

9.8

24.1
15.7
13.9

12.9

7.3

7.3

8.2

8.3

8.3

2018

2019

2020

2021

2022

(FY)

*1 Total for eight companies (Seven & i Holdings Co., Ltd., SEVEN-ELEVEN
JAPAN CO., LTD., Ito-Yokado Co., Ltd., York-Benimaru Co., Ltd., Sogo &Seibu Co., Ltd., Akachan Honpo Co., Ltd., Seven & i Food Systems Co., Ltd.,and Seven Bank, Ltd.).
*2 The total for six Group companies (Seven & i Holdings Co., Ltd., SEVENELEVEN JAPAN CO., LTD., Ito-Yokado Co., Ltd., York-Benimaru Co., Ltd.,York Co., Ltd., and Sogo & Seibu Co., Ltd.) as of May 31 of each year
*3 Excluding executive officers who are directors*4 Officers represent the total of directors, Audit & Supervisory Board
members, and executive officers

Management Report 2023

56

Social Initiatives

Human rights initiatives

Human rights impact assessment

Seven & i Group Human Rights Policy
As business activities become increasingly globalized,
public concern about company initiatives related torespecting human rights is mounting. While the Grouphas been conducting activities to protect humanrights based on the Corporate Action Guidelines,
we believe that it is extremely important to comply
with international standards and respect the humanrights of our stakeholders. With this in mind, in 2021
we established the Seven & i Group Human Rights
Policy, based on the International Bill of Human Rights(the Universal Declaration of Human Rights andthe International Covenants on Human Rights), theInternational Labour Organization (ILO) Declaration
on Fundamental Principles and Rights at Work, theTen Principles of the United Nations (UN) Global
Compact, the UN Guiding Principles on Business andHuman Rights, and other principles and standards.
We will continue to engage with our employees, oursupply chain, and local communities as we strengthen
our efforts to respect human rights.
Seven & i Group Human Rights Policy
https://www.7andi.com/en/sustainability/policy/human_rights.html

Promotion system
The Human Rights Promotion Project has been
established as a cross-Group organization topromote the Human Rights Policy in the Group, andongoing efforts are being made to implement it.
The project involves the chairpersons of each of thefour subcommittees under the CSR Management
Committee (the Corporate Ethics and Culture
Subcommittee, the Supply Chain Subcommittee, theCompliance Subcommittee, and the Environment
Subcommittee), as well as the Human Rights
Education Center, which serves as a dedicateddepartment overseeing tasks related to human rights
awareness and normalization. The project promotes
human rights due diligence initiatives, including
identification of business-specific human rights issues,corrective actions, regular monitoring, and information
disclosure. Meetings of the Human Rights Promotion
Project involve development of plans for human rights
initiatives and reviews of their progress.
CSR Management Committee
https://www.7andi.com/en/ir/management/governance/
structure.html

57

Management Report 2023

Details on evaluation of human rights risks
https://www.7andi.com/en/sustainability/human_rights/
risks.html

Severity and likelihood of occurrence of identified
human rights issues
Severity*1
Human rights issue
Employees Forced labor and human trafficking
Child labor
Discrimination
Inhumane treatment
Freedom of association and the right tocollective bargaining
Working hours and wages
Occupational health and safety
Rights of migrant workers
Right to privacy (employees)
Our
Ethical/responsible marketingcustomers Children’s rights (other than child labor)
Right to privacy (consumers)
Product safety and quality
Local
Health of local residents
communities Land issues
Access to water and sanitation
Rights of indigenous peoples
Human rights violations by security
personnel, etc.
Responsible mineral procurement
Other high-risk situations

Seven & i
Group
3.67
4.00
3.00
4.00

Supply
chain
4.33
4.33
3.00
4.00

Likelihood of
occurrence*2
Seven & i
Supply
Group
chain
6.04
6.05
4.04
4.26
4.14
6.87
3.67
3.32

3.00

3.00

6.06

7.35

3.33
4.00
3.00
2.33
2.67
3.33
3.33
4.33
3.00
2.33
3.33
3.00

3.50
4.67
3.67
2.33

6.73
6.73
4.59
4.36

4.33
3.67
4.67
4.33

4.83
5.33
6.28
2.74
2.29
2.29
2.74
3.00
2.35
1.52
2.04
2.02

3.21
3.34
5.40
4.91

4.00

3.59

4.33

4.00
4.33

2.52

1.54
2.92

*1 Severity is converted into a score on a scale of 0 to 5 (0 being low risk and 5
being high risk).
*2 Likelihood of occurrence is converted into a score on a scale of 0 to 10 (0being low risk and 10 being high risk).

Implementation of preventive and corrective measures
The Group identifies human rights issues (andcountries/regions) that we focus on preventing andresponding to. For those high-priority human rights
issues identified, we implement corrective measures
within the Group as well as conduct education,
training, and other activities aimed at prevention.

For human rights risks in the supply chain, we
continuously engage in dialogue and consultation
with relevant stakeholders and disseminate guidelines
to improve and enhance our efforts to respect humanrights, and take corrective measures when risks
become apparent.

Monitoring

Conducting human rights due diligence
We have a human rights due diligence mechanism
in accordance with procedures set forth in the UN
Guiding Principles on Business and Human Rights
and Organization for Economic Cooperation andDevelopment (OECD) Due Diligence Guidance for
Responsible Business Conduct, and strive to preventor mitigate any negative impact on human rights,
and take corrective action as necessary. If it becomes
clear that our business activities have caused orcontributed to human rights abuse, we will work tocorrect and remedy the situation. Even if our businessactivities have not caused nor contributed to humanrights abuse but if our products or services havebeen directly linked to the impacts through business
relationships, we will encourage our business partners
to correct and remedy the situation.

We recognize that the Group’s business activities
may have an impact on human rights. We arecommitted to identifying the causes of negative
impacts on people and society, and to mitigating
and remedying those we find.
In 2022, we conducted an assessment of thepotential negative human rights impacts of ouroperations and those of our business partners. We
held interviews and surveys throughout the Seven & i
Group and our supply chain to identify human rights
issues. We evaluate human rights risks and mitigate
the risks by calculating and mapping the severity
and likelihood of occurrence of the identified humanrights issues based on human rights risk indicators
published by international organizations and others.
The identification of such issues is conducted withthe support and advice of external experts.

Monitoring

In order to identify negative human rights impacts ofour corporate activities and to promote continuous
improvement, we conduct monitoring both within theGroup and the supply chain, as well as collect internaland external information.
The Group has conducted surveys of business
partners to confirm whether the actions andstatements of employees follow our Corporate Creedand Corporate Action Guidelines. In these surveys,
business partners reply to questions anonymously. In
FY2022, a total of approximately 10,900 people fromour business partners responded to surveys issued byCheck
implementationand track results

Disclosure of information to stakeholders

Human rights due diligence process

Corporate Creed: Trust and Sincerity
Human Rights Impact
Assessment

Implementation ofPreventive andCorrective Measures

Identify and assess
Stop, prevent, andnegative impacts on our
mitigate negative
business activities, supply
impacts
chain, and business
relationships
Seven & iGroup

Disclosure
Disclose how we haveaddressed impacts(website, etc.)

Human
Rights
PolicyGroup companies.
As part of supply chain monitoring efforts, we
conduct CSR audits of end manufacturing facilities
to which the Group outsources the manufactureof our Seven Premium private-brand merchandise
as well as of overseas manufacturing partners for
the Group’s private-brand products. The audits
ascertain their level of compliance with the Seven& i Group Business Partner Sustainability Action
Guidelines (“Action Guidelines”). In FY2022, CSR
audits were conducted at 846 production facilitiesin 13 countries, including Japan.

We regularly disclose our commitment to respect for human rights through our website, management reports,
and other means of communication.

Management Report 2023

58

Social Initiatives

Supply chain management

CSR audit items and procedures

Building a sustainable supply chain with our business partners
Since our establishment, the Group has beencommitted to being a sincere company that our
stakeholders trust, as stated in our Corporate Creed.
Various human rights issues have come up in theworld today. Expectations are high for companies
to fulfill their social responsibilities throughout their
supply chains for the merchandise and services
they provide. That means respecting and protecting
human rights, complying with laws and regulations,protecting the environment, and giving consideration
to working conditions. The Group places the highest

priority on respecting and protecting human rights,
and we ask our business partners to understand andimplement the Action Guidelines. Together with ourbusiness partners, we apply the Action Guidelines inbuilding a sustainable supply chain. In this way, we
not only provide our customers with merchandise andservices whose safety and quality are ensured but wealso promote the respect of human rights, compliancewith laws and regulations, global environmental
conservation, and consideration for working
environments throughout our supply chain.

Implementing CSR audits of business partners
Of the factories to which the Group outsources the
manufacture of our private-brand merchandise (Seven
Premium) and the private-brand merchandise ofGroup companies, we seek cooperation in our CSR
audits from factories in regions (mainly in China andSoutheast Asia) that we judge particularly importantfrom the viewpoint of risk management. We also share
updates with our business partners on the status of
the promotion of the Action Guidelines and support
corrective actions to address any problems. When

we request a new business relationship with a Group
company, we ask the partner company to understandand comply with the Action Guidelines and undergo a
CSR audit. If the business partner is found to comply
with the CSR audit or to take any required corrective
action, we issue a Certificate of Conformity and startbusiness with the partner. Renewal of the Certificate
of Conformity is a prerequisite for continuing businesswith the Group.

The Group conducts audits of business partners’
production facilities through a third-party organizationin accordance with its own audit criteria, which are
based on ISO 26000 and international conventions
such as the global standards set forth by theInternational Labour Organization (ILO). Audit items
cover adherence to the Action Guidelines, respect ofhuman rights, compliance with laws and regulations,occupational safety and health, and environmental
conservation. The four most important categories
are forced labor, child labor and underage workers,
living wage (minimum wage), and disciplinary action.
Audits confirm compliance with CSR audit items
through inspection of sites, documents, and data,
as well as through interviews with managers andworkers. The interviews with workers are conductedin a room with only auditors present to prevent any
instructions or retaliation from employers. If the audit
reveals a nonconforming item, the third-party audit
organization will point out the nonconformity to thebusiness partner. Business partners are requested tosubmit a Corrective Action Plan based on the findings
and act immediately to improve the situation. After
receiving a report from the business partner on thecompletion of improvement of the indicated item, theauditors will confirm completion of the improvement
after viewing evidence that shows the improvement.

However, if a certain standard is exceeded, such as
when numerous serious nonconforming items occur,
the factory will be visited again, and another audit will
be conducted to determine whether the issues havebeen corrected.
The 16 categories of CSR audits
The four top-priority categories
No.

