Management Report
2023
Seven & i Holdings Co., Ltd.

https://www.7andi.com/en/

Editorial Policy

Contents

Aiming for collaborative value creation and sustainable growththrough constructive dialogue with stakeholders
Seven & i Holdings has been implementing thevarious initiatives outlined in its Medium-Term
Management Plan 2021–2025 (MTMP). In light ofthe progress of these initiatives and changes inthe business environment surrounding the Seven& i Group, we conducted a reevaluation of Groupstrategy through the entire Board of Directors,
which comprises a majority of outside directors,
and independent external advisors. The resultsof these discussions were announced in March2023 alongside upward revisions to the targetsof the MTMP. In this Management Report, wePublication date
September 2023
Reporting period
March 1, 2022 to February 28,
2023
Includes certain disclosures andbusiness activities conducted
after March 2023.
Scope of coverage
Seven & i Holdings Co., Ltd. andits consolidated subsidiaries

introduce our new “Ideal Group Image for 2030”
based on the outcomes of the Group strategy
reevaluation as well as the value creation process
underpinning its realization. We also present therevised Group growth strategy and sustainability
strategy, along with their target values, based on
the reevaluation.
Through this report, we aim to engage inconstructive dialogue with our stakeholders
to achieve collaborative value creation andsustainable growth.

Guidelines referenced
International Financial ReportingStandards (IFRS) Foundation’s“Integrated Reporting
Framework,” Ministry of
Economy, Trade and Industry’s“Guidance for Collaborative
Value Creation 2.0(https://www.meti.go.jp/english/
policy/economy/corporate_accounting/pdf/20221129_
guidance.pdf),” and the Task
Force on Climate-related
Financial Disclosures (TCFD)
Status Report.

Editorial Policy / Contents

P. 01

Management Philosophy / Stakeholder Dialogue

P. 03

Message from the CEO

P. 05

Value Creation Process

P. 13

Basic Information
Milestones

P. 15

Primary Businesses and Capital

P. 17

Initiatives in the Food Domain

P. 19

7-Eleven Brand

P. 23

Efforts toward Digitalization

P. 24

Business Strategy

Forward-looking statements
This report contains certain
statements based on Seven & i
Holdings’ current plans, estimates,
strategies, and beliefs. All statementsthat are not historical fact are
forward-looking statements. Thesestatements represent the judgments
and hypotheses of the Company’s
management, based on currently
available information. It is possiblethat the Company’s future
performance will differ significantly
from the contents of thesestatements. Accordingly, there is no
assurance that the forward-looking
statements in this report will prove tobe accurate.

Message from the CFO

P. 25

Business Strategy of Domestic Convenience Store Operations

P. 29

Business Strategy of Overseas Convenience Store Operations

P. 33

Superstore Operations Strategy

P. 37

Financial Services Strategy

P. 39

Sustainability Strategy
Message from the CSuO

P. 41

Material Issues

P. 43

Environmental Initiatives

P. 45

Social Initiatives

P. 55

Corporate Governance

P. 61

Financial Information

01

Management Report 2023

Key Indicators

P. 75

Financial Highlights

P. 77

Management’s Discussion and Analysis

P. 79

Company Information

P. 83

Management Report 2023

02

Management Philosophy

Stakeholder Dialogue

The cornerstone of Group management

Become a trusted Company throughsincere stakeholder dialogue

GlobalEnvironment

Management Philosophy
The Company formulated its Corporate Creed as below in 1972. The Corporate Creed is unchanging
and comprehensively symbolizes the Group’s Management Philosophy; thus, the Company values it
most as the fundamental basis of the Group’s management.

Corporate CreedWe aim to be a sincere company that our customers trust.
We aim to be a sincere company that our business partners, shareholders andlocal communities trust.
We aim to be a sincere company that our employees trust.

Basic Stance
We aim to contribute to the local community both in Japan and overseas byproviding new experiences and values from the customer’s point of view.

Seven & i Holdings Corporate
Action Guidelines
The spirit embodied in the Corporate Creed isour unchanging philosophy, which will remain
undisturbed no matter how greatly the social
environment changes in the future. The attitudes
needed to realize this philosophy have beenformulated as our Corporate Action Guidelines.
The Guidelines present the basic attitudes
adopted by all of the Group’s directors, Audit& Supervisory Board members, and employees
and comprise the Basic Policy, which sets out theapproach of the Group as a whole, and the Codeof Corporate Conduct, which sets out rules for
conduct. Furthermore, each Group company has
established detailed guidelines and conduct rules
appropriate for its business format at the concrete
action level and, together with the Guidelines,
will keep all new recruits and newly appointed
managerial employees fully informed throughtheir training.

03

Management Report 2023

Structure of the Corporate Creed andCorporate Action Guidelines

Corporate
Creed
Seven & i Holdings Corporate
Action Guidelines
Basic Policy

Code of Corporate
Conduct

Group company guidelines andconduct rules

The Company aims to be a sincere
company in line with its Corporate
Creed, earning the trust of all
stakeholders, including customers,
business partners and franchisees,shareholders and investors, local
communities, and employees.
Guided by our Group slogan
of “Responding to Change while
Strengthening Fundamentals,” weview the constantly changing needsof society and our customers asopportunities to create new retailservices, and work toward thecreation of new retail services in
response to changing times.
Today, as various changes
are accelerating, the Company
recognizes the importance ofconstantly striving to accurately
understand the expectations andinterests that stakeholders have of
the Group.
For this reason, the Company
will strive to respond quickly tofeedback from its stakeholders—theiropinions, requests, and so forth—that it receives through its dialogue
with them, and at the same time, theCompany will continue to sincerelyreflect this feedback in its businessactivities and management decisionmaking process (stakeholder
engagement).

