Seven & i Stock

Thank you for joining us today. Allow me to introduce myself once again. I am Takagi. I assumed the position of CFO on April 16. As this is my first earnings briefing since taking office, I would like to briefly share my upcoming initiatives and commitment as CFO before moving on to the overview of our first quarter financial results. My role as CFO is clear to accelerate disciplined execution across the group and support faster, higher-quality decision-making that enhances corporate value and deliver sustainable long-term shareholder returns. The transformation of 7-Eleven is based on a simple premise. As customers' needs and the operating environment evolve faster than ever, we must transform our businesses with greater speed and agility while leveraging the full strength of our global organization. By sharing capabilities across markets and capturing the benefits of our global scale, we will strengthen execution and accelerate sustainable growth.

Against that backdrop, I will focus on 3 priorities. First, strengthening our management information platform. As our businesses continue to evolve timely, transparent and comparable information will underpin better management decisions. While recognizing the different characteristics and growth stages of each business, we will establish a common management framework and performance metrics across the group. By making the differences across our businesses more visible and measurable, we will be better positioned to allocate capital and resources to where they can create the greatest value. At the same time, enhancing both our financial and nonfinancial data infrastructure will support broader use of AI and advanced analytics across the organization.

Second, embedding ROIC management throughout the organization. ROIC will become more than a financial metric. It will become a management discipline. We will evaluate each business through the dual lenses of growth potential and capital efficiency, enabling us to optimize our business portfolio. We will continue investing decisively in areas where we see attractive long-term growth while rigorously assessing their performance and making timely adjustments where necessary.

My objective is to lead a disciplined end-to-end management process from capital allocation and execution to value creation while improving both the quality and speed of decision-making across the group. Importantly, we also intend to embed ROIC's thinking into everyday decision-making so that capital efficiency becomes part of how we operate, not simply how we measure performance. Third, strengthening the foundations for sustainable growth. To support long-term value creation, we will maintain disciplined capital allocation and financial discipline while maintaining the group's strong free cash flow generation and robust balance sheet. By maintaining financial flexibility, lowering our cost of capital, advancing our sustainability initiatives and strengthening our dialogue with investors and shareholders, we will build a business that is more resilient to changes in the operating environment and better positioned to deliver sustainable long-term growth.

Ultimately, these 3 priorities all serve one objective, enhancing corporate value and delivering sustainable long-term shareholder returns. Together with speed and the management team, I'm fully committed to driving the transformation of 7-Eleven with speed, discipline and conviction. Now I would like to proceed to the main topic, our financial results for the first quarter. Here is today's agenda.

First, I will explain our consolidated results for the first quarter. Following that, I will go over the revisions to our first half and full year consolidated financial forecast. I will begin with our first quarter results. Please look at Slide 5. As explained during our full year financial results announcement for fiscal year 2025, in order to facilitate an accurate understanding of our actual performance trends for the current period, our year-on-year comparisons for the fiscal year 2026 results are presented on a like-for-like basis, which excludes the impact of the business structural reforms implemented last year.

Please note that unadjusted financial accounting basis information is disclosed in the appendix for your reference. Now let me share the consolidated results highlights for the first quarter.

Revenues from operations, JPY 2,378.8 billion, 102.4% year-on-year. Operating income, JPY 105 billion, 222.4% year-on-year. Net income attributable to owners of parent, JPY 60.6 billion or 195.3% year-on-year. On a consolidated basis, we achieved increases in both revenues and income across all levels and metrics, successfully exceeding our plan.

Despite a challenging business environment, our initiatives steadily progressed and a significant increase in income from our overseas convenience store business primarily contributed to these results. As for EPS, it rose significantly to JPY 26.21, reaching 218.4% of the previous year's level. This was driven by the substantial growth in net income in addition to the impact of our share buybacks totaling approximately JPY 600 billion, which we completed by February 2026. Consequently, we have significantly exceeded our plan. This is a record high for any first quarter.

Please turn to Slide 6. The chart on the left illustrates the year-on-year changes in operating income by segment on a like-for-like basis. While the Domestic Convenience Store segment saw a decrease in operating income of JPY 2.2 billion, the Overseas Convenience Store segment achieved a substantial income increase of JPY 56.9 billion, primarily driven by improved fuel margins at SEI due to fuel market volatility.

I will go into further details on the performance of SEJ and SEI later in this presentation. As a result, consolidated operating income increased by JPY 57.8 billion on a like-for-like basis. The chart on the right shows our operating income by segment compared to the plan. The Overseas Convenience Store segment significantly outperformed the plan due to an increase in fuel gross profit. The other segment also exceeded the plan, resulting in a total operating income that was JPY 44 billion ahead of plan. Please look at Slide 7. From here, I will explain the performance of our major operating companies, starting with SEJ. The chart on the left breaks down the year-on-year changes in operating income by factor. Under the leadership of our new President, Mr. Akutsu, SEJ has been driving various transformations since May 2025. The effects of these initiatives are beginning to emerge, contributing to profit growth through sales expansion and merchandise gross profit margin improvements.

On the other hand, SG&A expenses increased by JPY 8.8 billion. This was primarily due to expenses related to next-generation store systems, which are indispensable for our future sustainable business growth as well as an increase in strategic promotional costs aimed at strengthening customer engagement.

However, through rigorous cost control, these expenses were kept below the planned level. And as a result, operating income decreased by JPY 2 billion. As shown in the graph on the right, same-store sales have been on a steady growth trajectory. This trend resulted from the continuous implementation of measures based on our co-creation marketing strategy, which has gradually resonated with customers. Furthermore, franchise store income in the first quarter exceeded the level of the previous year. Please look at Slide 8. As mentioned earlier, I will now explain our first quarter initiatives for co-creation marketing, which is the driving force behind our same-store sales growth. While co-creation marketing is an initiative we have been advancing, we have enhanced and evolved its position by identifying categories to reinforce based on combinations of target customer segments and their respective user scenarios.

In the first quarter, we designated freshly prepared counter merchandise developed under the freshly prepared meals brand and IP content at key categories. By aligning these with high-impact promotional campaigns, sales of just made merchandise grew by 14.7% and toy sales rose significantly by 26.5%, driving overall sales growth. We are seeing a clear positive response with our category strategy, which clearly defines user scenarios and target customers successfully driving top line growth.

Consequently, we will accelerate the rollout of the strategy to other categories. Please look at Slide 9. This slide shows SEJ's key initiatives for the current fiscal year and their progress in the first quarter. Our initiatives for fresh food differentiation and store network are both progressing generally in line with our plan. Regarding 7NOW, leveraging its strong affinity with -- just Made counter merchandise, we launched mobile ordering in April. Combined with our existing delivery services, this expands the options for customers using 7-Eleven, and we look forward to further expanding its utilization going forward. Please look at Slide 10.