Category

1

Implementation of management system and rules

2

Forced labor

3

Freedom of association

4

Health and safety

5Child labor and underage workers

6

Living wage (minimum wage)

7

Working hours

8

Discrimination and harassment

9

Regular employment

10

Subcontracting agreements, domestic industry,outsourced processing

11

Disciplinary action

12

Global environmental conservation

13

Anti-corruption and fair business practices

14

Ensuring merchandise safety

15

Security management

16

Interests of local communities and disaster response

Results of CSR audits
CSR audit certification process for private-brand production facilities in China and Southeast Asia

Before starting
business

Conditions forstarting businessStart businessContinuing business

Sharing Action
Guidelines

CSR audit Certificate
of Conformity

Conclusion of
CSR memorandum

CSR audit Certificate
of Conformity•Understanding
Action Guidelines•Written pledge•Acceptance of
CSR audit•SAQ (self-assessment
questionnaire)•CSR audit evaluation•Issuance of CSR audit
Certificate of Conformity•Business contract•CSR clause•Business partner briefing•Renewal of CSR audit
Certificate of Conformity
Note: In principle, every year

Results of overseas CSR audits for FY2022 identified
major nonconformities at seven factories, andcorrective actions have been implemented. The
following nonconformities were identified: living wage
(minimum wage, five cases) and underage workers(six cases). Inadequate wage payment records werealso handled as the nonconformities
relating to living wage (minimum wage). The
six cases of nonconformity related to underage
workers concerned inadequate registration anddocumentation, for which corrective actions havebeen taken. The CSR audit results did not identify
any nonconformities in terms of forced labor, childlabor under the age of 15, or disciplinary action. In
Japan in FY2022, CSR audits were carried out at
535 production facilities to which we outsource
the manufacture of merchandise for our private
brand Seven Premium. One major instance of noncompliance related to child labor was identified.
However, this noncompliance was due to an error in
the recording of employment rules, and there was no
actual occurrence of child labor.

Numbers of CSR audits (overseas factories)

CSR audit

59

Management Report 2023

Fiscal year

2016

Number offactories audited

245

Implementation
rate (%)*1

100.0

2017

2018

2019

2020

2021

2022

2023 plan

215

274

304

413

357

322

327

100.0

100.0

100.0

89.8*279.9*274.2*2—*1 Proportion of the number of factories audited to the number of factories where audits were planned (excluding factories that no longer need to be audited due totermination of production or suspension of business relationship)*2 Audits were suspended at some factories due to the COVID-19 pandemic.

Management Report 2023

60

Corporate GovernanceCorporate
Governance

Messages from Independent
Outside Directors

We will thoroughly discuss imagination and preparation
which captures the essence of change.

Toshiro Yonemura

Independent Outside
Director

I have become keenly aware through putting into practice crisis management that the attitude ofus as humans to only see the reality we want to see instead of looking at all which is real—in otherwords, wishful thinking—is a cause of the worst results. The same is true for business expansion. I
have actively engaged in discussions with management from that perspective. The symbol of thatis the update to our Medium-Term Management Plan which now outlines a food-centered growthstrategy. We discussed past failures and problems while looking straight at the harsh reality and future
projections we did not want to see. The business environment including the international and social
situation will continue to change in the future. However, I will grasp the signs of change by gathering
information to thoroughly discuss imagination and preparation for the future. That will allow us to
avoid being obsessed by superficial changes and falling into situationism preoccupied only withresponding to the situation at present.

I will contribute to global growth, while also sharing the thoughts of those on
the front line.

Fuminao Hachiuma
Independent Outside
Director

I believe that the Board and management have an effective working process inplace that will bring about meaningful change.

In discussions by the Board of Directors, I will fulfill my role,
which is to help push corporate value to the maximum level.

Yoshiyuki Izawa

Independent Outside
Director

The Group's stakeholders are customers, business partners, shareholders, local communities, andemployees. Convenience stores are integral to not only regional but also national infrastructure, and thesocial role that convenience stores fulfill in, for example, keeping streets safe and helping out in times ofdisaster in addition to providing food, has grown enormously. I want to see employees execute businessactivities matched to the expectations of stakeholders, proud of the vital social mission they play. In
addition, to sincerely respond to all stakeholders, Seven & i Holdings must be a company that seeksmaximum corporate value not only based on short-term targets but also medium- and long-term targets.
For myself, I will help push corporate value to the maximum level while taking advantage of various inputs,
particularly content that is hard to grasp from an executive position and content for which I do not havethe necessary experience to form a personal opinion.

It will be almost one year since I assumed the role as an independent Board member of the Company.
With the support of management, our Board has launched the Strategy Committee, which is on drivingorganizational transformation and an assessment of the Company's current business portfolio. I am
satisfied and confident that the Board and management have an effective working process in place andwill, thereafter, institute changes that will be meaningful for its shareholders, company employees andcustomers. I hope that my skill sets will make a meaningful contribution to the Group.
Paul Yonamine

Independent Outside
Director

I will lead discussions on strategic initiatives and support decision-making
which contributes to growth.

Our Group’s mission is to provide value linked tothe enhanced well-being of consumers.

Meyumi Yamada

Independent Outside
Director

Japan, is in the midst of great change—an unavoidable progression of issues, including instability on
the global stage and the unrelenting spread of COVID-19 as well as a falling birthrate, aging society, anddeclining population. Against this backdrop, can Seven & i Holdings—being headquartered in Japan,
which may be a developed country but still grapples with challenges—address these changes in society
and maintain a presence supported by many people? I see this time as a crucial phase in the Company’s
history. Seven & i Holdings states in its Corporate Creed, which dates back to its earliest days, that it will
be a sincere company, earning the trust of diverse stakeholder groups. I believe this is the starting point of
all discussions, and the mission of the Group is ultimately to provide services that support the happiness
and well-being of as many consumers as possible. I, too, have the perspective of a consumer, but I will also
actively participate in discussions from the more objective position of an outside director, and work hard tofulfill my role in pursuing the interests of all stakeholders.

Stephen Hayes
Dacus

Independent Outside
Director

Jenifer Simms
RogersIndependent Outside
Director

All the outside directors bring their own unique experience and knowledge to the Board.
My experience includes working as a teenager in my father’s 7-Eleven, leading retail organizations inJapan, North America, and Europe, and competing directly with the Group. I will leverage this experiencealong with that of our other outside directors in my role as chair of the Strategy Committee. Our role is
to monitor the progress of our key strategic initiatives and carry out an objective and holistic analysis
of various strategic options to enhance long-term enterprise and shareholder value. We will be looking
at corporate structure, our DX evolution, accelerating the growth and profitability of our overseas
convenience store business, and monitoring the progress of our superstore’s transformation. I am
confident that this team will be able to objectively evaluate all strategic options and contribute to the longterm growth of the Seven & i Group.

Our passion for our customers, food, and employees will be our strengths as
we execute our global convenience store strategy.

I will actively express my views as an outside director who
has a unique perspective.
As a newer member of the Board of Directors, I have contributed to strategy assessments by actively
expressing my views in meetings of the Board and the Strategy Committee by utilizing my legal andinternational financial services experience. Seven & i Group’s business environment is becoming increasingly
challenging due to changes in consumer behavior, food security problems, and rising energy and commodity
prices. However, it is precisely at times like these when there is a need for active discussions with outside
directors who have unique perspectives. In particular, I believe we need to further deepen discussions
regarding the main driver of our growth strategy, which is the convenience store business, considering how
we should invest and in which region, and what is the best way to expand our franchises in relation to global
expansion that takes advantage of our high degree of 7-Eleven brand recognition in Japan and the UnitedStates. We also need to engage in a related risk assessment with respect to future earnings forecasts.

I have been involved in Japanese food companies' global expansion for many years. The Group has
been my business partner in several different contexts in the past. I experienced a shared corporate
culture of sincerity, as stated in the Corporate Creed, which I believe has been the core strength of
the Company, supporting the past growth in a sustainable way. In recent years, the Group has been
rapidly enhancing its global presence, and expectations are rising for further globalization.
To meet these expectations, it has become important to enhance corporate value by further
scaling up its unique strength in the food sector, rooted in its corporate culture, and fulfilling our social
responsibilities, including sustainability. As an outside director, I will leverage my past experiences andcontribute from an objective standpoint to achieving these goals.

Elizabeth Miin
Meyerdirk

Independent Outside
Director

Over the last year, I have been honored and delighted to serve on the Board of Directors. We haveengaged in active dialogue to challenge our assumptions and strengthen our conviction in the foodbusiness and in particular, in our global convenience store strategy. In addition to the qualitative
assessment, I have emphasized a quantitative and objective focus on the value derived from thevarious parts of our business. I believe that a continued commitment to our digital customer experienceis necessary—particularly as we invest in technology, our food offerings, and how we can redefine
convenience and the changing consumer need. One key element will be affordability, especially as wenavigate a heavy inflationary environment. Overall, critical to our desired global leadership will be in
how we attract, retain, and grow our global talent base. We need to continue to surprise and delight ourcustomers as well as our employees and become the global leaders in the convenience store industry.

I will encourage system linkage within the Group. At the same time, I will takeon the challenge of creating business which utilizes our customer base.

Shinji Wada

Independent Outside
Director

61

Management Report 2023

My impression of the Group was of a company involved in business which contributes to local
communities in Japan and overseas. I was, therefore, surprised to find it had globalized beyond what I had
imagined. On the other hand, I feel there are also many issues in the digital domain such as system linkage.
It is said that, in addition to the economic zone of the previous physical space, the economic zone in thevirtual space will drastically change the retail industry through digital transformation (DX) and the Web 3.0.
I want us to take this reality seriously. I hope to encourage system linkage in fragmented business entities.
In addition, a customer base rooted in the local community is an important factor in value creation for
the retail industry in the real world. Therefore, I would like us to take on the challenge of creating business
which takes into account the issues facing diversifying local communities.

Note: Each of the messages above is current as of June 2023.

Management Report 2023

62

Corporate Governance

Please visit the Corporate Governance section of our corporate website.
https://www.7andi.com/en/ir/management/governance/structure.html

Corporate governance system (as of August 31, 2023)

Utilization of the company with Audit & Supervisory Board member system

Shareholders’ Meeting
Appointment,
Dismissal

Appointment,
Dismissal

Appointment,
Dismissal

Audit & Supervisory Board(5 members, including 3
independent outside Audit& Supervisory Board members)

Management supervision function

Board of Directors

Nomination Committee*

Compensation Committee*(15 members, including 9
independent
outside directors)(7 members, including 5
independent outside directors)
Chair(Independent outside director)(5 members, including 3
independent outside directors)
Chair(Independent outside director)

The Company considers the following characteristics and advantages of the Audit & Supervisory Board member system to beeffective for ensuring the appropriateness of the Company’s Group governance and has therefore adopted it as the corporate
governance system:
1. Each Audit & Supervisory Board member independently has their own auditing authority (individual independence system),
which allows audits to be conducted from the perspectives of each Audit & Supervisory Board member.
2. The independence of the Audit & Supervisory Board members is clearly specified by law, which enables independent andobjective audits.
3. Audit & Supervisory Board members have legally specified authority to investigate subsidiaries, which is effective also
from a Group audit perspective.

