FamilyMart and Lawson post H1 profit gains as Seven & i's domestic convenience arm falls
FamilyMart and Lawson, two of Japan's three big convenience-store chains, both reported higher half-year profit this week even as sales slipped at one of them -- a split result that looks different again against Seven & i Holdings, whose own core domestic convenience business shrank over the same six months.
FamilyMart Co., Ltd. said on October 14 that its consolidated business profit -- an IFRS measure the company says is equivalent to operating profit under Japanese accounting rules -- rose 5.6% to ¥65.1bn in the six months to August, even as sales at its own Japanese stores fell. Lawson, Inc. reported a comparable gain a day later, with business profit up ¥4.6bn to ¥66.0bn over the same half. Both figures come from the companies' own half-year result statements.
FamilyMart's overall revenue rose 1.3% to ¥264.0bn and net income attributable to owners rose 1.5% to ¥44.5bn, the company said. But chain-wide sales at its Japanese convenience stores -- including franchised stores in Okinawa, southern Kyushu and on JR Kyushu's network -- fell 0.6% to ¥1,684.7bn, a reversal from 3.2% growth a year earlier. Its non-consolidated results moved the same way: operating revenue was almost flat, up 0.1%, while non-consolidated net income fell 5.1%. The one-page results summary FamilyMart published alongside the figures does not explain what offset the weaker store sales at the consolidated level.
Lawson's own figures show a similar split between sales and profit, but with a more detailed explanation attached. Chain-wide sales across its stores rose ¥39.2bn to ¥1,563.6bn -- roughly 2.6% -- and operating revenue rose ¥19.6bn to ¥641.5bn, while net income attributable to owners rose ¥2.2bn to ¥40.5bn. Unlike FamilyMart, Lawson set out what drove the gain in business profit: roughly ¥8.0bn more income from franchise and licensing charges, against roughly ¥5.5bn higher marketing spending and smaller increases in labour and IT costs, with Japanese and overseas group companies adding a further ¥3.0bn.
Seven & i Holdings, Japan's largest convenience-store operator by a wide margin, told a different story a week earlier -- floortok reported it on October 8. The group said operating profit at its Domestic Convenience Store Business segment, built around Seven-Eleven Japan, fell 9.8% to ¥109.9bn over the identical six months, even as the segment's own revenue rose 1.0% to ¥467.3bn; Seven-Eleven Japan attributed the squeeze to investment in store-kitchen equipment and next-generation store systems layered on general cost inflation. Seven & i's overseas convenience business, led by 7-Eleven, Inc. in North America, nearly doubled operating profit, up 87.7% to ¥150.4bn, and carried the group's consolidated operating profit up 11.5% even as consolidated revenue fell 2.8%.
Put side by side, the three chains' half-years pull in different directions inside the same channel. FamilyMart, smaller than Seven & i's domestic business, found profit growth even as its chain-wide sales -- the sector's standard top-line measure -- went backwards; Seven & i's domestic arm grew that same kind of top line and still lost profit, saved only by an overseas business now large enough to cover the gap. Whether that overseas cushion keeps growing fast enough to keep covering the gap, or whether FamilyMart's and Lawson's smaller-scale gains hold up once promotional spending normalises, is what the second half of the year will show.
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