Shareholders
and Investors

Franchisees

Our Customers

Business
Partners

Employees

Local
Communities

Management Report 2023

04

Message from the CEO

Aiming to be one of
the worldʼs leading
retail groups with afocus on foodRyuichi Isaka
President, Representative Director
and CEO
Joined SEVEN-ELEVEN JAPAN CO.,LTD. (SEJ), in 1980. Named Director in2002 and Managing Executive Officer
in 2006. After serving as Director andManaging Executive Officer of the
Merchandising & Foods Department,
was named SEJ’s Representative
Director and President in 2009.
Appointed Representative Director
and President of Seven & i Holdings
Co., Ltd. in May 2016.

05

Management Report 2023

Q1: You reassessed Group strategies and updated
the Medium-Term Management Plan in March
2023. Could you tell us about the process andbackground of these moves?
Promoting business portfolio reforms forsustained growth in corporate value, based on
dialogue with stakeholders
Let’s start by reviewing how our previous
reforms went.
Seven & i Holdings has long maintained
the basic policy of formulating and steadily
implementing management strategies tocontribute to sustained growth in corporate value
while reflecting the issues and needs identified
in repeated dialogue with diverse stakeholders.
Based on this policy, since 2018 we have laid thegroundwork for global growth in our overseas
convenience store (CVS) operations throughacquisitions including Sunoco LP and Speedway
LLC. At the same time, we have made progress
on reforming our domestic business portfolio
through a process of business streamlining andrefocusing based on a Groupwide approach. We
aim for growth with more of a focus on quality,
by means such as strengthening relations withfranchisees through dialogue while also enhancing
attentive management based on individual storesand locations to keep CVS operations on a track
toward further growth.
Based on these initiatives, in July 2021 wedeveloped the Group vision for 2030 of “a worldclass global distribution group that leads distribution
innovation through a global growth strategy withthe 7-Eleven business as its core and the active useof technology.” We also formulated Medium-Term
Management Plan 2021–2025 (MTMP) for the period
through FY2025, based on backcasting fromthis vision.
In FY2022, the second year of the MTMP,EBITDA in overseas CVS operations grew
substantially by 166.9% YoY thanks to greater than
expected effects of consolidation with Speedway—

despite a complex business environment that
included clear changes in consumer behavior andvalues as a result of the global pandemic alongwith supply-chain disruptions associated with the
Ukrainian situation. Combined with the favorable
performance of domestic convenience stores, thisgrowth in overseas CVS operations contributed
to record-high consolidated operating income
and net income attributable to owners of parent(hereinafter “net income”) in FY2022 as revenues
from operations rose by 135.0% YoY to ¥11,811.3
billion—the first time such revenues have exceeded¥10 trillion in the history of Japan’s retail industry.
Even as we achieved these results, theenvironment in which the Group does business has
continued to undergo considerable changes overthe past few years. Examples include skyrocketing
prices of energy and raw materials and continued
growth in labor costs. We feel that in order torealize our vision we will need to accelerate thepace of reform even further.
Accordingly, under the new Board of
Directors and governance structure establishedin the 2022 annual shareholders' meeting we

Reforming the business portfolio

August 3, 2020
Announcementof the acquisition
of Speedway

February, 2023
Decided to invest additionallyin Vietnam business
January 12, 2022
Launch of 7-Eleven International LLC

2020

2021

2022

July 21, 2021
Announcementof the partial
sale ofFrancfrancFebruary 10, 2022
Announcement of thesale of OSHMAN’S

2023

November 11, 2022
Announcement of the sale ofSogo & Seibu
April 6, 2023
Announcement of the sale ofSeven Card Service to Seven Bank
April 6, 2023
Announcement of the sale ofBarneys Japan

Management Report 2023

06

Message from the CEOreassessed Group strategies by considering, invarious ways, strategic initiatives to contributeto increasing the Group’s corporate value whilereflecting the growth potential and efficiency ofeach business segment.
The key to growth is building a supply chain to
generate strengths in food
The six outside directors appointed in May
2022 participated in this reassessment of Groupstrategy, together with independent outsideadvisers hired to ensure the fairness of the process.
The Board of Directors, a majority of whom areoutside directors, repeatedly discussed strategic

options such as IPOs and spin-offs in individual
business segments as well as thoroughgoingreforms to the Group business structure, leaving
no possibilities excluded.
Through a process that at times included
passionate debate and pointing out unpleasant
facts, the Board reaffirmed the fact that theGroup’s strengths are in the field of food. These
strengths power domestic CVS operations’ appeal
to consumers and contribute to not only high daily
sales but high profit margins as well. The process
also showed that in overseas CVS operations too
there is a strong correlation between the share ofsales made up of original food products, including
fresh foods and private-brand products, andChange in business portfolio

Scale of business has significantly increased with acquisition of Speedway,and contribution of CVS to overall EBITDA has reached over 80%
Revenues fromOperations per
Segment (1)(2)

Financial
3.4%

Others0.3%

Department /Specialty
Stores
11.8%

Financial
1.6%
Department /Specialty Stores
3.9%

Overseas
CVS
38.7%

Superstore
12.2%

FY2020¥5,766.7 billion
Superstore
31.1%

EBITDA per
Segment (1)(2)(3)

Financial
11.9%
Others0.1%

Overseas
CVS
31.2%

Superstore
9.2%

FY2020¥626.8 billion
Domestic
CVS
48.0%

Food-based growth strategy for domestic and overseas CVS operations

Others
0.2% Overseas

CVS
74.5%

Management Report 2023

CVS Operations

FY2022¥11,811.3 billion

Acquisition of
Speedway
Announced on
August 3, 2020
Closed on May
14, 2021

Financial
6.7%

7-Eleven, Inc. (SEI)