Management of the Board of Directors: Discussions centered on reassessment of Group strategies
Consultation
Auditing
AdviceComposition
3 outside Audit& Supervisory
Board members

Composition

2 internal Audit& Supervisory
Board members

9 outside
directors

Audit &
Supervisory
Board
members

6 internal
directors

2 observers(1 internal Audit &Supervisory Board member)(1 outside Audit &Supervisory Board member)

Directors

Auditing

Reporting

Supervision

Management
Meeting
Accounting
AuditorBusiness execution function

Representative
director
Auditing coordination

2 observers(1 internal Audit &Supervisory Board member)(1 outside Audit &Supervisory Board member)

Auditing Office
Auditing,
Monitoring

Committees• CSR Management Committee

Divisions• Risk Management Committee

Operating Companies

Operating Companies

Operating Companies

Organizational design: Adoption of the company with Audit & Supervisory Board members system
The Company ensures the effectiveness of its
corporate governance by coordinating “audits”
conducted by Audit & Supervisory Board members(Audit & Supervisory Board), including multiple
outside Audit & Supervisory Board members who
maintain their independence and have specialized
knowledge in such areas as legal affairs and financial
accounting, through their actively cooperating withthe accounting auditor and the internal audit division,and “formulation of management strategies” and“supervision of business execution” conducted by the
Board of Directors, including outside directors who
have management knowledge and experience.
The Company has adopted this corporate
governance structure because it judges the structure
to be workable for realizing and ensuring theCompany's corporate governance and for conducting
appropriate and efficient corporate management.

• Outline of basic policy and system
The Company has established the Nomination Committee
and the Compensation Committee (the “Committees”)
as advisory committees to the Board of Directors. Each
Committee's chair and the majority of its members are
independent outside directors.
The Company has been utilizing the more diverse
range of knowledge and advice of outside directors andoutside Audit & Supervisory Board members to ensure
further objectivity and transparency in procedures for
deciding on the nomination of and compensation for
representative directors, directors, Audit & Supervisory
Board members, and executive officers (“Officers, etc.”),thereby enhancing the supervisory functions of theBoard of Directors and further substantiating corporate
governance functions.
•P roper Group management and utilization of theNomination Committee and Compensation Committee
The Committees deliberate on the nomination andManagement Report 2023

2. Matters determined by
the Corporate GovernanceCode

3. Items for deliberations,in cooperation with theNomination Committee andthe Compensation Committee
4. Progress of the MediumTerm Management Plan,
and the strategies andpolicies of the Group andits operating companies
5. Internal controls, the statusof risk management, andthe implementation statusof compliance

Examples of main themes discussed
from May 2022 to April 2023
•A
 pproval of quarterly financial
statements•A pproval of the agenda of thegeneral meeting of shareholders, etc.
• Assessment of cross-shareholdings•E valuation of the Board of
Directors’ effectiveness•E stablishment of a leadindependent outside director•R eport on the status of dialogue
with shareholders and institutional
investors, etc.
•A
 ddition of Nomination
Committee members•D eliberation of candidates for directors
proposed by shareholders, etc.
•T
 ransfer of share of Sogo & Seibu
Co., Ltd.
•R
 eevaluation of Group strategy,etc.
•R eport on internal Audit &Supervisory Board members•F undamental review of risk
management•R eview of deliberation anddecision-making process, etc.

Nomination Committee and Compensation Committee: Ensuring objectivity and transparency
in decision-making* The Board of Directors appoints committee chairs and members. Observers are chosen through consultation by Audit & Supervisory Board members.

63

Main matters requiringdeliberation
1. Matters determined by laws
and regulations, including
the Companies Act• Information Management Committee

Auditing

Operating Companies

In addition to meeting once a month in principle, theCompany’s Board of Directors also meets at othertimes as necessary. The Board deliberates and makes
decisions on matters such as important managementtargets and budgeting, in accordance with laws,
regulations, the Articles of Incorporation, and theBoard of Directors Regulations. It also monitors theefficiency and soundness of business execution
through means including periodic reporting byCompany directors and the persons responsible inbusiness execution sections.
In FY2022, the Board considered the mattersshown at right. The Board devoted the largest
percentage of its time to deliberation focusing onreassessment of Group strategies and matters related
to various business strategies.

compensation of not only the Company’s Officers,etc., but also representative directors of the core
domestic operating companies and presidents andCEOs of the core overseas operating companies(“Representative Directors, etc.”).
The Representative Directors, etc., of the core
operating companies occupy important positions for
the Group's management and are included within
the purview of deliberations by the Committees
from the perspective of emphasizing the objectivity
and transparency of the principal nomination andcompensation procedures for the management of not
only the Company but also the Group.
To strengthen the objectivity and transparencyof procedures related to nomination of Officers, etc.,
effective December 31, 2022 the Company increased thenumber of members of the Nomination Committee fromfive (two internal and three outside directors) to seven(two internal and five outside directors).

Management Report 2023

64

Corporate Governance

Please visit the Corporate Governance section of our corporate website.
https://www.7andi.com/en/ir/management/governance/structure.html
https://www.7andi.com/en/ir/management/governance/board.html

Composition of the Board of Directors and use of outside directors

65

Ryuichi Isaka

President, Representative Director
and CEO

Katsuhiro Goto

Vice President, Representative
Director and CAO
Information Management Supervisor

Junro Ito

Senior Managing Executive Officer,
Representative Director and CSuO
General Manager of ESG Development
Division
Supervising Officer of Superstore
operations

Fumihiko Nagamatsu

Director and Senior Managing
Executive Officer
Head of Domestic CVS operations(Japan)Joseph M. DePinto

Director and Senior Managing
Executive Officer
Head of Overseas CVS operations(North America)

Yoshimichi Maruyama

Director, Managing Executive Officer
and CFO
General Manager of Corporate
Finance & Accounting Division

Toshiro Yonemura

Independent Outside Director

Yoshiyuki Izawa

Independent Outside Director

Meyumi Yamada

Independent Outside Director

Jenifer Simms Rogers

Independent Outside Director

Shinji Wada

Independent Outside Director

Fuminao Hachiuma

Independent Outside Director

Paul Yonamine

Independent Outside Director

Stephen Hayes Dacus

Independent Outside Director

Elizabeth Miin Meyerdirk

Independent Outside Director

Noriyuki HabanoStanding Audit & Supervisory Board
MemberNobutomo Teshima

Standing Audit & Supervisory Board
MemberKazuhiro Hara

Independent Outside Audit &Supervisory Board Member

Mitsuko Inamasu

Independent Outside Audit &Supervisory Board Member

Kaori Matsuhashi

Independent Outside Audit &Supervisory Board Member

Management Report 2023

Information
Management
Committee

Risk
Management
Committee: Board or committee chair)

CSR
Management
Committee

Management
Meeting(

Strategy
Committee

Compensation
Committee

Nomination
Committee

Position in the Company

Audit &
Supervisory
Board

Name

Board ofDirectors

Composition of directors and Audit & Supervisory Board members at
each meeting body (as of August 31, 2023)

Board diversity: Consciousness of gender, nationality, and career diversity andbalancing points of view and abilities
The Company emphasizes the composition of directors
and Audit & Supervisory Board members for the Boardof Directors having a good overall balance of knowledge,
experience, and skills to effectively perform the role andresponsibilities of the Board and ensuring both diversity
and an appropriate size.
In particular, as a holding company, the Company
needs to conduct comprehensive and multifaceted
management for diverse business domains. Therefore,
the Company examines the Board composition,
considering diversity (including career and age) interms of female and non-Japanese directors and Audit& Supervisory Board members as well as the balanceamong their knowledge, experience, and skills. For theCompany's Audit & Supervisory Board Members, theCompany takes care to appoint such persons withappropriate knowledge of finance and accounting.
The Company stipulates the aforementioned
policies in the “Guidelines for Directors and Audit &Supervisory Board Members.”
Please visit our corporate website for details on the “Guidelines
for Directors and Audit & Supervisory Board Members.”
https://www.7andi.com/library/ir/management/
governance/en/pdf/guidelines202201.pdf

Composition, etc., of the Board of Directors for FY2023
The Company executed a bold reform to the Board of Directors, majority of which are independent outside directors, at its
FY2022 Annual Shareholders’ Meeting to establish a governance structure suitable for a world-class retail group, an aim of its
Medium-Term Management Plan 2021–2025 announced in July 2021.
The composition of the Board of Directors in FY2023 emphasizes experience in top management at listed companies;
knowledge and experience relating to food, DX, and global management, which are viewed as the strategic axes of the Group; andskill sets such as specialization in business transformation to establish a management structure which will contribute to further
growth and maximization of long-term corporate value and shareholder value.
The Board of Directors of the Company will make important decisions which support the swift and decisive risk-taking of
the management team with its diverse members as described above. At the same time, it will provide highly effective oversightand appropriately fulfill its roles and responsibilities as the Board of Directors.

Exchange of opinions with outside directors and outside Audit & Supervisory Board members:
Management Opinion Exchange Meetings and other meetings held separately from Board meetings
In addition to participating in meetings of theBoard of Directors, outside directors and outside
Audit & Supervisory Board members meet with therepresentative directors, directors, standing Audit& Supervisory Board members, and others. Thesemeetings, including Management Opinion Exchange
Meetings, are held on a regular and as-needed basis.
The themes are set for each of the meetings, centeredon various management issues and matters of highsocial concern. Reports are provided by directors, theinternal control divisions, and so forth regarding thestatus of business execution and internal control, andexplanations are given in response to questions fromoutside directors and outside Audit & Supervisory Board

members, who also express their opinions regarding
the Company's management, corporate governance,and other topics based on their respective expert
knowledge, experience, and insights. In these and otherways, outside directors and outside Audit & Supervisory
Board members exchange frank and lively opinions.
Outside directors and outside Audit & Supervisory
Board members also exchange opinions with directors
and Audit & Supervisory Board members, etc., ofoperating companies.
Through these activities, outside directors
supervise operational execution, and outside Audit& Supervisory Board members perform audits ofoperational execution and accounting practices.

Establishment of the Strategy Committee, composed solely of independent outside directors
At the meeting of the Board of Directors held on March 9, 2023, we established the Strategy Committee, composed solely of
independent outside directors.
The Strategy Committee will monitor the progress of the Group’s strategic priorities and continue to analyze and review
the optimal Group business structure and strategic alternatives (IPO, spin-off, etc.) comprehensively and objectively to achieve
the Group’s strategic goals. Based on the results of this review, the Strategy Committee will provide advice to the Board of
Directors on strategies to increase the Group’s medium- to long-term corporate value.

