2020 annual results and analysis: 7&i, Aeon and Lawson in Japan

Date : 13 April 2021

Charles Chan

Senior Retail Analyst

Seven & i Holdings, Aeon and Lawson have posted their annual results for year ended February 28, 2021.

Summary and our view

2020 was a very difficult year for Japan’s convenience industry. All of the leading retailers faced lower sales and customer visits. This was despite average basket size being larger than ever before. Returning to a growth trajectory is a priority for all convenience chains. Lawson, for example, is repositioning its stores to target purchases for essential daily goods and focusing on delivering better localised stores.

Supermarkets overall continued to see buoyant demand and growth in sales. Group revenue at Aeon, for example, was positive unlike 7&i and Lawson (both falling back significantly), given its smaller convenience operations and stronger supermarket emphasis and healthy and beauty operations. Retailers continue to invest in technology to drive efficiencies, as well as focus on ways to expand contact points with their customers.

Seven & i Holdings: total group sales -7.9% and revenue -13.2%

  • Total group sales -7.9% to JPY11,044.8bn (US$100.9bn) YoY
  • Revenue down -13.2% to JPY5,766.7bn (US$52.7bn) YoY 
  • Operating income down -13.7% YoY
  • 7-Eleven Japan sales -2.8% to JPY4,870.6bn (US$44.6bn) YoY 
    • Existing store sales -2.4%
    • Number of customers -9.9%, but average spend per customer up 8.4% YoY
    • Ended the fiscal year with 21,167 stores, up 212 YoY
    • 7-Eleven continues to expand sales space for liquor (having expanded frozen in previous years). It targets a total of 12,000 stores to have completed store layout changes by next year (currently about half have been adjusted)
    • Aims to roll out Net Convenience Store online delivery service to 1,000 stores by February 2022
  • Revenue from 7&i’s main supermarket banner, Ito-Yokado, fell -7.8% to JPY1,080.9bn (US$9.9bn) YoY (but food sales was flat, food LFL up 7.4%). Business restructuring and consolidation to improve productivity continuing. Trading 132 stores, down 25 YoY
  • Total store sales for the year ended December 31 at 7-Eleven Inc (U.S and Canada) -13.5% to JPY3,407.1bn (US$31.2bn) YoY
    • Gasoline sales -27.2% YoY, but merchandise flat at 0.7% YoY
    • 9,884 stores in the U.S and Canada, up 202 YoY
    • Double-digit YoY growth for frozen foods and alcoholic beverages in February
    • Plans to integrate Speedway acquisition are underway

Aeon: revenue flat and profit -30.1% YoY

  • Group operating revenue flat, JPY8,603.9bn (US$78.6bn)
    • General Merchandise Store Business revenue flat, JPY3,069.5bn (US$28bn)
    • Supermarket Business revenue up 1.3% to JPY3,265.7bn (US$29.8bn) YoY
    • Health & Wellness Business revenue up 8.9% YoY
    • Shopping Center Development Business revenue -12.1% YoY
    • Services & Specialty Store Business revenue -13.7% YoY
    • International Business revenue -5.6% YoY
  • Group operating profit -30.1% to JPY150.6bn (US$1.4bn) YoY
    • General Merchandise Store Business profit -317.2%
    • Shopping Center Development Business profit -43.5% YoY
    • Supermarket Business profit up 135.7% to JPY50.7bn (US$460m) YoY
    • Health & Wellness Business profit up 16.6% YoY

Lawson: net sales of all convenience stores -6.3% YoY

  • Consolidated net sales of Group convenience stores -6.3% to JPY2,349.7bn (US$21.9bn) YoY
  • Operating revenue -8.8% to JPY666bn (US$6.1bn) YoY
  • Operating profit -35.1% to JPY40.9bn (US$370m) YoY
  • Lawson Japan (excluding ticket and gift-card) sales -7.6% to JPY2,165.8bn (US$19.8bn) YoY 
    • Existing-store-sales in Japan -7.3%
    • Number of customers -14.2%, but average spend per customer up 8% YoY
  • Seijo Ishii, Lawson’s minimart format helped meet increased supermarket demand with sales up 10.2% YoY

Lawson ended the fiscal year with 14,476 convenience stores in Japan, up 32 YoY. Overseas, it recorded 3,621 stores (3,344 in China), up 703 YoY. Lawson continues to expand into new cities in China. It now trades in Shanghai, Chongqing, Dalian, Beijing, Shenyang, Wuhan, Hefei, Changsha and Haikou. The retailer targets 10,000 stores in China by 2025.

On-demand delivery via Uber Eats and foodpanda is now available from 1,472 stores in 27 metropolitan and urban areas. In early February, delivery of over-the-counter (OTC) drugs (sold at three LAWSON stores in Tokyo) was made available on Uber Eats.

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