Others0.1%

Overseas
CVS
56.4%

Department /Specialty
Stores
1.7%
Superstore
4.8%

FY2022• Focus on the Tokyo metropolitan
area + consolidate SM*1 entities• Set up infrastructure(PC*2, CK*3, online supermarket)¥995.3 billion

Domestic
CVS
30.3%(1) Contribution of each segment based on revenues from operations / EBITDA total excluding eliminations and corporate(2) CVS operations: Convenience Store operation(3) EBITDA calculated by per-segment operating income + depreciation and amortization + goodwill amortization

07

capabilities in areas including networking with awide range of suppliers of products from perishables
through processed foods. Based on theseprocurement capabilities, for our Seven Premium
private brand, launched in 2007, the Groupdevelops diverse product lines while leveraging
marketing information from points of contact
with consumers in Group stores. In addition, ourunique product choices including fresh foods
realize delicious flavor and product lineups that are
unmatched by the competition. This is the resultof team merchandising that brings together highlevels of technologies and knowledge in various
fields to develop products that emphasize quality,
safety, and deliciousness, together with our diverse
supplier teammates (p. 19).
In CVS operations as well, it is not justgrowing the number of stores but also building

Domestic
CVS
7.5%

Domestic
CVS
14.7%

Department /Specialty
Stores(0.4)%

appeal to consumers (p. 33).
Through these discussions, we revised
the Group vision for 2030 identified when weformulated the MTMP, to focus even more on theelement of food: “a world-class food-focused retailgroup that leads distribution innovation through a
global growth strategy with the 7-Eleven businessas its core and the active use of technology.”
We believe that our strength in food isbacked by the diverse tangible and intangible
capital that the Group has built up over the years,
including our value chain, shared infrastructure,brand power, and store loyalty.
Among our businesses, the superstore
operations serve as a major force driving ourstrength in food. The superstore operations offer
wide-ranging product lines unrivaled by CVS
operations and boast outstanding procurement

Exit
Apparel*1 SM: Supermarkets

Focus andconsolidation

SST*4*2 PC: Process centers

Food

Fresh
food

Synergies

Frozenfood

Grocery
Perishables

Householditems

Expand product category

Domestic CVS*3 CK: Central kitchens*4 SST: SuperstoresManagement Report 2023

08

Message from the CEO

supply chains to generate strengths in food, as
noted above, that have proven to be keys to
growth. Although we were, in fact, the last CVS
operator to expand its store network to reach allof Japan, our insistence on building reliable supply
chains before advancing into new territories has
earned us the support of consumers in each region
by demonstrating our strengths in food. We areconfident that this strategy of progress by linking
supply chain development with opening stores will
help us to secure unrivaled advantages in global
markets as well.
Q2: Could you describe some key points of therecently announced action plan intended toachieve the MTMP?
Steady progress of domestic and overseas CVS
operations and further acceleration ofthoroughgoing reforms to superstore operations
In FY2023, while consumer activity is recoveringin Japan thanks to the reclassification of
COVID-19 as a Class 5 infectious disease andother developments, there are concerns aboutlower consumer confidence as a result of factors
including lower disposable income in addition tocontinuing increases in energy costs. While there
were expectations of a recovery in consumer
confidence for a time in the United States as
gasoline prices fell, some observers expect arecession in the U.S. economy in the second half.
As such, conditions are unpredictable. In light ofthese considerations, we expect to have no choice
but to do business under conditions that willremain very challenging in FY2023.
Even under these circumstances, domestic
CVS operations maintain planned profit levels
and North American CVS operations show largescale growth in profit levels thanks to the effectsof the Speedway merger and enhancement oforiginal products that have high gross profit
margins. Driven by these domestic and overseas
CVS operations, both EBITDA and free cash
flow recorded higher than anticipated growth.
We consider the Group’s strengths in food to bebehind this growth in profits as well.
At the same time, in March 2023 weannounced thoroughgoing business reforms tosuperstore operations, including an exit from thein-house apparel business as well as consolidation
and reorganization of Group companies with afocus on the Tokyo metropolitan area. We will moveahead steadily with these measures in line with a

FY2025 performance targets (revised upward)
EBITDAOver¥1.1 trillion¥995.3 billionOver¥1 trillion

Over¥900 billion

Free CF (excl. financial
services)¥474 billion

Over¥800 billion

ROIC (excl. financial
services)

ROE

09

FY2025InitialTargetManagement Report 2023

FY2025
UpdatedTargetFY2022
ActualFY2025InitialTargetFormulation of a capital reallocation plan for
medium- to long-term growth
In reassessing Group strategy, we also are identifying
clear guideposts on capital reallocation.
It will be important to strive to recover capitalthrough thoroughgoing transformation in the areaof priority structural reforms while continuing
to grow the operating cash flow that we havebuilt up through now centered on domestic andoverseas CVS operations. We also will allocate
generated cash flow with a focus on strategic
investment in overseas CVS operations, which
drive Group growth, while continuing to makeinvestment decisions grounded in capital efficiency
for medium- to long-term growth. We plan toallocate to investment in superstore operations
cash flow generated within superstore operations
themselves, without allocating cash flow from CVS
operations to SST operations.
We also plan to provide returns toshareholders, including purchase of treasury stock,
dynamically with the aim of increasing returnon equity (ROE) and earnings per share (EPS),

Over¥400 billion

FY2025
UpdatedTargetFY2022
ActualFY2025InitialTargetFY2022
ActualCAGR:Over 18%

CAGR:
Over 15%

Over
7%
3.0x
Lower
than
2.0x

5.2%

FY2025 FY2025
Initial Updated
TargetTarget

EPS

8.0%

Over
10%

FY2025
UpdatedTargetDebt/EBITDA ratio

Over

Over
11.5%

Over
¥500 billion

8.7%

FY2022
Actualoperations, which provide the food that people
enjoy every day.