Management Report 2023

66

Corporate Governance

Please visit the Corporate Governance section of our corporate website.
https://www.7andi.com/en/ir/management/governance/board.html
https://www.7andi.com/en/ir/management/governance/nomination.html

Nomination process for directors and Audit & Supervisory Board members:
Objective and transparent deliberation by the Nomination Committee

Directors and Audit & Supervisory Board members skill matrix

Ryuichi Isaka

Representative Director andPresident

Katsuhiro Goto

Representative Director andVice President

Junro Ito

Representative Director

Fumihiko Nagamatsu

Director

Joseph M. DePinto

Director

Yoshimichi Maruyama

Director

Sustainability

Risk Management/
Crisis Response/
Legal

Finance andAccounting

DX/IT/Security

Marketing/Branding

Management Skills, Knowledge, etc.
Organizational
Management

Financial Business
Experience

International Business
Experience

Title

Retail Experience

Name

CEO Experience

Management and Industry
Experience

The Company has established the Nomination
Committee (see p. 64) as an advisory committee
to the Board of Directors that deliberates on
appointment of Officers, etc.
The “Guidelines for Directors and Audit &Supervisory Board Members,” which describe therequirements and qualities expected of Officers, areused in these deliberations. Thus, the Company has
clarified “conditions that must be satisfied by directors
and Audit & Supervisory Board members” as universal“requirements.” Meanwhile, the “strengths” of eachindividual can vary; thus, the Company has treated these“personnel selection analysis and perspective that allows
for individual strengths and weaknesses” as “qualities”
separately from the requirements.
If any director or Audit & Supervisory Board
member has come to lack these “requirements” or“qualities,” the Company considers dismissing suchdirector or Audit & Supervisory Board member.
Please visit our corporate website for details on the “Guidelines
for Directors and Audit & Supervisory Board Members.”
https://www.7andi.com/library/ir/management/
governance/en/pdf/guidelines202201.pdf

1. Candidate selection

Select candidates
such as officers

2. Preparation of candidate
materials (including resume andreason for recommendation/
appointment)

The secretariat prepares
the interviews andCommittee materials

3. Interview withcandidates

Conduct interview
between Committee
members and the candidate

4. Nomination Committee(deliberation anddecision to report)

Based on the materials of thecandidate and the content of
the interview, the Committee
deliberates and decides to report

5. Report to the Boardof Directors

The results of the deliberationof the Committee, including theabove process, are reported to
the Board of Directors

Toshiro Yonemura

Independent Outside
Director

Yoshiyuki Izawa

Independent Outside
Director

Meyumi Yamada

Independent Outside
Director

Succession Plan: Making desired qualities clear in the “Guidelines for Directors andAudit & Supervisory Board Members”

Jenifer Simms Rogers

Independent Outside
Director

The Company has stipulated the following qualities desired for Group representative (Company President) in the“Guidelines for Directors and Audit & Supervisory Board Members”.

Shinji Wada

Independent Outside
Director

Fuminao Hachiuma

Independent Outside
Director

Paul Yonamine

Independent Outside
Director

Stephen Hayes Dacus

Independent Outside
Director

Elizabeth Miin Meyerdirk

Independent Outside
Director

Noriyuki HabanoStanding Audit &Supervisory Board Member

Nobutomo Teshima

Standing Audit &Supervisory Board Member

Kazuhiro Hara

Independent Outside
Audit & Supervisory Board
MemberMitsuko Inamasu

Independent Outside
Audit & Supervisory Board
MemberKaori Matsuhashi

Independent Outside
Audit & Supervisory Board
MemberAppropriate qualities and viewpoints for Group representative
Qualities

Viewpoints

Business management capability•H ave problem-solving capabilities•H ave outstanding judgment, etc.

Leadership ability•S et constructive targets and lead the Company to achieve beyond them•S
 trong ability to communicate with other directors, Audit & Supervisory Board members, and employees•A bility to drive change, etc.

Personal qualities•U nderstand own strengths and weaknesses, able to collaborate with persons who possess qualities tocompensate for qualities they lack•A
 lways prepared to learn

The basic policy regarding appointment/dismissal of Group representative is as follows.
• Evaluate the candidate through a sincere process using multifaceted and objective materials• Examine in detail whether the candidate has the management capabilities required for solving management issues facing theGroup companies• Specifically check and evaluate the leadership style and ability of the candidate

Note: The above table is not an exhaustive list of the knowledge and experience each person can offer.

67

Management Report 2023

Management Report 2023

68

Corporate Governance
As of August 31, 2023

Directors (internal)
Name/Date of birth/Attendance at meetings

Board of Directors’ meetings attended*1
Nomination Committee meetings attended*2
Compensation Committee meetings attended*3

Area of responsibility in the
Company and importantconcurrent positions

Reasons for selection (experience and knowledge)

Toshiro Yonemura

President, Representative
Director and CEO
Director of 7-Eleven, Inc.

He has overseas business experience and broad knowledge of theretailing industry cultivated as a president of a Group company
and a director of the Company as well as broad knowledge andexperience in company management including the franchisebusiness, marketing, and management administration, as well assustainability (addressing environmental and social issues and soforth). The Company would like him to utilize this knowledge andexperience to realize the management plans aimed for by theCompany, and to maximize the Group's corporate value through thegeneration of new business and through activation of our existing
business by means of using the collective capabilities of the retailgroup, which has various business categories.
He has broad knowledge of the retailing and financial industries
cultivated as a director of the Company and its Group companies
including a finance-related subsidiary as well as broad knowledge
and experience in areas including advertising and branding,management administration, risk management, and so forth. The
Company would like him to utilize this knowledge and experience
to realize the management plans aimed for by the Company, and toadvance Group function (strengthening the provision of high-valueadded services and the function of administrative divisions).

Yoshiyuki Izawa

Ryuichi Isaka(October 4, 1957)

Member of theNomination Committee
17/17
7/7

Katsuhiro Goto
(December 20, 1953)

Member of theNomination Committee
17/17
7/7

Junro Ito
(June 14, 1958)

Member of theCompensation
Committee
17/17
3/3

Fumihiko
Nagamatsu(January 3, 1957)

17/17

Vice President, Representative
Director and CAO
Information Management
Supervisor
Director of SEVEN-ELEVEN
JAPAN CO., LTD.
Director of Seven Bank, Ltd.

Senior Managing Executive
Officer, Representative
Director and CSuO
General Manager of ESG
Development Division
Supervising Officer ofSuperstore operations
Outside Director of AIN
HOLDINGS INC.
Representative Director of
Ito-Kogyo Co., Ltd.

He has overseas business experience and broad knowledge of theretailing industry cultivated as a director of the Company and its
Group companies as well as broad knowledge and experience in
ESG, risk management, accounting and finance, social marketing,and so forth. The Company would like him to utilize this knowledge
and experience to realize the management plans aimed for by theCompany, to enhance its corporate value including non-financial
aspects, and to smoothly execute group management.

Director and Senior Managing
Executive Officer
Head of Domestic CVS
operations (Japan)
Representative Director andPresident of SEVEN-ELEVEN
JAPAN CO., LTD.
Director of 7-Eleven, Inc.

He has broad knowledge of the retailing industry cultivated as apresident of a Group company and a director of the Company
as well as broad knowledge and experience relating to company
management including the franchise business, managementadministration, personnel management, etc. The Company would
like him to utilize this knowledge and experience to realize themanagement plans aimed for by the Company, to advance Groupfunctions, and to pursue Group synergies.

Joseph M. DePinto Director and Senior Managing(November 3, 1962)

16/17

Yoshimichi
Maruyama(November 2, 1959)

Member of theCompensation
Committee
17/17
1/1

69

Management Report 2023

Directors (outside)

Executive Officer
Head of Overseas CVS
operations (North America)
Director and CEO of 7-Eleven,Inc. Chairman of the Board
of Brinker International, Inc.
(Non-Executive)
Director of DHC Acquisition
Corp. (Non-Executive)

Director, Managing Executive
Officer and CFO
General Manager ofCorporate Finance &Accounting Division
Representative Director
and President of Seven & i
Financial Center Co., Ltd.
Director of 7-Eleven, Inc.

He has broad knowledge of the international retailing business
cultivated as a president of our U.S. Group company and as a directorof the Company as well as broad knowledge and experience relating
to company management, the franchise business, managementadministration, marketing and so forth. The Company would like him toutilize this knowledge and experience to realize the management plans
aimed for by the Company, to provide advice to the Company's Boardof Directors from an international perspective, and to promote global
management of the Company.
He has business experience in a financial institution and broad
knowledge relating to the Group's overall operations cultivated as asenior officer in the risk management division of the Company andthe finance division of the Company as well as broad knowledge andexperience relating to risk management, finance and accounting,and so forth. The Company would like him to utilize this knowledge
and experience to realize the management plans aimed for by theCompany, to stabilize the Group's financial base, and to strengthen
financial discipline.

Name/Date of birth/Attendance at meetings

Board of Directors’ meetings attended*1
Nomination Committee meetings attended*2
Compensation Committee meetings attended*3

Area of responsibility in the
Company and importantconcurrent positions

Reasons for selection (experience and knowledge)

Independent Outside Director
Outside Director of
Kansaidengyosha Co., Ltd.

He has held such important positions as Superintendent Generalof the Tokyo Metropolitan Police Department and Deputy Chief
Cabinet Secretary for Crisis Management, has held positions suchas Chief Security Officer (CSO) of the Tokyo Organising Committeeof the Olympic and Paralympic Games, and has broad high-levelknowledge and experience regarding organizational management,risk management, etc. The Company would like him to utilize thisknowledge and experience to realize the management plans aimed
for by the Company, and to further improve risk management andthe effectiveness of the Company's management and the Boardof Directors.

Independent Outside Director
Outside Director, Member ofthe Audit and Supervisory
Committee of Nitori Holdings
Co., Ltd.
Outside Director of Sanoh
Industrial Co., Ltd.

He has abundant overseas experience and a broad range ofhigh-level knowledge and experience in international corporate
management, business administration, finance and capital
markets, as well as his experience as an investor, having served
as a representative director of a trading company and a financial
institution, and has served in such important positions as chairman& CEO, representative director of BlackRock Japan Co., Ltd. The
Company would like him to utilize this knowledge and experience
to realize its sustainable growth and to further improve theeffectiveness of its management and the Board of Directors.

Independent Outside Director
Director of istyle Inc.
Outside Director of SEINO
HOLDINGS CO., LTD.
Outside Director of Sompo
Holdings, Inc.

She has a broad range of high-level knowledge and experiencein e-commerce, DX, organizational management, marketing, andsustainability, among others, which she has cultivated through theoperation of “@cosme,” one of Japan’s largest cosmetics and beauty
portal sites, and through starting up a women’s skill development
and job hunting support business. The Company would like her toutilize this knowledge and experience to realize its management
plans and to further improve the effectiveness of its management
and the Board of Directors.

Independent Outside Director
General Counsel Asia of
Asurion Japan Holdings G.K.
Outside Director of Kawasaki
Heavy Industries, Ltd.
Outside Director of Sumitomo
Mitsui Financial Group, Inc.

She has experience working for international financial institutions
as an in-house counsel, as well as extensive experience as presidentof the American Chamber of Commerce in Japan and as an
outside director at other companies, and through said experienceshe has cultivated a high level of insight into global legal and risk
management, finance and accounting, and sustainability, etc. The
Company would like her to utilize this knowledge and experience
to realize its management plans and to further improve theeffectiveness of its management and the Board of Directors.