To conclude my explanation of SEJ, I would like to introduce our recently announced initiatives aimed at medium- to long-term growth. The first initiative is part of our efforts to expand our store network. We have formulated a new contract designed to facilitate multi-store management and new franchisee recruitment for further store openings and to achieve sustainable business growth. We plan to launch this new contract in the fall of 2027, and we expect it to be a major driver in achieving our target of a net increase of approximately 1,000 stores by fiscal year 2030.

The second initiative relates to new business. On June 11, 7-Eleven, dentsu and CyberAgent jointly announced the establishment of a joint venture, 7-Eleven Ad Connect, to drive the growth and development of our Retail Media business. This new company is scheduled to begin operations on September 1, 2026. We are confident that this partnership will maximize the potential of SEJ, which boasts Japan's largest customer touch point and store network by leveraging the respective strengths of our partner companies. We will steadily advance our efforts toward maximizing advertising effectiveness through enhanced AI utilization and enhancing customer shopping experiences with newly added value.

Next, I will explain SEI's performance. Please look at Slide 11. The chart on the left breaks down the factors behind the change in operating income. As you can see in the first quarter, a significant increase in fuel gross profit was a major contributor to the JPY 315 million increase in operating income. The rise in fuel gross profit was in line with industry trends and was primarily driven by volatility in fuel market conditions during the first quarter.

Merchandise and other categories posted a $9 million increase in operating income, reflecting factors such as a 1.4% increase in same-store sales. OSG&A expenses increased by $44 million due to factors such as higher rent resulting from inflation and increased credit card fees. However, cost control was thoroughly implemented and expenses came in, in line with plan. As a result, operating income increased by $315 million to $560 million. As shown in the right, same-store sales are steadily improving.

In the first quarter, the same-store sales rose by 1.4%. Amid the changing consumer environment in North America, the effects of our initiatives are gradually becoming evident, supported by continued promotional initiatives and merchandise proposals tailored to customer preferences. Going forward, we will further strengthen initiatives to enhance customer loyalty.

Please look at Slide 12. This slide shows SEI's key initiatives for this fiscal year and progress in the first quarter. In the first quarter, these initiatives progressed steadily. In particular, as part of our efforts to optimize the store network, we are proceeding with the closure of unprofitable stores as one element of transforming our earnings structures for the future. We plan to close 200 stores this fiscal year, and we executed 45 closures in the first quarter.

At the same time, we are also converting stores to fuel wholesale formats. On the other hand, we will also proactively pursue growth-oriented initiatives to drive sales and profit growth, including steadily opening new stores and implementing store remodels starting in the second half.

Please look at Slide 13. I would like to introduce our franchising, which we position as an important initiative within the store network optimization initiatives I mentioned earlier. As shown on the left, regarding the 31 stores converted in 2025 compared with pre-conversion levels, merchandise sales achieved low to middle single-digit growth and the merchandise gross margin showed a significant improvement.

By strengthening our operations management structure and promoting franchising, we will deliver improved profitability. In fiscal 2026, we plan to convert 390 stores. And by 2030, we plan to convert 2,600 stores, raising the franchise ratio to approximately 80%. Next, I will explain the revisions to our first half and full year consolidated financial forecast.

Please look at Slide 15. Based on our first quarter performance, we have upwardly revised our first half financial forecast, primarily reflecting the increase in fuel gross profit in our overseas convenience store operations and revisions to our foreign exchange rate assumptions. Our revised forecast for the first half of FY 2026 are as follows: revenues from operations, JPY 5,510 billion, 117.3% year-on-year, [ upward revision ] of JPY 823 billion; operating income, JPY 234 billion, 137.6% year-on-year, upward revision of JPY 44 billion; net income, JPY 118 billion, 111.7% year-on-year, upward revision of JPY 30 billion. Please look at Slide 16. Next, I will explain the revisions to our full year consolidated financial forecast for FY '26. These revised forecasts incorporate the first half forecast I just explained as well as our outlook for fuel and foreign exchange rate assumptions for the second half of the year.

As a result, our revised full year forecast for FY '26 are as follows: revenues from operations, JPY 10,430 billion, 109.7% year-on-year, upward revision of JPY 982 billion; operating income, JPY 425 billion, 110.5% year-on-year, upward revision of JPY 20 billion; net income, JPY 278 billion, 109.1% year-on-year, upward revision of JPY 8 billion. I will explain the details of these revisions on the following pages.

Please look at Slide 17. This slide shows the revised full year forecast by segment. The upward revisions in revenues from operations, operating income and EBITDA are all primarily driven by the overseas convenience store operations. I will explain the details of the overseas convenience store operations revisions on the next page. Please look at Slide 18. This slide shows our revised forecast by operating segment broken down into the first half and the second half. While we upwardly revised our first half operating income by JPY 44 billion, the full year forecast has been upwardly revised by JPY 20 billion, which means the second half forecast has been downwardly revised by JPY 24 billion.

As explained earlier, the main driver behind the upward revision in overseas convenience store operations for the first half was the increase in fuel margins due to fuel market volatility. For the second half, however, we have taken a conservative view on fuel, assuming that uncertainty in the economic environment will persist. Furthermore, we have factored in an increase in SG&A expense due to our plans to actively implement promotional activities to improve customer loyalty from the second half onward.

Consequently, we have downwardly revised the second half operating income forecast for the overseas convenience store operations by JPY 19.4 billion. Please look at Slide 19. Earlier, I explained that the downward revision for the second half of the overseas CBS operations was mainly due to fuel and OSG&A expense. Here, I will again explain SEI's merchandise-related plan. On the left is the planned same-store growth for merchandise and on the right is the planned merchandise gross margin for the first half and second half. For same-store sales, while we expect the business environment to remain challenging, we aim for improvement by accelerating assortment, enhancement initiatives and implementing proactive initiatives to increase customer loyalty.

For merchandise gross margin, we expect to achieve our first half plan. And for the second half as well, we are seeing encouraging signs that performance will exceed plan. We will further strengthen merchandise-related initiatives and aim to grow sales and gross profit. Please look at Slide 20.

Lastly, I would like to briefly summarize today's presentation. As we advance the transformation of 7-Eleven, fiscal 2026, will be a year in which we accelerate our growth momentum. In the first quarter, I would like to report that each initiative toward accelerating momentum has been progressing steadily. At SEJ, the effects of our initiatives are steadily emerging. We believe President Akutsu's strong commitment to transformation is being shared with franchisees and employees, taking shape as co-creation marketing initiatives and beginning to resonate with customers. We will work to further enhance momentum by strengthening these initiatives even more. At SEI, we will accelerate the North Star plan, which aims to improve the customer shopping experience. In the first quarter, as part of efforts to improve profitability, we steadily advanced initiatives to optimize the store network such as closing unprofitable stores and converting stores to fuel wholesale formats, along with efforts to transform the business into one that is robust, consistent and highly competitive through organizational simplification.