FY2025 performance targets (revised upward)

Operating CF (excl. financial
services)¥832.8 billion

three-year time limit and under monitoring by theStrategy Committee, which consists of outside
directors only, and the Board of Directors.
To reflect this steady progress based on the
results of domestic and overseas CVS operations
and indicate our unwavering commitment tothoroughgoing business reforms in superstore
operations, in March 2023 we revised our FY2025
targets upward.
We consider FY2023 to be a year of laying
solid groundwork for achieving these targets,
through growth into one of the world’s leading
retail groups with a focus on food. The makeup
of Japanese society continues to change amid
developments such as the aging of the population,
the rising number of single households, and thegrowing presence of women in the workforce.
What’s more, the global pandemic has led tochanges in people’s work styles and behaviors.
These factors are spurring further growthin demand for purchasing products such as
perishables and fresh foods close to home.
Furthermore, demand for safety, peace of mind,
and good health is growing as well. We believethat these changes are resulting in significant
opportunities to demonstrate the strengths ofour domestic and overseas CVS and superstore

FY2022
ActualFY2025 FY2025
Initial Updated
TargetTargetFY2022
Actual

¥318
Lower
than
1.8x

FY2025 FY2025
Initial Updated
TargetTargetFY2022
ActualFY2025 FY2025
Initial Updated
TargetTargetManagement Report 2023

10

Message from the CEOtargeting a total return ratio of 50% or morecumulative from FY2023 through FY2025.
Q3: Some shareholders submitted a shareholder
resolution to the 2023 Annual Shareholders'Meeting. What is your view on the results?
Building even stronger relations of trust withshareholders and investors by enhancing dialogue
toward long-term value creation
Behind this shareholder resolution was a demand
to separate some operations from the Group. As
I noted earlier, food is the source of the Group’s
competitive strengths, and the knowledge
and know-how of procurement and productdevelopment that the Group has built up in thefield of food, including superstore operations, plays
a major role in creating long-term value.
For this reason, we believe that haphazardly
separating some businesses could impede ourefforts to maximize corporate value, and this in turn
could harm returns to shareholders.
On the proposal on appointment of directors,
which was the specific point at issue, the company
proposal garnered much more support than theshareholder proposal. However, we take seriously
the fact that there was some solid opposition to
the company’s proposal. While we have valued
dialogue with stakeholders under our Corporate
Creed of aiming to be a sincere company trusted bystakeholders, 2023 Annual Shareholders' Meetingprovided an opportunity to rethink how we handle
dialogue—particularly with investors. Reflecting
on the fact that although we have discussed ourpractical vision for the future extensively in the
Board of Directors we have not communicatedit fully to investors, from now on we will discuss
our future vision in as specific terms as possible,
attaching roadmaps and evidence.
Together with actively holding IR Days andother opportunities in which I will take the leadin discussing our understanding of the issues
and our future vision, we will have the persons
responsible for overseeing individual businesses
and chief officers in charge of corporate functions(CxOs) describe strategies in specific terms. Thisis part of our efforts to improve communication,
including enhancement of investor relation (IR)and shareholder relations (SR) activities andstrengthening the IR and SR organizations.
Q4: Please tell us about Seven & i Group’s
sustainability initiatives, as an organization with afocus on long-term value creation.
Enhancing efforts to address material issues andhuman capital management
To realize a sustainable society through its
operations, the Seven & i Group is advancing
various initiatives based on seven material issues
linked to the 17 Sustainable Development Goals(SDGs). We identified these issues through dialogue
with stakeholders (p. 43).
We believe that by addressing thesematerial issues we will be able both to fulfill
our responsibility to improve the quality ofmanagement as one of the world’s leading retail

11

Management Report 2023

groups and to earn the trust of society and create
opportunities for growth through solutions tosociety’s challenges.
For example, in 2019 the Group formulated
its environmental declaration GREEN CHALLENGE
2050, describing our vision for decarbonization,a circular economy, and a society in harmony
with nature. In this declaration, we announced ourgoals for 2030 and vision for 2050 on themesthat include reduction of CO2 emissions, measuresagainst plastic waste, measures against foodloss/waste and for organic waste recycling, andsustainable procurement. In the area of plastic
waste, we collect PET bottles in store for recycling
and sell beverages in 100% recycled PET bottles.
We are able to carry out initiatives such as thesethanks to our position as a retailer that comes into
contact with numerous consumers on a daily basis.
We believe that this approach of building up small
actions to deliver solutions to large-scale social
issues will lead to understanding of the Group’sbusinesses as well as higher levels of trust andexpectations over the long term.
In addition, to ensure the sustainability ofthe value chain in which we demonstrate ourstrengths in food, we have formulated the Seven& i Group Human Rights Policy and the Seven& i Group Business Partner Sustainable Action
Guidelines, and we carry out human rights due
diligence through corporate social responsibility(CSR) auditing and other means.
Simultaneously with such activities toimprove the quality of management, over the
past few years we on the management teamhave focused in particular on efforts to increase
employee engagement. As we have seen, today
the Group is in the midst of large-scale reforms.
To ensure the success of these reforms, we willneed to develop measures to respond to theaspirations of Group employees who want togrow more and to take on new challenges witha positive approach, while working together
in solidarity toward our goals. But it is a factthat the progress of Group reforms can makesome employees wonder about their employer’s
future. I believe that at a time like this internal
communication to empower employees plays animportant role, and soon after the announcementof the results of reassessment of Group strategy
we held a briefing for employees on the superstore
operations, which are slated for thoroughgoingreforms. Of course, it takes more than a single
briefing to alleviate employees’ concerns. Still,
we believe that continued direct communication,
while also demonstrating to employees the visible
results of specific measures and actions, will leadto improved engagement that will enable theGroup’s further growth. I intend to guide the helmof management while keeping at heart the needto generate such results by bringing together
the power of individual employees as my mostimportant mission as a manager.
Q5: Do you have a message for stakeholders?
Realizing sustained growth based on our
Corporate Creed of trust and sincerity
As I noted earlier, the Seven & i Group’s Corporate
Creed calls for being a sincere company trusted
by stakeholders. This creed is something thatmust remain unchanged no matter how much thetimes or the business environment may evolve. We
will continue to realize sustained growth throughrepeated and thorough dialogue with stakeholders
in the future as well.
From a look at recent developments such as
the effects of the global pandemic and international
disputes, we can expect conditions of dramaticchange and future uncertainty to continue. Amidsuch circumstances, we will continue to contributeto our communities, in Japan and around the world,
as one of the world’s leading retail groups with afocus on food, while steadily achieving the MTMP.
We ask for your continued support andunderstanding.