Independent Outside Director
Chairman, Director, Executive
Officer of Nippon Gas Co., Ltd.

He has held important positions such as the representative directorof a comprehensive energy company. He has a wide range ofadvanced knowledge and experience relating to retail business
management, DX, organizational management, and corporate
governance. The Company would like him to utilize this knowledge
and experience to realize its management plans and to further
improve the effectiveness of its management and the Boardof Directors.

(April 26, 1951)

Chair of theCompensation
Committee
Member of theNomination Committee
Member of the Strategy
Committee
17/17
7/7
1/1

(February 10, 1948)

Member of theNomination Committee
Member of the Strategy
Committee
11/12
2/2

Meyumi Yamada(August 30, 1972)

Chair of the Nomination
Committee
Member of the Strategy
Committee
12/12
3/3

Jenifer Simms
Rogers(June 22, 1963)

Member of theCompensation
Committee
Member of the Strategy
Committee
12/12
1/1

Shinji Wada
(April 3, 1952)

Member of the Strategy
Committee*1 Attendance at meetings of the Board of Directors held in the 18th fiscal year (from March 1, 2022 to February 28, 2023)*2 Attendance at meetings of the Nomination Committee held in the 18th fiscal year (from March 1, 2022 to February 28, 2023)*3 Attendance at meetings of the Compensation Committee held in the 18th fiscal year (from March 1, 2022 to February 28, 2023)

Management Report 2023

70

Corporate Governance
As of August 31, 2023

Directors (outside)
Name/Date of birth/Attendance at meetings

Fuminao
Hachiuma(December 8, 1959)

Member of theNomination Committee
Member of the Strategy
Committee

Paul Yonamine(August 20, 1957)

Member of the Strategy
Committee
Member of theCompensation
Committee
12/12

Board of Directors’ meetings attended*1
Nomination Committee meetings attended*2
Compensation Committee meetings attended*3

Area of responsibility in the
Company and importantconcurrent positions

Reasons for selection (experience and knowledge)

Independent Outside
Director
Outside Audit &Supervisory Board
Member of YKK AP Inc.
Outside Director of Subaru
Corporation

He has a wide range of knowledge relating to international foodcultivated through important positions such as the representative
director of food companies in Japan and overseas. At the sametime, he has a wide range of advanced knowledge and experience
relating to corporate management, organizational management,
marketing, and sustainability. The Company would like him to utilize
this knowledge and experience to realize its management plans andto further improve the effectiveness of its management and theBoard of Directors.

Independent Outside Director
Chairman & CEO of Central
Pacific Financial Corp.
Executive Chairman of Central
Pacific Bank
Outside Director of Sumitomo
Mitsui Banking Corporation
Outside Director (Outside
Audit & Supervisory
Committee Member) of
PayPay Corporation

He has a broad range of high-level knowledge and experiencein DX, organizational management, and finance and accounting,etc., cultivated through his extensive management experience atconsulting firms, as president of IBM Japan, Ltd., and as CEO ofoverseas financial institutions, among others. The Company would
like him to utilize this knowledge and experience to realize its
management plans and to further improve the effectiveness of its
management and the Board of Directors.

Independent Outside Director
Chairman of the Supervisory
Board of Hana Group SAS
Chairman of Daiso California
L.L.C.

He has served as a corporate executive officer in the retail industry
and other industries both in the United States and Japan, and has
a broad range of high-level knowledge and experience in corporate
management, marketing, finance and accounting, etc., cultivatedthrough abundant global business experience. The Company
would like him to utilize this knowledge and experience to realize its
management plans and to further improve the effectiveness of its
management and the Board of Directors.

Independent Outside Director
Chairwoman & CEO of Hey
Favor, Inc.

She has a broad range of high-level knowledge and experiencein DX, marketing, finance and accounting, etc., cultivated throughher experience as a co-founder of Uber Eats, a division of Uber
Technologies, Inc. in the United States, and her management of
e-commerce companies and other positions, globally. The Company
would like her to utilize this knowledge and experience to realize its
management plans and to further improve the effectiveness of its
management and the Board of Directors.

Stephen Hayes
Dacus(November 7, 1960)

Chair of the Strategy
Committee
Member of theNomination Committee
12/12
2/2

Elizabeth Miin
Meyerdirk(December 1, 1981)

Member of the Strategy
Committee
12/12

Audit & Supervisory Board members (internal/outside)
Name/Date of birth/Attendance at meetings

Noriyuki Habano(February 10, 1958)

17/17
26/26

Nobutomo
Teshima(June 15, 1962)

12/12
18/19

Area of responsibility in the
Company and importantconcurrent positions

Reasons for selection (experience and knowledge)

Standing Audit &Supervisory Board
MemberAudit & Supervisory Board
Member of Sogo & Seibu
Co., Ltd.
Audit & Supervisory Board
Member of Ito-Yokado Co.,Ltd.

He has broad knowledge related to the overall operations of the Group
cultivated as a senior officer of the Auditing Office of the Company,
as well as broad knowledge and experience in marketing, branding,risk management, etc. The Company would like him to contributeto the establishment of a good corporate governance structure thatcan realize the robust and sustainable growth of the Company, create
medium- to long-term corporate value, and respond to social trust by
utilizing his knowledge and experience.

Standing Audit &Supervisory Board
MemberAudit & Supervisory
Board Member of SEVENELEVEN JAPAN CO., LTD.
Audit & Supervisory Board
Member of York-Benimaru
Co., Ltd.

He has extensive knowledge and experience in finance and accounting,risk management, and information technology, etc., as well as abroad range of knowledge of the Group’s overall operations, which
he cultivated as a senior officer in the Accounting Management
Department and Auditing Office. The Company would like him tocontribute this knowledge and experience to the establishment ofa good corporate governance structure that can realize robust andsustainable growth of the Company, create medium- to long- term
corporate value, and respond to social trust.

Independent Outside Audit &Supervisory Board Member
Certified Public Accountant
Certified Tax Accountant

He has abundant experience and technical knowledge related tofinance, accounting, tax, and risk management cultivated as a certified
public accountant and tax accountant. The Company would like him
to contribute to the establishment of a good corporate governancestructure that can realize the robust and sustainable growth of theCompany, create medium- to long-term corporate value, and respondto social trust by utilizing his knowledge and experience.

Independent Outside Audit &Supervisory Board Member
Attorney at Law
Outside Director, Member ofthe Audit and Supervisory
Committee of NTT DATA
Corporation

She has abundant experience and technical knowledge related tooverall corporate legal affairs, including legal affairs pertaining to thedigital field, and risk management cultivated as an attorney at law.
The Company would like her to contribute to the establishment of agood corporate governance structure that can realize the robust andsustainable growth of the Company, create medium- to long-term
corporate value, and respond to social trust by utilizing her knowledge
and experience.

Independent Outside Audit &Supervisory Board Member
Certified Public Accountant
Representative Director of
Luminous Consulting Co., Ltd.
Outside Director, Member ofthe Audit and Supervisory
Committee of YASKAWA
Electric Corporation

She has abundant experience and technical knowledge related tofinance, accounting, business management, and risk management
cultivated through her experience in a business company and as aconsultant and certified public accountant. The Company would likeher to contribute to the establishment of a good corporate governancestructure that can realize the robust and sustainable growth of theCompany, create medium- to long-term corporate value, and respondto social trust by utilizing her knowledge and experience.

Kazuhiro Hara
(February 25, 1954)

17/17
26/26

Mitsuko Inamasu(March 15, 1976)

17/17
26/26

Kaori Matsuhashi(June 7, 1969)

17/17
26/26

Board of Directors’ meetings attended*1
Audit & Supervisory Board meetings attended*4*1 Attendance at meetings of the Board of Directors held in the 18th fiscal year (from March 1, 2022 to February 28, 2023)*2 Attendance at meetings of the Nomination Committee held in the 18th fiscal year (from March 1, 2022 to February 28, 2023)*3 Attendance at meetings of the Compensation Committee held in the 18th fiscal year (from March 1, 2022 to February 28, 2023)*4 Attendance at meetings of the Audit & Supervisory Board held in the 18th fiscal year (from March 1, 2022 to February 28, 2023)

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Management Report 2023

Management Report 2023

72

Corporate Governance

Please visit the Corporate Governance section of our corporate website.
https://www.7andi.com/en/ir/management/governance/board.html
https://www.7andi.com/en/ir/management/governance/compensation.html

Evaluation of the Board of Directors' effectiveness
The Company evaluates the effectiveness of theBoard of Directors (“Board of Directors’ evaluation”)
through objective analysis and thorough discussions
by members of the Board of Directors regarding“whether the Board of Directors is effectivelyfunctioning to realize corporate value and improve
corporate governance as the Company aims.” Thisevaluation is positioned as an important factor
in the PDCA cycle leading to specific actions forfurther improvements.
In addition, the Company has established theBoard of Directors’ evaluation implementation policyon the right based on this concept.

Thinking on and composition of executive (executive director) compensation
Board of Directors’ evaluation
implementation policy
1. The evaluation shall basically be a “self-evaluation,” tobe performed each year by all directors and all Audit &Supervisory Board members.
2. Progress of the important topics set in the previous fiscal
year’s Board of Directors’ evaluation shall be confirmed
and evaluated.
3. With regard to the Board of Directors’ evaluation
process (conducting surveys and interviews, utilizing
third-party organizations, etc.), the Board of Directors’
secretariat shall prepare a draft each time, and this draft
shall be discussed by the Board of Directors.

Bonuses

Stock-based compensation

Representative directors

35%

30%

35%

Directors

50%

25%

Composition
Fixedcompensation•A fixed compensation commensurate with the responsibilities for each position will be paid.
•C ompensation will be paid monthly during the term of office.

Performancebased bonuses•S hort-term incentive compensation will be a performance-based cash compensation that varies based on the Company’sbusiness performance and individual evaluations, etc., for the relevant fiscal year.
•C ompensation will be paid annually after the Company's business performance and individual evaluations, etc., for the
relevant fiscal year have been confirmed.
•T he key performance indicators (KPIs) for performance-based compensation (bonuses) is per the table below. In orderto evaluate the capability of the main business to make a profit in cash and to incorporate shareholder perspectives,consolidated net income is also used together as a KPI.

KPIs for performance-based bonuses

1 . Confirmation of evaluation
procedure and policy(including survey topics)[Dates of meetings]
September 1, 2022
September 29, 2022

Based on the Board of Directors’ evaluation implementation policy, the evaluation topics (including survey topics)
as well as the process for FY2022 were deliberated and determined through discussions by the Board of Directors.

2. Pre-evaluation survey

October 24–
November 8, 2022

We distributed surveys about the effectiveness of the Company’s Board of Directors to all of the Company’s
directors and Audit & Supervisory Board members, and collected responses.