From the second half onward, we will proactively pursue initiatives that lead to greater value, including store remodels and assortment enhancement measures. Finally, regarding shareholder returns, there is no change to our policy of progressive dividends nor to our policy to repurchase a total of JPY 2 trillion of shares by fiscal 2030, including the JPY 600 billion executed in fiscal 2025. In addition, as stated in today's press release, we would like to inform you that we have resolved to cancel all treasury shares acquired in fiscal 2025 on July 15, 2026. That concludes my presentation. Thank you for your attention.

[Statements in English on this transcript were spoken by an interpreter present on the live call]

Good morning, and good evening, everyone, and thank you for joining us today. Since I recently shared the overview of where we stand at our recent full year results reading, I think today, I'd like to focus on how we're going to accelerate in the next phase of our transformation.

As I mentioned 2 weeks ago, in 2026, we will build on the momentum we regained last year and accelerate the disciplined execution of our transformation across the globe. What we need to do is clear, we are operating in an environment of rapid structural change. In order for us to remain at the forefront of change, we will accelerate our transformation, doubling down on our strengths and sharpening what differentiates us. In doing so, we will be our customers' first choice for convenience. And today, we'd like to brief you on the specific actions that we plan to take.

So first and foremost, we will elevate our customers' experience by offering superior quality and a compelling value. Quality and value will be at the center of the initiatives we will be taking. We will raise the bar on both across every product, every store and every touch point. That means at 7-Eleven, our products will delight our customers and exceed their expectations. And we will provide trusted and seamless service anywhere, and we will enable and empower franchisees to deliver quality and value to our customers.

As we look towards 2030, we will invest to deliver on these objectives and rigorously review how we deliver. I'll be working with my leadership team to allocate the necessary resources and drive progress. In Japan, SEJ will invest to accelerate the rollout of new equipment and continued innovation. We stay ahead of our customers' needs, so our customers will keep coming back to our stores. At the same time, we're setting into action structural reforms to enhance profitability. [indiscernible] will share the details with you later on. And in North America, SEI will strengthen the fundamentals and scale for our future. Our growth investments will span from store remodels to new stores to private brand merchandise development and further expansion of 7NOW.

The initiatives, which Stan and Doug will explain today are centered around how we elevate customer experience. Also, we're bringing discipline to our network strategy, including a focus on modernization and profitability. This includes closing unprofitable stores and converting to wholesale where appropriate so that we can focus on serving our customers and franchise owners better. Most importantly, this direction is already taking hold across our global group across regions and companies, teams are stepping up, taking ownership and driving change. This is 1 of the earliest and most meaningful proof points of our transformation, and it gives us strong confidence in our ability to drive growth globally.

Through these initiatives, even in an increasingly uncertain and challenging market environment, we will serve our customers better and be their first choice for convenience. In doing so, we will deliver sustainable top line growth and margin expansion and ultimately enhance both corporate and shareholder value. We previously shared our value-creation algorithm. This has not changed. Over the last 2 years, we have increased earnings per share by 40%. By driving our transformation together with growing the business and disciplined capital execution or capital allocation, we will double earnings per share and nearly triple our consolidated ROIC over the next 5 years. We remain firmly committed to our shareholder return policy, including our JPY 2 trillion share repurchase program through fiscal 2030 as well as a progressive dividend policy. These commitments reflect our confidence in the strength of our cash flow generation and our focus on enhancing total shareholder returns over the long term. You will today hear from the leaders of SEI, SEJ and 7IN along with an update on our sustainability initiatives.

Across each of these areas, our message is consistent. Our strategic direction is clear. Our capital allocation priorities are well defined, and we are executing with discipline, while increasing the pace of delivery.

Now before I hand over, I'd like to touch on a recent change in the leadership team. I'm very pleased to welcome Takagi-san as our new CFO, taking over from Mariyama-san, who contributed immensely over his years in 7i. Takagi-san will bring his strong global experience to our effort to drive the next phase of our growth. He will be joining us later to share his perspectives.

So now with that, I'd like to hand it over to Stan Reynolds, who will walk you through our initiatives in North America. Thank you.

Thank you very much, Mr. Dacus. With this, we would like to end the opening session. We would like to now start the second session, 7-Eleven, Inc. The presenters are from 7-Eleven, Inc. President and Co-CEO, Stan Reynolds; COO and Co-CEO, Doug Rosencrans. After the presentation, the 2 will respond to your questions. Over to you.

Good morning, and thank you for joining us. I'm Stan Reynolds, President and Co-CEO of SEI.

7-Eleven has lent this industry for decades. Sustaining that leadership requires constant reinvention, and we have entered a decisive inflection point for the business. The portfolio is being simplified, our strategic focus being sharpened and accountability across the organization is clearer than it has ever been. The actions we are taking are deliberate and forward-looking, designed to strengthen the business and position 7-Eleven for sustainable growth and improved returns.

Today, I will walk through where we are, how we are reshaping the operating model and how this translates into tangible financial outcomes for our shareholders.

Next page. As a quick recap, at our last Investor Day, we outlined the key challenges facing our business. from shifting consumer behavior and cost inflation to intensifying competition across all our markets. Those challenges remain, and in many cases, they have become more pronounced. What has changed is how we are organized to respond. The key point on this slide is that this is not a list of aspirations. These are competitive priority initiatives with accountability and progress already underway.

Next slide. Before we get into these specific initiatives, I want to start with our North Star and the strategic logic behind why we are moving with urgency. The market is changing and is changing fast. Customers today expect great value, quality fresh food and digital convenience as a baseline. These are no longer points of differentiation. They are minimum expectations. At the same time, our legacy store formats need to evolve to support a stronger product offering and competition across the convenience landscape is accelerating to retain and extend our leadership, SEI must move decisively. Our North Star organizes our response around 3 pillars: customer, store and enterprise.

On the customer side, a store network that is available when and where customers need us, clean and welcoming stores clear leadership in food and beverage and experience gives customers a reason to come back.

On the store side, a best-in-class experience, simplified operations. and digital and delivery excellence. These are the operational foundations that translate into consistent unit economics.

On the enterprise side, strong talent, cost discipline and continued innovation. This is how we build a business that grows sustainably over time.

Every initiative you will hear about today connects back to this North Star and to a clear path towards long-term value creation through 2030.

Next slide. Now let's look at how the North Star translates into action through 5 core priorities. We have organized our road map into 2 tracks, strengthen the fundamentals and scale of the future. The foundation is a modern store network through new models, new standard stores and franchise. We are building the physical platform that everything else depends on. Without modernized stores, our product and experience strategies cannot reach their full potential. On top of that foundation, 4 priorities: first, a leading product assortment to create real differentiation in fresh food and private brands. Second, the best customer experience to increase loyalty and frequency across physical and digital channels. Third, fuel vertical integration to capture more value within our supply chain and expand margins. And fourth, cost leadership to fund growth and improve returns over time. These 5 priorities give us and give you a clear line of sight into how we create value through 2030.