Management Report 2023

12

Value Creation Process
Adapting to changes in the business environment andpursuing sustainable growth with stakeholders
Dialogue with stakeholders based on
our Corporate Creed and Basic Stancep. 03

Leveraging accumulated capital and strengths
to expand business focused on food

Driving a Medium-Term Management Plan that identifies seven material issues and integrates
growth and sustainability strategies in pursuit of sustainable growthp. 1 7

p. 43

Financial value(FY2025 targets)• EBITDA¥1.1 trillion or more

• Operating CF(excluding financial services)

Changes in the environment
surrounding the Company
and stakeholders

GlobalEnvironment

Global trends

Shareholders
andInvestorsDom
St estor ieFranchisees

Intellectual
capital

Dialoguehers
Ot

Co-creation

Corporate
CreedBa
sic St a n ce

Financial
capitalManufacturing
andsales capitalSocialcapitalBusiness
Partners

Fin

s

Our
Customersa n c i a l S e r v i ce s

Employees• Thoughts on safety, security, and health• Spread of digital consumption and delivery• Non-contact/remote society• Small trade areas and their diversification• The need for resilience

Management Report 2023

Human
capitalOver
seStor as C
eO o
pe nv
ra

NaturalcapitalChanges accelerating due to COVID-19

13

e
ienc
en ns
v
n tio
Co erac Op

Seven material
issues

Op
er
a
tio
n

• Population decline,
declining birthrate, andaging population• Population
concentration in
urban areas,
depopulation ofrural areas• Externalization ofhousework and food
• Diversification of working
styles• Competition thattranscends the boundaries
of business types¥500 billion or more

• ROE

11.5% or more

p. 25

Superstore

Domesticsocialstructureandconsumption• Free CF level(excluding financial services)

The Group’s
Growth Strategy

e
nc
ie s
en iont• Escalation of environmental
issues and social challenges• Increased awareness ofsustainability• Advances intechnology• Diversification ofvalues• Increasing and visible
country risks¥900 billion or moreoing growth investments
e ong
t
u
c
Exe

Domestic Convenience
Store Operations

Local
Communities

8.0% or more

• Debt/EBITDA ratio

p. 29

Less than 1.8 times

1

Create a livable society
with local communities

Overseas Convenience
Store Operations

2

Provide safe, reliable, andhealthier merchandiseand services

Superstore
Operations

Financial
Services Business

p. 37

p. 39

3

Realize decarbonization,a circular economy,
and society in harmony
with nature

4

Achieve a society inwhich diverse people
can actively participate

5

Improve work
engagement andenvironment for people
working in Groupbusinesses

6

Create an ethical society
through dialogue andcollaboration withcustomers

7

Achieve a sustainable
society throughpartnerships• EPS

CAGR: 18% or more

p. 33

Medium-Term
Management Plan
2021-2025
Sustainability
Strategyp. 41

GREEN CHALLENGE 2050:
Seven & i Group's
environmental declarationp. 45

Human resource measures:
Ensuring both a motivating andcomfortable work environment
p. 55

Sha
re c
reat
ed s
ocial
value

• ROIC(excluding financial services)

Financialvalue
Corporate
value

Socialvalue

Ideal Group Imagefor 2030

A world-classretail groupfocused on foodSocial value(FY2050 targets)

Realizing decarbonization,a circular economy, and society inharmony with nature• CO2 emissions from store operations

Net zero• Eco-friendly materials in containers
for original merchandise100%• Organic waste recycling rate100%

• Raw food ingredients with guaranteedsustainability used in original merchandise

with stakeholders

Corporate GovernanceA system for establishing and maintaining a sincere
management structure to ensure the trust of all
stakeholders and continuously increasing the Group’s
corporate value over the medium and long term in bothfinancial and non-financial (ESG) aspects

100%

Supporting the active role ofwomen, youth, and seniors acrossthe Group and in society• Ratio of female executive officers andmanagers (section manager andteam leader)30%(FY2025 target)

Note: Refer to pages 45 and 56 for details on thefiscal year in which each value/KPI isachieved, calculation conditions, etc.

Management Report 2023

14

Milestones

Basic Information

The Seven & i Group, evolving with society by staying
close to our customers’ lifestyles

1923 Great Kanto Earthquake

1939 World War II

1929 Great Depression

1973 First oil shock1973 Large-Scale Retail Store Law

Since starting as a single apparel store, the Group has remained closely attuned to changes in the social
structure and customer needs, striving to create new value while significantly changing its merchandise,services, and business content. We will continue to sincerely support our customers’ lifestyles and grasp
societal trends from a global perspective in order to enhance our corporate value.