3. Individual interviews
Internal members: third party
Outside members: third party

Early November–early December, 2022

Based on the pre-survey results, described above, an individual interview lasting approximately one hour
was conducted for all (internal and outside) directors and all (internal and outside) Audit & Supervisory
Board members.

Mid-December 2022

Following the aforementioned pre-evaluation survey and individual interviews, the third party compiled,analyzed, and sorted out the points for debate.

January 26, 2023

To ensure objectivity, reports on the results of the survey and interviews and proposals for discussion
points were submitted by the third party at the Board of Directors’ meeting.

*Implemented by third party

5. Results reported to the Boardof Directors by the third party

6. Discussions of results by directors
April 18, 2023
and Audit & Supervisory
Board members

Based on the above points for debate, with respect to the points to be further examined throughdeliberations, discussions were held regarding how the Company’s Board of Directors should respond andhow improvements should be made going forward.

7. Resolution on evaluation
summary at the Board of
Directors’ meeting

Resolution made about evaluation summary at Board of Directors’ meeting.

May 11, 2023

Results of evaluation and key FY2023 themes• Overview of process of the FY2022 Board of Directors’ evaluation
1. Survey and interview results were reported by the third party at a meeting of the Board of Directors toensure objectivity
2. Major issues that emerged from the results of the survey and interviews were categorized into (a) matterswhich do not require deep discussions and (b) matters which require separate discussions and reporting, anda response to them was then organized
3. Based on the above, we will hold discussions on the FY2023 important topics and the process of preparing
the agenda for meetings of the Board of Directors and then confirm the course of action for the operation of
the Board of Directors in FY2023
FY2023 important topics [Evolution (deepening) of meetings of the Board of Directors following changes in thecomposition of the Board of Directors]
Important topics
Evaluation of the progress and verification of the Group’s growth strategies
Monitoring of Superstore operations business turnaround
Ongoing review of business portfolio
Strengthening the Group’s governance structure
Confirmation of initiatives relating to human capital management, etc.

73

Management Report 2023

25%

Note: Calculated assuming that
performance-based
bonuses andperformance-based andstock-based
compensation were atbase compensation
amounts.

Stock-based
compensation

Monetary compensation

Overview of evaluation schedule and evaluation process

4. Evaluation, organizing points
for debate

Performance-based bonuses

Fixed compensation

Measures• N orth America, Japan, and other global CVS business strategies; food, DX, and Last Mile measures; and financial strategies, etc.
• Q uarterly confirmation of the state of progress on the drastic transformation of the Superstore operations business• O ngoing review of strategic options• M onitoring of the Group’s governance and risk management structures, monitoring relating to sustainable management initiatives, and discussions relating to theway the governance structure should be such as the roles of the Board of Directors• S trengthening of human resource development and engagement, and strengthening of cooperation on the status of reviews by the Nomination Committee, etc.

KPI

Ratio

Purpose of evaluation(a) C onsolidated operating CF (excl. financial
services)*

60%

Evaluation of profit-making capability in the main business in cash(b) Consolidated net income
40% Evaluation of the degree of achievement of budgeted net income* Managerial accounting figures based on net operating profit after tax excluding financial services.
Coefficient pertaining to performance-based bonuses = {(a) + (b)} × (c)(a) “Consolidated operating CF (excluding financial services)”* related coefficient × 60%(b) “Consolidated net income” related coefficient × 40%(c) “Individual evaluations” related coefficient•W hen evaluating KPI, the range of compensation of representative directors is set wider by using different coefficients
pertaining to performance-based bonuses from other directors, so that the compensation of representative directors will be
more affected by the link to performance.
•T he coefficient pertaining to performance-based bonuses will vary depending on not only an evaluation of KPI but also
individual evaluations.
Performancebased andstock-based
compensation•M edium- and long-term incentive compensation is a performance-based and stock-based compensation that varies based on
the Company’s business performance, management indicators and non-financial indicators, etc., (the introduction of the BIP
Trust system*1 as the stock-based compensation system was resolved at the Annual Shareholders’ Meetings held in May, 2019).
•P erformance-based and stock-based compensation will enhance sharing profits and risks with our shareholders who havemedium- and long-term perspectives by providing points during the term of office based on which shares will be delivered.
•T he initial covered period shall be four fiscal years starting from FY2019 and the subsequent covered periods shall be per
three fiscal years.
•S hares will be delivered to directors upon their retirement.
•P oints to be granted for each fiscal year will be calculated by multiplying the standard points based on their position
by a coefficient pertaining to performance-based and stock-based compensation and will vary between 0% and 200%
depending on the achievement level of targets, etc.
•T he KPI for performance-based and stock-based compensation is per the table below. In order to incorporate mediumand long-term shareholder perspectives, consolidated ROE and consolidated EPS are used as indicators and the degree ofachievement will be evaluated.
•T he Company, aiming for a balance of corporate value and social value, added a target to reduce the amount of CO2
emissions under the environmental declaration called “GREEN CHALLENGE 2050” made in May 2019, as the KPI for
performance-based and stock-based compensation from FY2020.
•T he degree of improvement in employee engagement was added as a KPI for performance-based and stock-based
compensation from FY2022 to further promote the creation of an environment that allows various human resources toexercise their abilities.
*1 A
 BIP (Board Incentive Plan) trust is an incentive plan for officers established with reference to a performance share plan
and a restricted share compensation plan in the United States.

KPIs for performance-based and stock-based compensation
KPI(a) Consolidated ROE(b) Consolidated EPS(c) CO2 emissions(d) Employee engagement

Ratio

Purpose of evaluation

60%

Evaluation of profitability against equity

40%

Evaluation of net income from shareholder perspectives

See theformulabelow*2

Evaluation of the degree of promoting a reduction in the environmental burden
Evaluation of the degree of improvement in employee engagement*2 Comprehensive evaluation by the Compensation Committee
Coefficient pertaining to performance-based and stock-based compensation = {(a)+(b)} × {(c)+(d)}(a) “Consolidated ROE” related coefficient × 60% (b) “Consolidated EPS” related coefficient × 40%(c) “CO2 emissions” related coefficient (d) “Employee engagement” related coefficient•W hen evaluating KPI, the range of compensation of representative directors is set wider by using different performancebased coefficients from other directors, so that the compensation of representative directors will be more affected by thelink to performance.
• If an eligible director commits a material illegal or unlawful act, no shares under this system will be delivered to suchdirector (malus) or the Company may request that such director refund money corresponding to the shares delivered tothem (clawback).

Management Report 2023

74

Key Indicators

Financial Information
Below are some of the Seven & i Group’s key indicators.

Financial indicators

Non-financial indicators

EBITDA(Billions of yen)
995.3

1,000
800
600

655.9

674.3

Cash flows from operating activities

CO2 emissions from store operations*2

Organic waste recycling rate*3(Billions of yen)(Thousand t-CO2)

(%)

1,000

3,000

80

928.4

800

751.4
626.8

600

400

400

200

200

0

2,286

736.4
577.8

576.6

2,000

2019

2020

2021

2022

(FY)

2,011

60

1,970

539.9
1,000

2019

49.3

52.8

2019

2020

2020

2021

2022

2019

2020

2021

(FY)

2018

EPS

Volume of plastic (PET) bottles collectedfrom collection machines

Percentage of female managers*4(Billions of yen)

(Yen)

(t)

(%)

400

15,000

40

500
0

258.6

20.3

515.2

-500

246.95229.50200-1,0009,000

238.68203.03-2,000
2018

2019

2020

-1,769.0
2021

2018

(FY)

2019

Debt/EBITDA ratio(%)(Billions of yen)

Debt

2020

EBITDA

2021

2022

2,898.7

3.9

2,975.7

6.8

2,000

1,761.2

1,000

1,105.1

982.9
1.7

2

655.9

0

0
2019

2020

2021

2022

(FY)

2018

1.5
674.3
2019

2021

2022

626.8

751.4

2020

2021

2022

(FY)

36.8

32.8

32.4

32.4

30.4

23.1

22.3

22.1

23.3

11.8

11.1

13.6

14.4

20

10.1

11.3

9.8
7.3

8.2

8.3

8.3

2018

2019

2020

2021

2022

(%)

40

4

995.3 2.0

20

16.3

20.3

32.5

3

21.8

15.7
13.9

7.3

(%)

28.9

24.1

12.9

Percentage of employees with disabilities*9

30

2.84

(FY)

Executive officer*5, *6

Ratio of eco-friendly materials*8 in containers
for original merchandise

3.0

3.0

2.8

4

2018

4.0

7.5

6

8,669

0
2019

Section manager
Manager

30

10

2018

(FY)

(Times)Debt/EBITDA ratio

3,000

8.7

8.5

8.2

10,856

0

ROE
10

9,740

3,000

0
2022

8,900

12,438Team leader
Officer*5, *7

6,000

100

-1,5008

12,000318.14

300

145.8

58.7

0
2018

(FY)

Free cash flows*1
1,000

57.1

20

0
2018

55.2

40

0
2018

2,162

2.96

2.95

2.98

3.16

2019

2020

2021

2022

(FY)

2

10

1

1.0
2020

2021

2022

(FY)

0

0
2018

2019

2020

2021

2022

(FY)

2018

(FY)

Dividends per share(Yen)

Dividends

Dividends payout ratio (consolidated)

120
90

113.0
98.5

95.0

80

100.0

98.5

60

48.5

39.9

41.4

60

(%)

41.9

40

35.5
20

30
0
2018

75

2019

Management Report 2023

2020

2021

2022

0
(FY)

*1 Free cash flows = Cash flows from operating activities + Cash flows frominvesting activities*2 The period of the calculations was from April to March. The period of
the calculations from April of the year to March of the following year ispresented as the fiscal year ended February (FY). Totals are for 12
companies (SEVEN-ELEVEN JAPAN CO., LTD., Ito-Yokado Co., Ltd.,
York-Benimaru Co., Ltd., Life Foods Co., Ltd., York Co., Ltd., SHELLGARDEN CO., LTD., IY Foods K.K., Sogo & Seibu Co., Ltd., Akachan Honpo
Co., Ltd., Barneys Japan Co., Ltd., Seven & i Food Systems Co., Ltd., andTHE LOFT CO., LTD.). For the calculation methods, please refer to theenvironmental data of each operating company described in Data Section of
the CSR Data Book.
https://www.7andi.com/en/sustainability/report/2022.html*3 The period of the calculations was from April to March. The period of thecalculations from April of the year to March of the following year ispresented as the fiscal year ended February (FY). Totals are for the six
food-related operating companies (SEVEN-ELEVEN JAPAN CO., LTD.,
Ito-Yokado Co., Ltd., York-Benimaru Co., Ltd., York Co., Ltd., SHELLGARDEN CO., LTD., and Seven & i Food Systems Co., Ltd.).