Next slide. Let's start with the foundation our modern store network and specifically, our remodel program. By 2030, we plan to complete more than 7,000 store remodels. The purpose is straightforward. I will invite the customer experience by improving the stores we already have. Our approach is targeted and disciplined. Every store will receive a modernized exterior signaling to the customer that we have invested in the property before they walk in the door. Inside, we are upgrading equipment, expanding product offerings and simplifying store operations to make every business easier. Beyond that baseline, we take a store-by-store needs-based approach, making additional investments based on the local customer base and expected returns on capital. We are piloting first validating the impact and then scaling what works. Modernized stores are the foundation, they unlock everything that follows.

Next slide. Now let's turn to the second pillar of our modern store network, new standard stores. between 2025 and 2030, we will open 1,300 new stores with 122 already opened in 2025. These are not incremental improvements to the old format. Our new standard was developed from the ground up is designed around what today's convenient customer expects. The results speak for themselves. New standard stores outperformed the existing portfolio by 30% in traffic and 44% in merchandise sales and maturity. At 5 years and beyond, our new store portfolio generates ROIC north of 20%. What is important for investors to understand is that this is no longer a pilot. We have proven the model, validated the economics and built a repeatable template that we could scale with confidence over the next decade. Each new store we open strengthens the network expands our reach and compound the returns we deliver to shareholders.

With that, I'll turn it over to Doug Rosencrans.

Thank you, Stan. Good morning and good evening. This is Doug Rosecrans, COO and Co-CEO of SEI.

Please let me take you through the third pillar of our modern store network strategy, which is franchising our core operating model. Between 2025 and 2030, we plan to convert 2,600 corporate stores to our franchise model with approximately 390 to be converted in 2026. The rationale is straightforward. Franchising delivers 3 things that matter to investors. First, stronger unit economics, franchisees absorb labor and cost variability while SEI maintained stable and predictable margins. Second, stronger local execution Franchisees bring deep knowledge of their local markets, delivering more relevant experiences and value for local customers while also improving store level performance. And third, a leaner operating model. A unified franchise system reduces capital intensity and lower operating costs at scale.

Looking ahead, we will extend franchising across all markets, apply 1 uniform operating model and introduced franchising into our restaurant business as well. The bottom line, a strong franchise system allows SEI to grow faster with less capital and deliver stronger returns on every dollar deployed.

Now let's turn to our second core priority, building a leading product assortment, starting with fresh food and restaurants. Our ambition is clear. By 2030, we will deliver an incremental $1 billion in fresh food sales and add 1,100 new restaurants across the network. The goal is to make 7-Eleven a primary food destination, not just a place to pick up a drink or a snack, but a place customers choose for quality and value. This will be enabled by our redesigned and enhanced value chain to support fresh food and scale, reducing cost per unit and improving freshness across all 13,000 stores.

In 2026, we are accelerating our fresh food platform with expanded hot food offerings. And then turning to restaurants. Our confidence in this business model is grounded in proven economics. Stores with restaurants already generated 28% higher sales, 32% more traffic and higher margins than stores without. This is not a forecast. This reflects our actual performance across our existing restaurant base. The combination of fresh food and restaurants enabled by our transformed value chain will drive differentiation, increase customer frequency and expand margins, all builds on the modern store network we just discussed.

Next was in product assortment, private brands. This is 1 of the clearest margin expansion opportunities in our portfolio. Our private brand products carry approximately 18 percentage points higher margin than comparable national brands. with better or equivalent quality. That is a meaningful economic advantage and scale. Today, our private brand business is $1.3 billion. Our goal is to double that to $2.6 billion by 2030. While we are well ahead of our peer group and private brands penetration, we are relatively early in this journey compared to other retail sectors, which means the upside is significant. We are expanding into high-growth categories where customers are already showing strong demand, including hydration, protein and Hispanic products.

The strategy rests on 3 things: first, continuous improvement in our existing product lines; second, accelerating innovation and new product launches. And third, making our private brands the preferred choice for customers in every category where we compete. Private brands is differentiation that customers cannot find anywhere else that builds loyalty, it drives repeat visits and delivers margin that funds reinvestment into the business.

Let's now turn to how we deliver literally the best customer experience and specifically, our digital delivery platform, 7NOW. 7NOW has been 1 of the strongest growth stories between 2022 and 2024, the business grew at a compound annual growth rate of nearly 25%. In 2025, same-store sales growth exceeded 20%. This is a high-growth business that is contributing meaningfully to the network. The reason it works is simple. We are leveraging our physical store network as a fulfillment engine with more than 7,500 stores already enabled. We offer industry-leading delivery times of under 28 minutes and an average basket that is 80% larger than in-store transactions.

Looking ahead, we are targeting $1.8 billion in 7NOW sales by 2030. We will get there by expanding to 8,500 enabled stores, scaling our Gold Pass subscription program and increasing the share of proprietary products on the platform. No other convenience retailer has a digital delivery business at this scale. 7NOW extends our reach, deepens customer engagement and generates incremental revenue on top of our existing store economics.

Continuing on customer experience. Let's talk about how we are simplifying store operations to ensure operational excellence. The logic is straightforward. When stores are easier to operate, associates spend more time with customers, stores are cleaner, shelves are better stocked, and check out is faster. All of this drives loyalty, frequency and sales. We are currently piloting a comprehensive set of simplification initiatives in our model market. And the early results are very encouraging, showing measurable improvement in sales, associate productivity and customer satisfaction. The approach is disciplined. We test in the model market, validate the impact and then carry the learnings across the entire network. This is not a onetime effort. It is how we will run stores going forward. and the impact compounds as we apply it as part of the remodels and new builds we just discussed.

And now I'll hand it back to Stan Reynolds.

So now let me turn to fuel vertical integration, which is a meaningful initiative intended to strengthen cost discipline and supply reliability over time. Our focus is on selectively expanding our participation in the areas where greater control can improve economics and resilience, while remaining consistent with a capital-light offering model. The approach is guided by 3 considerations: improving supply security, capturing incremental metal margin across the value chain and aligning more closely with established industry practices. Execution is focused on 3 areas, including direct fuel sourcing, optimization of logistics through pipelines and terminals and expanded blending capabilities. These actions represent an estimated EBITDA opportunity of approximately $400 million by 2030 with approximately $75 million expected in 2026 based on identified initiatives and phased implementation. The organizational capabilities and infrastructure required are being put in place with initial investments underway and early actions incorporated into 2026 plans. The model is well established across the industry, and our focus is on disciplined participation where it offers clear economic benefits.

Next slide. Finally, cost leadership. This is the discipline that funds reinvestment and makes our growth sustainable. The principle is simple, we will grow gross profit faster than we grow operating costs consistently over the full planning period. We are already demonstrating this discipline. In fiscal 2025, OSG&A declined, our gross profit held steady even in a difficult cost environment. These are not onetime an improvements on from how we source, how we operate stores and how we allocate resources. They are built into the way we run the business going forward.