1989 Consumption tax introduced
1995 Great Hanshin-Awaji Earthquake
Early 1990s Collapse of “bubble” economy

2007 Global financial crisis

2011 Great East Japan Earthquake2015 Sustainable Development 2020 COVID-19 pandemic
Goals (SDGs)
Work-life balance

Interest in foods that are safe and provide peace of mind
High economic growth

Declining birthrate and aging population
Heightened need for emphasizing quality over quantity
Shift from era of shortages to era of excess

Shortages

1920–1960s

Increase in dual-income households (rising demand for home meal replacements)

1970–1980s

Shift from consumption of products to consumption of services

1990s––2000s

2010s–Creation of new business formats, merchandise, and services in the face of a changing social structure
1920
Yokado established(later, renamed from Meugaya)

1974
Opened 7-Eleven store

Significance1958
Yokado Co., Ltd. established• Created Japanese-style convenience
store and established concept ascomponent of social infrastructure

Provided value

1961
Began developing
supermarket chain network• Large stores and small shops prosper
together• Modernization and revitalization ofexisting small- and medium-sized stores• Provided merchandise of high quality
and convenience in buyers’ market,
where customers choose themerchandise they want

1974
Opened Denny’s restaurant

1991
Rebuilt Southland Corporation(now, 7-Eleven, Inc.)

Significance• U.S. 7-Eleven rebuilt by Japanese company• Global expansion

Provided value• Applied methods of convenience store
operations in Japan to the United States tobetter meet needs of U.S. customers

2001
Established IY Bank Co., Ltd.

2007
Birth of Seven Premium

Significance• Sharing know-how of every Group company
and providing quality and value

Provided value• Proposed richer dining experiences tocustomers by providing “safety, security,and health,” “best taste and technology,”and “daily life and convenience”(now, Seven Bank, Ltd.)

Provided value• Provided better quality at lower prices
to more local customers• Created Japanese-style family
restaurant chain

2005
Seven & i Holdings Co., Ltd.
established

Provided value• Provided delicious food for enjoyment
outside the homeSignificance• Multi-business format with Group management
under holding company structure

Provided value• Provided new merchandise and services
through Group synergy transcending bordersof formats, such as convenience stores,
supermarkets, and department stores

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Management Report 2023

Provided value• Swiftly delivering high-quality foodand immediate consumables• Business expansion in North American market• Accelerated global expansion• Providing new food and beverage experiences
and convenience as a store indispensable tocustomers’ lifestyles

Provided value

June 2021
7-Eleven International LLC
establishedMarch 2023
Start of common Group
infrastructure with Peace Deli

• Enhancing 7-Eleven’s global brand value
through Japan–U.S. collaboration

Significance• Provided convenience of
deposit/withdrawal transactions at any time

SignificanceSignificance• Improving customer convenience

SignificanceProvided value• Spirit of trust and sincerity• Customer-oriented business using
self-service chain store approach

February 2022
Full-fledged start of 7NOW
delivery service

Significance2007
Birth of nanaco e-money service• Retail industry’s first settlement bankbased on customer perspective

SignificanceMay 2021
Acquisition of Speedway LLC
by 7-Eleven, Inc.

Provided value

Significance• Improving customer convenience• Addressing trend toward diversified
small-payment methods

Provided value• Provided an easy and speedy payment
method that does not require change• Supported fun and convenient life scenarioswith point system• Reinforced support for existing area licensees,
accelerated store openings in new areas, andpromoted merchandise procurement anddevelopment initiatives leveraging economies
of scale

July 2021
Drafted Medium-Term
Management Plan 2021–2025

Significance• Development of the Group's
strategic investment infrastructurein the food sector

Provided value• Development of high-quality, fresh,and differentiated products

Ideal Group Image for 2030

• A world-class retail group focused on food,leading retail innovation through global
growth strategies with the 7-Eleven businessat the core and proactive utilization oftechnology.
(Updated in March 2023)

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16

Primary Businesses and Capital

Accumulating capital essential for growth as a retailgroup centered on the 7-Eleven business
The Seven & i Group has been crafting unique capital that does not manifest on the financial
statements as we explore new products, services, and business expansion, encompassing diverse
human resources from Japan and abroad as well as the highly recognized 7-Eleven brand. By
effectively utilizing this accumulated capital in the Group, we aim to become a world-class retailgroup centered on the 7-Eleven business.

4.1%

1.6%

Domestic Convenience StoreOperations

7.5%

12.2%

Revenues
from operations

11,811.3

Human capital•D iverse human resources from around the world withextensive capabilities> Number of employees (consolidated): 167,248
Note: As of the end of February 2023. Includes part-time employees (converted to theequivalent in full-time workers, assuming 163 average monthly working hours).

Superstore Operations
Major Group Companies*1• Ito-Yokado Co., Ltd.
• York-Benimaru Co., Ltd.
• SHELL GARDEN CO., LTD.
• Peace Deli Co., Ltd.
• Hua Tang Yokado Commercial Co., Ltd.
• Chengdu Ito-Yokado Co., Ltd.
(16 consolidated subsidiaries, 5 affiliates;
21 companies, in total)

74.5%(Billions of yen)

Major Group Companies

2.2%

0.5%

Operatingincome•T he ability to develop proprietary merchandise byintegrating the Group’s knowledge, technologies, andexpertise related to food•7
 -Eleven’s trademark and brand strength boasting global
recognition•A robust franchise system that grows together withfranchisees and the store management expertise tosupport it

Manufacturing and sales capital
*1

6.5%

Intellectual capital

40.4%

506.5

• SEVEN-ELEVEN JAPAN CO., LTD.
• SEVEN-ELEVEN OKINAWA CO., LTD.
(5 consolidated subsidiaries, 4 affiliates; 9 companies,
in total)

Major Group Companies*1

Overseas Convenience StoreOperations• Seven Bank, Ltd.
• Seven Financial Service Co., Ltd.
• Seven Card Service Co., Ltd.
• Seven CS Card Service Co., Ltd.
(14 consolidated subsidiaries, 2affiliates; 16 companies, in total)

Financial Services• International product sourcing capability in the foodsector based on superstore operations•A pproximately 85,000 stores*2 spread across 19 countries
and regions•A strong value chain with business partners contributing to
the quality enhancement and stable supply of proprietary
merchandise> 176 manufacturing facilities (including 159 7-Elevendedicated facilities)(Billions of yen)

50.5%

Social capital•B usiness expansion driven by contact with customers
reaching approximately 59.9 million people daily

Note: The composition ratios shown in the pie charts
do not include eliminations and corporate.