*4 Total for eight companies (Seven & i Holdings Co., Ltd., SEVEN-ELEVEN
JAPAN CO., LTD., Ito-Yokado Co., Ltd., York-Benimaru Co., Ltd., Sogo &Seibu Co., Ltd., Akachan Honpo Co., Ltd., Seven & i Food Systems Co., Ltd.,and Seven Bank, Ltd.).
*5 The total for six Group companies (Seven & i Holdings Co., Ltd., SEVENELEVEN JAPAN CO., LTD., Ito-Yokado Co., Ltd., York-Benimaru Co., Ltd.,York Co., Ltd., and Sogo & Seibu Co., Ltd.) as of May 31 of each year.
*6 Excluding executive officers who are directors*7 Officers represent the total of directors, Audit & Supervisory Board
members, and executive officers.
*8 Biomass, biodegradable and materials, and paper, etc.
*9 The rate for each fiscal year is the rate as of June 1 of the year. The
percentage of workers with disabilities is for the five qualified Group
companies: Seven & i Holdings Co., Ltd., SEVEN-ELEVEN JAPAN CO., LTD.,
Ito-Yokado Co., Ltd., Seven & i Food Systems Co., Ltd., and Terube Ltd.
(special subsidiary for employees with severe disabilities).

Management Report 2023

76

Financial Highlights
Seven & i Holdings Co., Ltd.
For the fiscal years ended February 28 or 29

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

For the fiscal year:

Millions of yen

4,991,642

5,631,820

6,038,948

6,045,704

5,835,689

6,037,815

6,791,215

6,644,359

5,766,718

8,749,752

11,811,303

Operating income

295,685339,659

343,331352,320364,573

391,657

411,596424,266

366,329

387,653

506,521

Net income attributable to owners of parent

138,064

175,691

172,979

160,930

96,750181,150

203,004

218,185

179,262

210,774

280,976

Capital expenditures*1

334,216

336,758

341,075

399,204

384,119

347,374

539,328

360,909377,299

439,630

431,961

Depreciation and amortization*2

155,666

147,379

172,237

195,511

207,483

213,167

221,133

226,475

235,504

292,561

376,097

Cash flows from operating activities

391,406

454,335

416,690

488,973

512,523

498,306

577,878

576,670

539,995

736,476

928,476

Cash flows from investing activities(340,922)(286,686)(270,235)(335,949)(371,602)(240,418)(557,497)(318,047)(394,127)(2,505,566)(413,229)

Cash flows from fi nancing activities

10,032(55,227)(79,482)(2,312)(78,190)(168,510)(5,324)(213,204)

690,542937,077(270,373)

Free cash flows*3

50,484

167,648

146,454

153,023

140,921257,888

20,381

258,623

145,868(1,769,089)

515,247

4,262,397

4,811,380

5,234,705

5,441,691

5,508,888

5,494,950

5,795,065

5,996,887

6,946,832

8,739,279

10,550,956

1,891,163

2,095,746

2,299,662

2,372,274

2,336,057

2,427,264

2,521,395

2,601,594

2,668,925

2,980,956

3,474,547

Revenues from operations

At fiscal year-end:
Total assets
4

Owners’ equity*

Per share data:

Yen

Net income

156.26198.84

195.66

182.02109.42204.80229.50246.95203.03238.68318.14

Net assets

2,140.45

2,371.92

2,601.23

2,683.11

2,641.40

2,744.08

2,850.42

2,946.83

3,022.68

3,375.50

3,933.93

64.00

68.00

73.00

85.00

90.00

90.00

95.00

98.50

98.50

100.00113.00Owners’ equity ratio*4

44.4%

43.6%

43.9%

43.6%

42.4%

44.2%

43.5%

43.4%

38.4%

34.1%

32.9%

Debt/equity ratio (times)*4

0.45

0.45

0.41

0.44

0.45

0.41

0.44

0.38

0.66

0.97

0.86

Return on equity (ROE)*4

7.6%

8.8%

7.9%

6.9%

4.1%

7.6%

8.2%

8.5%

6.8%

7.5%

8.7%

Return on total assets (ROA)

3.4%

3.9%

3.4%

3.0%

1.8%

3.3%

3.6%

3.7%

2.8%

2.7%

2.9%

Dividend payout ratio

41.0%

34.2%

37.3%

46.7%

82.3%

43.9%

41.4%

39.9%

48.5%

41.9%

35.5%

Cash dividends

Financial ratios:*1 Capital expenditures include long-term leasehold deposits and advances for store construction.
*2 In the fiscal year ended February 28, 2014, the Company and its domestic consolidated subsidiaries (except for certain operating companies) changed thedepreciation method for property and equipment from the declining-balance method to the straight-line method.
*3 Free cash flows = Cash flows from operating activities + Cash flows from investing activities*4 Owners’ equity = Net assets - Non-controlling interests - Subscription rights to shares

77

Management Report 2023

Notes: • For the balance sheets for the fiscal year ended February 28, 2014, the business results of the mail order service business are included in the scope of
consolidation.
• ROE and ROA are calculated based on the average of owners’ equity and total assets at the beginning and end of each fiscal year.
• For total assets, the Group has applied the “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement No. 28, February 16, 2018)
effective from the fiscal year ended February 29, 2020. The results for the fiscal year ended February 28, 2018 and the fiscal year ended February 28, 2019 arethose after retrospective application.
• For the statements of cash flows, ASU No. 2016-18 “Statement of Cash Flows: Restricted Cash” has been applied from the fiscal year ended February 29, 2020 byoverseas subsidiaries that adopt U.S. GAAP. Accordingly, cash and cash equivalents from the fiscal year ended February 28, 2019 include restricted cash.
• “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and other standards have been applied from the fiscal year ended
February 28, 2023.
• For total assets, ASU No. 2016-02 “Leases (Topic 842)” has been applied from the fiscal year ended February 28, 2023.

Management Report 2023

78

Management’s Discussion and Analysis(FY2022)

Analysis of Business Results
1. Revenues from operations andoperating income
Revenues from operations for the fiscal year underreview amounted to ¥11,811,303 million, an increaseof ¥3,061,550 million from the previous fiscal year(or 135.0% of the previous fiscal year). Operating
income was ¥506,521 million, an increase of¥118,868 million from the previous fiscal year (or130.7% of the previous fiscal year).
Revenues from domestic CVS operations
were ¥890,293 million (102.0% of the previous
fiscal year), and operating income was ¥232,033
million (103.9% of the previous fiscal year).
While the shift to smaller trading areas
accelerated and differences in customer needs
by stores became more apparent due to the
COVID-19 pandemic, SEVEN-ELEVEN JAPANCO., LTD., has continued to implement initiatives
aimed at increasing the number of customers
who visit 7-Eleven stores to purchase thedesired products by integrating three measures:
expanding the lineup of high-value-added
products, changing the sales floor layout toincrease the number of items handled, and sales
promotions that create an event atmosphere.
In response to rapidly growing demand fordelivery services, we have strengthened our
7NOW service, which delivers products ordered
via smartphone to a designated location in as
little as 30 minutes, by increasing the numberof stores providing the service to approximately
3,800 as of the fiscal year under review.
In addition to these efforts, during theconsolidated fiscal year under review, we
introduced new fast food products to broaden
our customer base, increased the number ofstores handling the “Traceable Vegetables”

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Management Report 2023

produce brand of Ito-Yokado Co., Ltd., andconducted aggressive sales promotion
campaigns such as a variety of fairs. Thanks
to these initiatives together with a recovery
in human flow, favorable weather, and otherfactors, same-store sales increased from theprevious fiscal year. Operating income was¥232,873 million (104.4% of the previous fiscal
year), despite the continued increase in utilities
expenses due to soaring fuel cost adjustment
unit prices. Total sales of all stores in the chain(the sum of sales from directly managed storesand franchisees) amounted to ¥5,148,742 million(104.0% of the previous fiscal year).
Revenues from the overseas CVS operations
were ¥8,846,163 million (170.3% of the previous
fiscal year), and operating income was ¥289,703
million (181.2% of the previous fiscal year).
7-Eleven, Inc., in North America has striven
to ensure stable store operations despite
the emergence of some problems in the U.S.
market, such as supply constraints arising fromlabor shortages and logistics disruptions. It
has also been strengthening development andsales of original products with high quality andprofitability (fresh food, proprietary beverages,
and private-brand products) as well as the
7NOW delivery service, which is available atapproximately 5,700 stores.
Although consumption showed signs of
weakness as prices soared, U.S. domestic
same-store merchandise sales in dollar terms
exceeded those in the previous fiscal year
during the fiscal year under review, andoperating income amounted to ¥396,568
million (176.4% of the previous fiscal year).
Total sales of all stores in the chain (the sumof sales from directly managed stores andfranchisees) amounted to ¥10,442,360 million(161.5% of the previous fiscal year).
The process related to the integration with
the Speedway business acquired in May 2021
is progressing well, and the synergy benefit
was approximately U.S.$682 million for the
fiscal year under review, much higher than theoriginally planned amount of U.S.$450 million. In
addition, we have established the Cost Leadership
Committee to conduct a fundamental review
of our cost structure, and will promote further
improvement of profitability by implementing
appropriate decision-making mechanisms, raisingawareness of cost management, etc.
Revenues from the SST operations were
¥1,449,165 million (80.0% of the previous fiscal
year), and operating income was ¥12,107 million(64.4% of the previous fiscal year).
Ito-Yokado Co., Ltd., a general merchandise
store operator, has been pursuing a regrowthstrategy that includes closing unprofitable
stores, optimizing personnel, and improving
productivity through the use of IT.
In the consolidated fiscal year under review,same-store sales, including tenants, increased
over the previous fiscal year mainly due to sales
growth by tenants, since human flow recovered,and unlike in the previous fiscal year, there wereno restrictions on operating hours and thenumber of people shopping in a store at one
time. However, operating income was ¥408
million (25.2% of the previous fiscal year) due
to deteriorating gross profit margins for foodproducts and an increase in utilities expenses
resulting from a sharp rise in adjusted unit prices
for fuel.
As for York-Benimaru Co., Ltd., a foodsupermarket, same-store sales decreased fromthe previous fiscal year mainly due to a drop
in food sales, which had been brisk since thepandemic started. However, thanks primarily tothe merger on March 1, 2022 with Life Foods Co.,
Ltd., which manufactured and sold delicatessen
food at York-Benimaru stores, merchandisegross profit margins improved, resulting inoperating income of ¥18,013 million (122.5% of
the previous fiscal year).
Revenues from the department andspecialty store operations were ¥463,739
million (65.1% of the previous fiscal year),and operating income was ¥3,434 million(compared with operating loss of ¥8,153 million
in the previous fiscal year).
In the department store business, samestore sales increased year on year, mainly
due to a recovery in apparel sales and strong
sales of luxury brand products as, unlike in theprevious fiscal year, there were no restrictions
on operating hours and the number ofpeople shopping in a store at one time. In therestaurant business, same-restaurant sales
showed an improving trend chiefly because,
unlike in the previous fiscal year, there were no
restrictions on operating hours and on serving
alcoholic beverages, and the number of people
dining in restaurants was on the rise. Despite
this, the business recorded an operating loss.
Based on our business portfolio approach,we have entered into an agreement to transfer
all of the issued shares of Sogo & Seibu Co.,
Ltd., held by the Company to Sugi Godo Kaisha,a special-purpose company which is a related
entity of Fortress Investment Group LLC, and are
in negotiations to execute the agreement.
(This transfer was completed on September 1,
2023.)