The point I want to leave you with on this slide, cost discipline gives us the capacity to keep investing in the areas that drive growth while making sure more of that growth flows through to the bottom line.

And with that, I'll turn it over to Doug to close.

Thanks again, Stan. So to close out, let me bring it all together. This slide summarizes the key targets we will hold ourselves accountable to through 2030. You've heard the detail behind each of these, so I'll keep this brief. The foundation of modern store network, 1,300 new stores, 7,000 or more remodels, a fundamentally upgrading physical platform. On top of that, a leading product assortment, $1 billion in incremental fresh food sales, 1,100 new restaurants and a private brand business that doubles to $2.6 billion. The best customer experience with 7 now scaling to $1.8 billion in delivery sales and operational improvements rolling out across the entire network and the 2 priorities that fund and sustain at all, approximately $400 million in EBITDA from fuel vertical integration and cost discipline that keeps OSG&A growth well below gross profit growth. These are not aspirations. These are committed targets with clear ownership, defined time lines and progress already underway. By 2030, 7-Eleven will be a structurally different business, better aligned with what customers expect and delivering meaningfully stronger returns for shareholders.

Thank you for your time today.

Thank you very much. We will now like to start the Q&A session. The answers will be provided by 7-Eleven Inc.; Mr. Stan Reynolds and Mr. Doug Rosencrans. [Operator Instructions] Then we would like to take the first question. Mizuho Securities, Mr. Takahashi.

This is Takahashi of Mizuho Securities. First of all, thank you for opening this IR Day event. I have 1 question. I have a question regarding the supply chain of the merchandise in the United States, if I visit your stores as you have just explained, I see clean and new stores. And I think the products are -- have also greatly improved. Today, you have showed us a very ambitious target like you are going to double your private brand or you are going to get -- add another JPY 1 billion for fresh food as well. This is very -- these are very ambitious these circles, manufacturers or vendors, how are you going to evolve the relationship with manufacturers and vendors that you partner with? That is what I would like to know. And in addition, 7-Eleven has a global network I think you may expand globally from the United States, but the global procurement network for 7-Eleven, Inc. in the United States. So what kind of opportunity will global procurement provide to U.S. Those are my questions.

Takahashi-san, thank you very much for your question. A big part of our transformation is optimizing our full value chain. And really, it comes down to providing the best products and the quality products and the best value that we can to our customers. So we're looking for opportunities throughout the value chain to improve quality and take cost out. And the solution will be different for us by region areas where we have very concentrated stores. We'll have a potentially a different value chain solution than an area where we have more of the first stores properly, what's going to stay constant is the commitment to quality products, innovation with the products and delivering value. But how we do that market by market may change somewhat, and we're going to have to optimize the value chain to take cost out, improve our cost competitiveness, which we can reinvest into adding quality for our products. And as part of that, you can also mention about the global procurement. I think that is certainly an opportunity, which we're going to pursue with Seven & i. We think there are opportunities there to take costs out, learn from our partners across the globe from a product innovation perspective, product development perspective, we will be collaborating both on the quality product development side as well as the -- obviously, the sourcing cost side.

Next, we will take a question from Shigeoka-san from Daiwa Securities.

This is Shigeoka from Daiwa Securities. I'd like to ask around CapEx as well as how that -- what do you expect for that CapEx to contribute to your performance. So I think there's JPY 337 billion amount that is to be invested globally. But how much of that would be for 7-Eleven Inc. For example, it could be for it could be about supply chain revamping. So if you can, what is going to be the breakdown of this capital investment that you're going to be doing? I do believe there's going to be a lot of store renovation. And I think there's probably a lot of investment that is going to be required, including exterior as well as interior. It is going to be a comprehensive investment, but then I'm sure there's a lot of hardware equipment that needs to be invested for. So what is your expected return through these investments? And that's my question.

Thank you for your question. And I apologize if I didn't get it all, somebody -- we're getting some background noise, but I'll answer as fast as I can. Certainly, the reinvestment plan that we have scheduled for the stores will require incremental CapEx. I think the point of our CapEx plan is it's really going to be largely focused on growth initiatives, both reinvestment in the stores through remodels and also adding we talked about 1,300 new stores, 1,100 new restaurants and once again, the reinvestment plan. The reinvestment in the stores will be both investment in physical remodels, exterior and interior, store simplification investments within the store and then selected equipment in store, food production equipment boot cases, beverage equipment, et cetera. So the expectation is, absolutely, this drives a strong return internally, we measure everything by a minimum criteria of 12% ROIC. If you look at our new stores, which we -- I think I talked about in the presentation, the new stores that are 5-plus years old, unless they have matured, they're yielding over 20%. But at the very minimum, we're looking for 12% on anything we do. And I think the point of the increased CapEx is that the increment will be return oriented, whether it's new stores, remodels or restaurant ads. So once again, I think we're going to refine that CapEx model as we make it through the first 200 stores we are testing with this remodel. So I think the scale of the investment per store, the pace of the spend and the exact return expectation will be above 12%, but the exact expectations will be refined as we make it through those first 200 stores. Hopefully, I answered your -- all of your questions here.

So I think there's like JPY 300 billion capital expenditure. Do you know the breakdown of that? Yes, all of my questions.

Yes. I think Seven & i can respond to the overall breakdown by group within the group. But we will be expanding CapEx. And as I said, we'll be able to produce a strong yield on any incremental CapEx.

So what about the breakdown within SEI? I was looking at your 2026 plan for capital expenditure. And so what would be like -- so you're going through new store development, renovation, if you'd be able to give us a rough breakdown of the capital expenditure you'd be able to spend for each of the items out of the total.

So once again, the majority of the spend more than 50% is new stores, remodels and growth investments. Minority is kind of basic keep the lights on maintenance systems expenses that we routinely do. But the predominance of the spend is around growth initiatives return oriented. On the new stores, we've got a great proof points on that. We've got over 100 of these new stores out there producing great results. Our 5-year old sources, as I said, are over 20%. The remodels, we're going to validate that, but we're not going to spend money unless we get a great return. So that's the bulk of the money. And I think from there, that will we'll refine the allocation as we get through the pilot sourcing.

Next, from JPMorgan Securities, Mr. Murata.

This is Murata of JPMorgan. Can you hear me?

Yes, we do.

The impact on the increase in fuel price on SEI is what I would like to ask. In the small meeting the other day, the IR meeting the other day. I think you explained some crude oil prices going up and more than that CPC is going up. So gross margin is in a very good situation. That's why you explained. However, the customers are struggling with inflation. Therefore, you would like to return some of your margin to customers, and that will be wisely used to sales and promotion, I think that is what you mentioned. Can you elaborate on those plans? How are you going to wisely use the excessive on margins? And even if you do use them for sales and promotion, the SEI's performance, do you think that you have a leeway to use those additional margins for sales and promotion?