■ Domestic Convenience Store Operations■ Overseas Convenience Store Operations■ Superstore Operations■ Financial Services■ Others(FY2022 results)

Note: Including licensees in FY2022
Major Group Companies*1• 7-Eleven, Inc.
• 7-Eleven International LLC• SEVEN-ELEVEN HAWAII, INC.
• SEVEN-ELEVEN (CHINA) INVESTMENT CO., LTD.
• SEVEN-ELEVEN (BEIJING) CO., LTD.
• SEVEN-ELEVEN (CHENGDU) CO., LTD.
• SEVEN-ELEVEN (TIANJIN) CO., LTD.
(102 consolidated subsidiaries, 4 affiliates; 106
companies, in total)

OthersMajor Group Companies*1• Akachan Honpo Co., Ltd.
• THE LOFT CO., LTD.
• Seven & i Food Systems Co., Ltd.
• Nissen Holdings Co., Ltd.
(28 consolidated subsidiaries, 9affiliates; 37 companies, in total)

Financial capital•R obust cash-generating capability>C onsolidated operating cash flow: ¥928.4 billion

Natural capital
Note: In order to realize the Group’s vision for 2030, effective from FY2023, the Group reclassified its operating segments from thetraditional six segments: domestic convenience store operations, overseas convenience store operations, superstore operations,department and specialty store operations, financial services, and others, into five segments: domestic convenience store
operations, overseas convenience store operations, superstore operations, financial services, and others.
*1 The list of consolidated subsidiaries and affiliates is as of February 28, 2023.
*2 The store counts in Japan are as of February 28, 2023, while for overseas, they are as of January 31, 2023.

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Management Report 2023

•T
 oward a sustainable society through the environmental
declaration, GREEN CHALLENGE 2050
>E
 lectricity consumption in store operations: 7,521 GWh(FY2021)
Note: The figure is for 11 domestic companies and 7-Eleven, Inc.

Management Report 2023

18

Initiatives in the Food Domain

Maximizing our unique Team MD structure
and value chain to further strengthen ourpresence in food

Annual sales
Approx.

¥1,380billionNumber of
items
Number of
manufacturers

Approx.

3,500

542 companies
facilities
1,453 production

Number of
categories

435
Number ofsales stores

Products withannual sales of¥1 billion or more

Approx.

286

Seven Premium harnesses the productdevelopment capabilities of different Group
companies
The Seven & i Group facilitates Team Merchandising(Team MD) by merging the marketing insights of
our operating companies and involving supplierswith differentiated technologies and expertisethat each company deals with individually. Thisapproach enables rapid product development inresponse to changing customer needs.
Drawing upon the product development
knowledge of these Group companies andleveraging our network of business partners, we
introduced a private brand common to the Group
in 2007 known as Seven Premium. To dispel theconventional image of low-priced private-brandproducts, Seven Premium focuses on aspects suchas taste, safety, and reliability in prioritizing quality.
In pursuit of this goal, the Group established a highlevel Team MD framework to develop and produce
merchandise with business partners who haveadvanced technologies and know-how covering

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Management Report 2023

22,000Team MD framework: In pursuit of Group synergies

Manufacturer of
raw materials

VendorMerchandiser

Manufacturer ofwrapping materials

Merchandise
manufacturer

Breakdown of merchandisers in charge ofSeven Premium (food) (as of March 2023)
Processed Food
Subcommittee
Other

Daily Item
Subcommittee
Other

Fresh Produce
Subcommittee
Otherfrom raw material procurement to processing,production, and packaging materials. Having started
with 49 items spanning clothing, food, and housing,Seven Premium has expanded to encompass
approximately 3,500 items as of February 2023,
with 286 of them achieving annual sales of over ¥1billion by nurturing each product carefully.

Driving Group growth with the Seven Premium
brand
The Seven Premium is continuing along its growthtrajectory, garnering particular acclaim in the fooddomain. In response to social changes such as adeclining birthrate and aging population, increasing
single-person households, and greater female
workforce participation leading to more dualincome households, 7-Eleven is bolstering its foodsector offerings, aligning with the growing trend of
simplified and outsourced food solutions. Utilizing
the strengths of our supermarket businesses
such as Ito-Yokado, York-Benimaru, and York,
known for their product variety and procurement

capabilities, we introduced the Seven Gold (nowSeven Premium Gold) brand in 2010, aiming forelevated quality, based on customer feedback fromour extensive network of stores serving around22.2 million visitors daily. Building on this, in 2013,
Seven Premium
The Seven Premium brand provides delicious and immensely satisfying cuisine for people’s
dining pleasure.

Seven PremiumGold

Seven Premium
Lifestyle

The Seven Premium Gold brand delivers
irresistible flavors to the dinner table, crafted withrenowned chefs and experts, that consumers will
be eager to share with others.

The Seven Premium Lifestyle brand focuses onenvironmentally friendly merchandise that seamlessly
blends with one’s lifestyle, meticulously crafted toprovide a sense of genuine comfort and ease.

Seven Café

Seven Premium
Fresh

Seven Café provides moments to relax and enjoy
delicious food and drink anytime, anywhere.

The Seven Premium Fresh brand prioritizes
sustainability and seasonality, providing a
fresh and delicious taste direct from theproducer to the dinner table that can beenjoyed with peace of mind.

Seven the Price
The Seven the Price brand delivers everyday items with dependable quality atbudget-friendly prices.