Management Report 2023

80

Management’s Discussion and Analysis(FY2022)

Revenues from the financial services
operations were ¥194,295 million (99.9% of theprevious fiscal year), and operating income was¥37,140 million (98.9% of the previous fiscal year).
At the fiscal year-end the number ofdomestic ATMs operated by Seven Bank, Ltd.,
stood at 26,889, up 695 from a year earlier.
The average number of ATM use per day per
ATM was 101.1 (up 4.4 from the previous fiscal
year) due to growth in the number of cash
charge transactions associated with various
cashless payments and a pickup in the numberof transactions at savings and deposit financial
institutions, resulting in a year-on-year increase
in total ATM use during the fiscal year underreview. At the fiscal year-end, Seven Bank had
cash and deposits (including cash for ATM
loading) of ¥1,024.3 billion.
2. Non-operating income/expenses andordinary income
Non-operating income/expenses amounted to aloss of ¥30,633 million (net amount), comparedwith a loss of ¥29,081 million (net amount) in
the previous fiscal year. This was mainly due toan increase in interest expenses on bonds for
7-Eleven, Inc.

As a result, ordinary income increased¥117,316 million from the previous fiscal year to¥475,887 million.
3. Special gains/losses and income before
income taxes
Special gains/losses came to a loss of ¥73,126
million (net amount), compared with a loss of¥46,716 million (net amount) in the previous
fiscal year. This was mainly due to an increase inimpairment losses.
As a result, income before income taxes
increased ¥90,906 million from the previous
fiscal year to ¥402,761 million.
4. Income taxes (including income taxes—
deferred) and net income attributable toowners of parent
Income taxes amounted to ¥110,591 million, up¥21,977 million from the previous fiscal year. The
effective rate of income taxes after applicationof deferred tax accounting was 27.5%.
As a result, net income attributable toowners of parent increased ¥70,202 million fromthe previous fiscal year to ¥280,976 million. Net
income per share was ¥318.14, an increase of¥79.46 from ¥238.68 in the previous fiscal year.

Analysis of Financial Position
1. Assets, liabilities, and net assets
At the fiscal year-end, total assets amounted to¥10,550,956 million, up ¥1,811,676 million from ayear earlier.
Current assets totaled ¥3,060,653 million,up ¥455,879 million from a year earlier, mainly
due to an increase of ¥250,219 million in cash
and deposits.

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Management Report 2023

Property and equipment increased¥1,109,402 million chiefly on account of anincrease in right-of-use assets resulting fromthe adoption of Accounting Standards Update(ASU) No. 2016-02, Leases (Topic 842) in theoverseas CVS operations. Intangible assets
increased ¥224,670 million, mainly due to anincrease in goodwill resulting from exchange rate

fluctuations. In addition, investments and otherassets increased ¥22,463 million, mainly due
to increases in municipal bonds and corporate
bonds acquired by Seven Bank, Ltd. As a result,non-current assets increased ¥1,356,536 million
from the end of the previous fiscal year to¥7,489,195 million.
Total liabilities increased ¥1,311,247 million
from a year earlier to ¥6,902,794 million.
Current liabilities totaled ¥3,265,089 million,
an increase of ¥784,363 million from the endof the previous fiscal year, mainly because thecurrent portion of bonds payable advanced¥295,823 million.
Non-current liabilities increased ¥526,883
million from the end of the previous fiscal
year to ¥3,637,704 million, largely due to anincrease in lease obligations resulting from theadoption of ASU No. 2016-02, Leases (Topic
842) in the overseas CVS operations despite a¥188,178 million decline in bonds payable.
Total net assets increased ¥500,429 million
from a year earlier to ¥3,648,161 million.
Retained earnings increased ¥213,336
million from the end of the previous fiscal
year, mainly due to an increase of ¥280,976
million resulting from recording of net
income attributable to owners of parent anda decrease of ¥89,787 million resulting frompayment of dividends.
Foreign currency translation adjustments
increased ¥286,908 million, mainly due totranslation of the financial statements of
7-Eleven, Inc.
As a result, net assets per share amounted
to ¥3,933.93, up ¥558.43 from a year earlier,and the owners’ equity ratio decreased to 32.9%
from 34.1% at the end of the previous fiscal year.

2. Cash flows
Cash and cash equivalents increased ¥259,897
million from the end of the previous fiscal
year to ¥1,674,787 million, mainly due to cash
flow generated by high operating profitability
primarily in the domestic and overseas CVS
operations, despite expenditures for new store
openings and store renovations chiefly in thedomestic and overseas CVS operations.
Cash flows from operating activities
Net cash provided by operating activities
amounted to ¥928,476 million (126.1% of theprevious fiscal year). The ¥191,999 million
increase over the same period last year was
mainly due to a ¥90,906 million increase inincome before income taxes and an ¥83,535
million increase in depreciation and amortization,
while there was a ¥44,247 million decrease indeposits received.
Cash flows from investing activities
Net cash used in investing activities amounted to¥413,229 million (16.5% of the previous fiscal year).
The main reason for the decrease of ¥2,092,336
million from a year earlier was a decrease of¥2,295,104 million in payment for purchase ofshares in subsidiaries resulting in change in scopeof consolidation, which occurred in the previous
fiscal year due to the acquisition of Speedway inthe overseas CVS operations.
Cash flows from financing activities
Net cash used in financing activities totaled¥270,373 million (compared with net cash
provided by financing activities of ¥937,077
million in the previous fiscal year). The change
from the previous fiscal year was mainly because¥1,192,710 million in proceeds of the issuanceof bonds by 7-Eleven, Inc. was recorded in theprevious fiscal year.

Management Report 2023

82

Company Information(As of February 28, 2023)

Corporate Profile

Organization chart (As of April 6, 2023)

Principal Shareholders
Number of shares Shareholding(thousand shares) ratio (%)

Name of shareholders

Head Office8-8, Nibancho, Chiyoda-ku, Tokyo 102-8452,
Japan
Tel: +81-3-6238-3000
URL: https://www.7andi.com/en/
Date of Establishment
September 1, 2005
Number of Employees[in brackets, number of part-time employees*](Consolidated) 84,154 [83,094](Non-consolidated) 1,017 [15]* Monthly average based on a 163-hour working month

THE MASTER TRUST BANK OF JAPAN, LTD.
(TRUST ACCOUNT)

121,723

13.7

ITO-KOGYO CO., LTD.

70,701

8.0

CUSTODY BANK OF JAPAN, LTD. (TRUSTACCOUNT)

52,596

5.9

SMBC NIKKO SECURITIES INC.

34,5883.9

SSBTC CLIENT OMNIBUS ACCOUNT

21,197

2.4

MASATOSHI ITO

19,6582.2

NIPPON LIFE INSURANCE COMPANY

17,672

2.0

VALUEACT CAPITAL MASTER FUND L.P.

16,761

1.9

MITSUI & CO., LTD.

16,222

1.8

JAPAN SECURITIES FINANCE CO., LTD.

14,153

1.6

Our Customers
Business Partners / Shareholders / Communities
Overseas
CVS Operations

ESG
Development
Division

Domestic
CVS Operations

Corporate
Planning
Division

Corporate
Finance &Accounting
Division

SST
Operations

Corporate
Communication
Division

Human
Resources
DivisionGroup Security Management OfficeClassification of Shareholders
by Percentage of Shares Held¥50,000 million
Auditor
KPMG AZSA LLC

Individuals andOthers11.0%

Stock Information

Foreign
Corporations
33.0%

Number of Shares of Common Stock
Issued: 886,441,983 shares
Number of Shareholders
74,745
Stock Listing

President,
Representative
Director and CEO

Auditing OfficeInformation Management Committee

Management Meeting
Nomination Committee

Board of Directors

Compensation Committee

Securities
Companies
8.6%

Other Domestic
Corporations
14.7%

Group
Merchandise
Strategy &Planning Division

Group DX
Division

Risk Management Committee

President OfficeFinancial
Institutions
32.7%

Corporate
General Affairs& Legal Division

OthersCSR Management Committee

Secretary OfficePaid-in Capital

Financial Services

Audit & Supervisory
Board Members/
Audit & Supervisory Board

Audit &
Supervisory
Board Members
OfficeShareholders’ Meeting

Rating Information (As of June 30, 2023)

Tokyo Stock Exchange, First Section
Transfer Agent and Registrar

S&P

Moody’s

R&I

JCR

A2

AA–

AA

Mitsubishi UFJ Trust andSeven & i Holdings

Long-termA

Banking Corporation

SEVEN-ELEVEN
JAPANLong-termA

Short-term*

A-1

P-1

The annual shareholders’ meeting of the

7-Eleven, Inc.

Long-term

A

Baa2Company is normally held in May each year

Seven Bank

Long-termA

Short-term

A-1

Annual Shareholders’ Meetingin Tokyo, Japan.

AA

AA–

* From January 2006, SEVEN-ELEVEN JAPAN’s short-term rating is its rating
as the guarantor of 7-Eleven, Inc.’s commercial paper program.

Disclosure materials related to this report
Latest IR Materials

https://www.7andi.com/en/ir/library.html
You can view the Company’s latest IR materials
in one place.
We have posted financial information including
securities reports (in Japanese only), fi nancial
results, and brief summaries of financial results.
Corporate Outline

https://www.7andi.com/en/ir/library/co/2023.html
Annual journal summarizing the Group’s businessactivities and business performance information.

Stock Price/Trading Volume Chart (Tokyo Stock Exchange) (As of July 31, 2023)

Sustainability Website
Management Report(this report)

https://www.7andi.com/en/ir/library/mr.html
An integrated report promoting constructive
dialogue with stakeholders and sincere governancefor collaborative value creation.

https://www.7andi.com/en/sustainability/
A website that comprehensively
communicates information on the Group’s
sustainability activities.

Stock price (Yen)
7,000

Disclosure materials for individual investors

6,000
5,000
4,000
3,000
0

Trading volume (Thousand shares)
100,000

Website for Individual Investors“Quarterly Report” Shareholder Newsletter

https://www.7andi.com/ir/individual/(in Japanese only)
We provide easy-to-understand details of the Group’sbusinesses to individual investors.

https://www.7andi.com/company/quarterly.html(in Japanese only)
Shareholder newsletter showcasing the latest initiatives of
the Seven & i Group and each Group company. Delivered toshareholders every three months, each issue includes a special
feature on various topics.

80,00060,00040,000083

2017Management Report 2023

2018

2019

2020

2021

2022

2023

All disclosure materials presented herein have been postedon the Company’s website.
https://www.7andi.com/en/

Management Report 2023

84