Murata-san, this is Doug Rosencrans. Thank you very, very much for your question. The short answer is yes. But let me give you a little bit more context to that. So 3 key -- actually, 4 key areas. The first is within fresh food and restaurants, providing additional food fresh food bundles and restaurant bundles for our customers that are also very profitable for franchisees.

Second area is with private brands. And some of those bundles also include private brands, but promotions using our private brands and highlighting those distinctly and within their own right for customers, that's the second area.

The third, you may be aware or recall our fuel loyalty program and leveraging not only our existing customer base and highlighting gasoline-related value for them there, but also bring that offer to the forefront to attract new customers who are seeking value. at the pump.

The fourth area is by highlighting the value through Gold Pass and the consistent opportunity that comes there with a very small monthly investment by the customer that covers proprietary beverage, delivery fees, sent off gasoline, cash back through 7NOW delivery, it's an industry-leading subscription offer. No 1 else is doing that. All of those components are going to be supported by incremental spend across multiple marketing channels to highlight this value, incremental value to our customers.

Just to confirm on your plan, the CPGs increase is not included in your plan, I guess. But this sales and marketing activities will be conducted even after conducting these sales and marketing activities, you still have some leeway in your financial health. Am I right to understand?

Murata-san, I think there's a tremendous amount of volatility as you're clearly well aware in the marketplace. But what we're keenly focused on is that volatility and the increase in retail prices on the street is putting pressure on consumers. And so we're doubling down on our value messages and our value offers for the customer. That is critical to us to be there for them during this time of compression and volatility. And that is where we're clearly focused.

Next, Yamaoka-san from Nomura Securities, please.

This is Yamaoka from Nomura Securities. I'm just supposed to ask 1 question. So I think it was 6 months ago when I was looking at your plan, compared to that I think, for example, revenue plan for PBs, private brand or plans for 7NOW, I think, has been heightened compared to the 1 that I saw before. Now from an outsider, when I would be looking at your sales trend, it's not exactly easy to grasp how better the situation has become. But on the other hand, your target for 2030 has been increased. Does that mean you have more confidence as you look into the future? Maybe it's something that you're finding more recently. So I wanted to know the reason why you're now -- you have now a higher target for 2030.

Thank you very much for your question. I think the confidence for us really comes from the improvement we've seen in the business, first off, throughout the course of 2025 and into the first part of I think, first, from a traffic perspective, we started off slowly in 2025. From a traffic perspective, narrowed the traffic loss very significantly going into the third quarter. We went from 6% down to traffic first quarter of 25% to 1.8% down in third quarter. At a little bit of the fourth quarter with the government shutdown of the restriction on government funding and staff in events but we responded very nicely since then. Comp store sales up in December throughout the first quarter and year-to-date or monthly through April. So we're seeing some traction in both getting customers back in the store. We've seen sustained strong basket performance kind of throughout that time period. A lot of that's been aided by private brands. Private brands were up over 5% last year. So we're seeing traction in the private brand business. We're really doubling down in terms of looking at new categories to enter within private brands, strengthening our existing private brand offerings. We -- while we are more penetrated than -- much more penetrated than most C-stores and private brands in the U.S. We have huge potential, and it's nowhere near the penetration we see with SEJ. And so there's a lot we can learn. There's a lot more we can do in this area. The margins are dramatically higher, as you know. So it's a big growth opportunity for us, and we're really leaning in on it. building out the team, and we're very focused on really transforming the private brand business. 7NOW is a fantastic business for us, almost $1 billion in revenue. We talked about earlier, 22 to 24, we grew to 25% clip. We grew over 20% last year. We have aggressive plans to continue to grow the 7NOW delivery business. We're also leaning into Gold Pass, which is our new subscription program. So we have other means to grow the delivery business as well. So I think these are both areas of investments, areas where we have proof points that we're seeing success. And we see a path towards really accelerating. So that's where we're getting the confidence. And obviously, those 2 areas you mentioned, along with the 1 you didn't food are kind of key elements of how we're going to grow this merchandise business and really part of the overall transformation of our customer offering.

So this will be the last question for 7-Eleven Inc. UBS securities, Kazahaya-san.

This is Kazahaya of UBS Securities. Do you hear me?

Yes, we do.

I would like to confirm about the store network. You are going to open new stores, remodeling and also closed some stores as well. So in 2030, which is the last year of in North America, how many stores will have in the United States? What are your thoughts? And also within the next 5 years, M&A strategies, acquisition of source. Do you have any thoughts on that as well or any plans?

Yes. Kazahaya-san, thank you for your question. First off with respect to the store count. Our overall what we call controlled real estate store count will increase by 2030. So what I mean by that is a lot of what we've talked about in terms of sites that will no longer be 7 branded are actually being converted to wholesale operation. They're not actually being closed down as a store. We're simply converting them over to wholesale several benefits from that. Number one, the conversion in and of itself is more profitable. But secondly, these are generally older sites that we would have to reinvest in to bring up to our new standard where we're striving for across the network. We think the better economic solution and the better solution in terms of improving our network image is to convert them to wholesale trade. So that's most of what we're doing in terms of the store base changes. And I think we've heard all the press talking about an aggregate closure number, most of that what's called closures actually conversion to wholesale. So net-net, our portfolio is growing. There will be some movement retail to wholesale, but once again, it's going to be more profitable, and it's going to be better for the store image.

On M&A, we'll continue to be opportunistic. I think the thing we have will probably primarily focus on or what we call bolt-on acquisitions. These are smaller acquisitions where we buy in an existing area of operation. The stores get rebranded to 7-Eleven basically immediately with our systems. And so there is first integration per se. They're more like bulk real estate purchases. We've done A lot of those over the years have been very successful. There are a lot less risk with those types of acquisitions, and I think they are a ratable way for us to augment our store count and augment our overall growth.

If that is a [indiscernible] to confirm the new store openings that you have announced, including wholesale conversion, in net-net, you will be increasing the number of store counts. Is that correct?

Yes, I expect our total store count inclusive of wholesale will increase by 2030, even without M&A. So from new store openings, we will net-net grow our overall store count once again, some may be conversions to wholesale, which is something we shouldn't be -- it's not an issue. We make more money, better for image, and we will still be growing the overall base of stores. And then any M&A would be supplemental to that.

So with this, we would like to end the Q&A session for 7-Eleven Inc.

The next session is 7-Eleven International. We will start the presentation. The presenter, the speaker from 7-Eleven International Director, President and CEO, Wakabayashi Ken. Wakabayashi-san, the floor is yours.

Good morning, ladies and gentlemen. My name is Wakabayashi. Today, I would like to report on the progress of our initiatives at 7-Eleven International.