Management Report 2023

20

Initiatives in the Food Domain

we started the Seven Café, creating a new market
of convenience store coffee. Seven Premium has
emerged as a premium food brand that transcends
private brands, driving growth for the Group.

EASE UP products

fusion of Ito-Yokado’s innovative ideas and SEVENELEVEN JAPAN’s product development prowess.

Strengthening Groupwide shared platform
and infrastructure toward the next stage,“Synergies 3.0”

Delivering better products to more people
The Seven & i Group positions the realization ofGroup synergies in the food domain, exemplified
by Seven Premium, as “Synergies 1.0,” and andthe ongoing development of excellent products,
services, and best practices shared among Group
companies as “Synergies 2.0.” As a practicalexample of “Synergies 2.0,” starting from January2023, SEVEN-ELEVEN JAPAN began selling theoriginal EASE UP frozen food products, developedby Ito-Yokado.
EASE UP was created to meet the growing
Synergies

Synergies

Synergies

Seven Premium

Sharing bestpractices for products
and services

Utilizing a sharedplatform andinfrastructure

1.0

2.0

3.0

demand for convenient and delicious individual
meals, embodying the concept of “easy yet
gourmet meals” that help save time. For its
introduction into 7-Eleven stores, a manufacturingsystem was established that leverages thecapabilities of SEVEN-ELEVEN JAPAN's daily
manufacturers to ensure greater customer
satisfaction. The knowledge and technology
gained from this collaboration have been applied
to address challenges specific to frozen food,such as freezing and heating, resulting in further
advancements in the quality of EASE UP. We are
currently tapping into the expertise of SEVENELEVEN JAPAN's manufacturing partners tofurther enrich our product lineup, and Ito-Yokado
has garnered strong customer support on the backof this initiative.
The Group is embracing the challenge of new
product development, building upon the success of
EASE UP, which embodies Group synergies in theNow, the Seven & i Group is moving toward“Synergies 3.0” utilizing a Groupwide sharedplatform and infrastructure at each company forthe food sector. An apt example of this endeavor
is Nagareyama Kitchen (Nagareyama City, Chiba
Prefecture), which started operation in March 2023
under Peace Deli (p. 38). Serving as a central foodproduction hub for the entire Group, it supplies
fresh fish, meat, and meal kits to approximately
200 stores, including Ito-Yokado and York outlets,
across the Tokyo metropolitan area. In 2024, weplan to launch Chiba Kitchen (Chiba City, Chiba
Prefecture). This expansion of synergies within
the Group's food domain, progressing from theproduct development focus of “1.0” (including
the development of Seven Premium), to thesales emphasis of “2.0,” and now extending
into manufacturing under “3.0,” reflects ourcommitment to fostering growth across all entities
within the Group.

Bringing our strengths in food to the global
marketThe Seven & i Group positions global convenience
store operations as a key driver of our growthstrategy based on food. To this end, we areleveraging the synergies grown from our domestic
operations and our expertise in building a value
chain in Japan to enhance the development
and sales of original products such as fresh
foods, proprietary beverages, and private-brandmerchandise, on a global scale. Building upon
the successful Team MD framework, which wasdeveloped through Seven Premium, and our
distinctive value chain, we are expanding our efforts
to North America. Additionally, by supportingarea licensees across various countries, reinforcing
synergies, and implementing other measures,
our goal is to establish ourselves as a world-classretail groupfocused on
food.

Peace Deli Nagareyama Kitchen (Chiba Prefecture)

Enhancing safety, peace of mind, and quality to support the food value chain
The Seven & i Group continues to reinforce efforts and structures aimed at enhancing safety, peaceof mind, and quality as the foundation for creating synergies in the food domain.
Regular sharing of quality-related policies
among Group companies

Centralized management of raw material
production history

The quality control officers of the 12 Group companies
handling food products regularly convene to discussguidelines concerning significant incidents, productrecalls, and sales continuity, ensuring accident
prevention and swift incident response.

To ensure accurate tracking of raw materials andproduction facilities used for daily products suchas rice-based merchandise and pre-cooked meals,
SEVEN-ELEVEN
Check records from raw materials
JAPAN maintains a
Raw materials management data
database of product
Data such as the country of origin,
information fromproduction facilities, and additives foreach raw material
approximately 180
Information
production facilities.
Check records from sales area
This allows us to
Logistics management data
manage production
Data such as raw materials for eachhistory from thearea, usage amount, and period of use
source of raw
Informationmaterials to store
Check records from merchandise
Recipe Mastershelves.
(Menu recipe management data)

Collaboration with JFSM
Established in 2016 with participation from domestic
and international food manufacturers, Japan Food
Safety Management Association (JFSM) serves as thegoverning body for Japan's food safety management
standards. As one of the founding members, we arededicated to enhancing the quality of food products
through the utilization of JFS standards.** Japanese-origin food safety management standards developed by
JFSM in alignment with international standards, including theCodex Hazard Analysis and Critical Control Point (HACCP) system

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Management Report 2023

Data on raw materials usedin merchandise

Acquisition of certification for food safety
management standards
All production facilities that manufacture Seven Premium
daily food items have obtained certification andconform to food safety management standards suchas ISO 22000, FSSC 22000, and JFS standards, which
are consistent with international standards, including
Codex HACCP.

Introduction of a cold chain
A variety of vegetables are used in SEVEN-ELEVEN
JAPAN's original fresh food products. To process andtransport freshly harvested vegetables from farms,
7-Eleven has introduced cold chain technologies(a low-temperature logistics network) to maintainfreshness. The harvested vegetables are under constanttemperature control during transportation and at
sorting centers and production facilities until theyreach the store shelf.

30°CStandard logistics

Ambient
temperature

0°C
Harvesting

Transportation

7-Eleven logistics
Processing
Sale

Management Report 2023

22