Next slide, please. Under [indiscernible] leadership, all operating companies of the Seven & i Group are working as 1 team concentrating our management resources on the convenience store business at 7IN, we are also taking on the challenge of entering a new growth stage for the group for the 2 fronts: strengthening collaboration with existing markets and preparing for expansion into new markets, specifically building on our 2 solid foundations in North America, we are achieving closer collaboration with master franchisees and licensees and existing reasons aiming to satisfy customers in each market through the values of convenience, quality and trust inherent in the 7-Eleven brand.

At the same time, while leveraging our track record foundation, we are pioneering new markets around the world through investment-led approaches to secure even higher returns with a goal of delivering our value to as many new customers as possible. Next slide, please. 7-Eleven was in Dallas, Texas in 1927 and will finally celebrate its 100th anniversary next year, with nearly 87,000 stores is by far the world's largest chain store by number. Comparing it with major global competitors, our scale is approximately 3x larger showing an overwhelming difference. Furthermore, as Steve mentioned at the beginning, those 87,000 stores welcome over 60 million customers every single day. As you can see, there is a massive gap between us and our competitors in terms of both store count and customer traffic. However, the number of markets we operate in is currently 19 countries and regions, which is by no means large compared to other global brands.

In other words, while 7-Eleven already possesses an overwhelming scale, it remains a brand with tremendous room for expansion and growth in the global market. This relatively small number of markets is a result of our store opening strategy, market concentration, whether at the national or city level, once we enter our market, we execute concentrated store openings to improve logistics efficiency, streamline store support and enhance power and also recognition. However, in regions outside of Japan, North America and Asia, as you can see, our store count is low. For example, in Europe, we currently only have 363 stores in Nordic region and 0 in South America. Therefore, there are vast untapped markets or white spaces for 7-Eleven, and we believe we can achieve significant growth in the future by applying the strengths. I will explain today.

Next slide, please. As we have explained previously, we position Europe as a critical market that will become our fourth pillar. Going forward, we plan to execute concentrated store openings through a return-focused investment model and future this market significantly. Furthermore, as we explained last October, even in untapped regions outside of Europe such as Latin America, we will proactively consider opportunities that offer high potential manageable risks and the prospect of substantial returns.

Next slide. Along with our proactive stance, I want to emphasize that under the equity model, we explore investment opportunities with strict discipline. It does not mean that any untapped 7-Eleven market with high potential and manageable risks will do. We carefully select markets and partners with a strong emphasis on process and discipline. While there are over 170 countries worldwide, where 711 does not yet operate. We have recently narrowed down our top priority markets to 11 countries using 30 carefully selected metrics. Within these narrow down top priority countries, we identify excellent companies, those possessing the capabilities we require and proactively approach them to advance discussions and negotiations or acquisition or joint ventures. And what I also would like to say is that not we are being reactive. But all the time, the companies that we have chosen, we approach them in a proactive way. and advanced discussions, negotiations for acquisitions or joint ventures. There are multiples that are in the process. It has been exactly 2 years since we acquired 7-Eleven Australia. And as I will touch upon later, the integration process is promising slowly. We often receive questions such as when and where is the next investment. Over the past 2 years, Seven & i and 7IN have jointly evaluate a significant number of investment opportunities. We have negotiated without any compromise. If a deal does not meet our high return hurdles or if risks cannot be sufficiently mitigated, we do not hesitate to pass on with strict discipline.

Going forward, our policy remains unchanged. We prioritize the quality of the opportunity over the number of deals, strictly select the best opportunities and execute only those that our investors will welcome.

Next, please. To realize growth in new markets, we will deploy our winning formula accumulated Japan and North America. Specifically, we will thoroughly inject our core competencies, excellent store operations, differentiated product offering and profitable store expansion, which are the 3 pillars of operations in the convenience store business into new countries to accelerate the growth of our investee companies. Next, please. We believe there are 5 key success factors required to permit replicate 7-Eleven in formula in new markets. In existing markets, we consider our market successful when all 5 of these elements are present with SEJ being the prime example. The success factors in new markets are also consolidated into the elements listed on this slide, which essentially represent our 7-Eleven model itself, excellent store operations, differentiated product offering, profitable store expansion, an efficient supply chain, and a local team with deep market knowledge, prioritizing a customer-centric approach. These 5 are the elements of success for delivering quality and value to our customers. Among these 5 elements, the 3 green boxes on the left are our core competencies that we can bring, deploy and apply overseas. SEJ, SEI, they are experts and 7IN has a bolster of experts in store operations, product development and use store developments. Some of this talent has already been dispatched to Australia and is delivering results. They not only know 7-Eleven's know-how inside out, but also have gained global experience at 7IN. This allows them to apply our know-how according to each country's needs and provide the necessary solutions rather than simply copying the success of Japan or North America.

First, regarding store operations, at 7-Eleven, we grasp customer needs and optimize the product assortment for each individual store and for fresh food by day of the week and time of day, this ensures that as many customers as possible purchase as many items as possible by satisfied. We've carefully managed everything from product ordering to display, maximize sales and profits by reducing add-up stocks and food waste. This is the item by item management coming candy approach, and this mindset is deeply embedded in our DNA. We also possess a know-how regarding communications meetings and training to instill this approach to route organization, all of which can be deployed overseas.

To realize the second element, differentiated product offering 7-Eleven utilizes a method called team merchandising. Business system where the person in charge of each product category at SEJX as an orchestra conductor. They bring together not only vendors and manufacturers, but also packaging and raw material manufacturers to develop safe, high-quality products and sell them at affordable prices. Similar to item by item management operations, the team merchandising approach is built into the DNA of SEJ's merchandising team members, and this can be rolled out overseas.

While there are exceptional cases where we bring SEJ products, like the egg salad sandwich directly overseas, our primary approach is not just exporting the products themselves. Instead, we bring the team merchandising system and their product development process overseas and use them to develop local products that match the needs, tastes, preferences and habits of local customers.

The third element, profitable store expansion is also packed with the know-how of SEJ, which operates a high profitable network of over 21,000 stores in Japan and is fully deployable overseas. Our team is fully bursted in the concept of concentrated store openings, which improves logistics and headquarter counseling efficiency while raising brand awareness in an area as well as the know-how for site evaluation, sales, forecasting and creating optimal store lays based on the plot.

On the other hand, the 2 red boxes on the right are also indispensable elements for 7-Eleven's success, but we do not inherently possess them in newly entered countries. We need to collaborate with local partner companies to deliver value to customers.

First, an efficient supply chain. In Japan, we have production facilities and distribution centers as the infrastructure supporting SEJ stores. However, in new regions such as Europe, we currently do not have this physical infrastructure. Therefore, in Europe, we will need partnerships with excellent local companies that possess such infrastructure. Regarding the rightmost element, and it will be through the joint ventures or local companies. And regarding the rightmost element, human resources as we did in Australia, we can send 5 or 10 outstanding experts from our side to the local market, but that alone will not win the support of local customers. The presence of a local team deeply familiar with the local market and aware of local customer needs is essential for success.

Since we do not possess this overseas either, it is crucial to form partnerships with excellent local companies that have outstanding management teams and execution units. We recognize that these 5 elements, our 3 core competencies plus 2 local capabilities are critical for global expansion. In fact, in Australia, our first global investment step, these 5 elements were exactly the key to driving numerical improvements. By combining Seven & i's strengths with local strengths of 7-Eleven Australia and fulfilling these 5 necessary capabilities, we are seeing continuous numerical improvements. Therefore, we are confident that we can replicate this success in new countries, establishing a foundation for further global growth.

Next page, please. The acquisition of 7-Eleven Australia 2 years ago was our first acquisition in the global market, positioning it as a highly important touchstone to prove whether combining our strength with local strength would work globally. In Australia, adding to the 2 localization capabilities to our 3 strength mentioned on the previous slide has yielded significant results. So let me introduce examples in store operations, product development, store development and digital.

First, as an example of excellent store operations, I can cite the expansion of product assortment. Before the acquisition, the number of items carried per store was only about 1,700. However, immediately following the acquisition, we quickly implemented initiatives such as introducing additional shelving and expanding the sales area in front of the register. So recently, we have increased the assortment of 2,600 items to satisfy more customers. As a result, merchandise sales, excluding tobacco, have grown significantly by 6% year-on-year, successfully offsetting the sales decline caused by tobacco sales regulations. So simply increasing items -- one item is not enough. Therefore, the assortment must be constantly reviewed. To achieve this, as I mentioned earlier, we are realizing strong sustainable growth by anticipating changes in Australian customers' needs using the item-by-item management know-how cultivated at SEJ.

Next page, please. Here is an example of our second strength, differentiated product offering. In February of this year, 7-Eleven Australia ran a major campaign featuring Japan-related products striving to expand sales of fresh food, beverages and ice cream. As a result, the sales of campaign-related items increased by over 40% compared to the previous week. And the Onigiri and Sushi category, which featured updated packaging designs became a massive hit with a 70% increase year-on-year.

Next page. And as for new store opening, again, we are injecting know-hows. Whole stores, you need permit until you open stores. So lead time will be necessary. So new stores going forward in order to expand new stores, we would like to beef up our resources. Australia, we have never exceeded 750. However, last year, we reached 765 stores. And by the end of this year, we plan to have 790 stores. We will further accelerate the store opening process to expand the network to 1,000 stores by 2030.

Next page. In Australia, efforts to improve customer convenience through digital products are also moving into high gear, as you can see here. On the left-hand side, the scan rate of loyalty app increased by 30% in 1 year, meaning 1 in 4 customers now uses it. Furthermore, our 7-Eleven delivery business has achieved accelerating growth with the number of deliveries per store per day increasing by approximately 2.7x over 2 years, demonstrating immense potential. To translate this potential into concrete results, we are deepening our collaboration daily such as bringing SEI's best practices to Australia and deploying Australian systems in North America.

Next page, please. There are many more initiatives in Australia that I would love to share. But as for strategic initiatives in all the strength that we have operation, know-how in store operations, product development and store development with localization capabilities will be multiplied. As a result, both merchandise sales and gasoline volume sold last year showed a gap of compared to our competitors' performance, about 9 percentage points. We feel a strong sense of accomplishments from the results shown in these numbers. While we certainly feel a strong response in Australia, our first global investment in touchstone, our full-scale growth is just beginning. As I mentioned earlier, we are preparing to achieve a 1,000 store network by 2030, and we are targeting an EBITDA of over AUD 380 million, roughly double the current level.

In new markets, we will enter through future investments. We will build on the success and lessons of the equity model gained in Australia. And by multiplying our strength with those of local partners, we will rapidly deliver quality and value to customers in these new markets. Through this, we will achieve significant growth in our global expansion, and we would like to make -- be able to report more concrete progress to you at an early opportunity as early as possible. And all members of Seven & i are working very hard for that.

Thank you very much. That is all for myself.

Thank you, Mr. Wakabayashi. So now we will move on to the Q&A session. In addition to CEO, Wakabayashi, 7-Eleven International, Chairman and Director of [ Shinji ] will respond to your questions. [Operator Instructions]

So now please ask your question. BofA Securities, Nishizawa-san, please.

This is Nishiza from BofA. In Europe, so what is the accuracy of success? How confident do you believe that you will be successful? So in Denmark and in Norway, you have presence. And I think it was about from 6 months before. And also at the Summit, there was a mention that you highly evaluate the Nordic. And also, I think you have a bakery in Norway and also there is a very strong localization. So with the current presence, what is the take that you have? And also what is the expectation moving forward? Also, Poland and any other -- there are convenience players. How do you plan to differentiate yourselves from local convenience players? That is my question.

Nishizawa-san, thank you for your question. So for the existing markets in Europe, as you've mentioned correctly, Norway, Sweden and Denmark, we have fresh food and also from the local customers, we believe we are being highly appreciated. We do feel that for other nations, once we expand, we can inject that know-how that we have accumulated for sure. Especially in the Denmark in the Danish market, what we focus mostly one of the index indicator is per day per store traffic.

And if we look at Denmark, the number of traffic is among the top. So especially where they have strength is at the airport. In Copenhagen Airport, if you go and visit there, you will notice that the 7-Eleven brand is everywhere. In Copenhagen Airport, you will not never miss a 7-Eleven convenience store. Inside the security, also outside the security, a total of 13 7-Eleven stores. On top of that, there's vending machines that is branded with a logo of 7-Eleven more than 30. So everywhere, you will find -- come inside of the 7-Eleven brand. So this success also, we can expand, roll out. Not only we're going to enter airports, but airport stores, we do have accumulated know-how, which we can tap on and capitalize.

Another part of your question was -- for the specifics, I will refrain because we do have a counterpart, and there's nothing at this point that I can disclose and report. But as you did say, in Europe, if we think of the European market, there are many funded companies, players. And during my presentation, as I explained, the supply chain in existence and existing infrastructure, that is what we are looking at and using or injecting our process so that we can offer the high-quality products to the local customers with a high-quality manufacturing facility and also the distribution logistics network. That is a kind of a company that we are seeking and looking at.

Another important point is that the team, the talent. When we think of the team, the talent, Seven & i is a small entity, even if we invest and make the investment and the number of expats that we can send could be 5 or 10. Even in Australia, it was 7. So that will be the kind of level that we're talking about. And the local operation will be done by the local team, meaning that we do need a good team, the good management, that is also going to be a very important decisive factor as well.

So maybe my question was not clear. So when there's a lot of local spend companies. So what would be your criteria? So for example, is it going to be their digital capability?

Thank you for the follow-up. Right, there are many companies that are very advanced in digital. So that could be one area. Also for the convenience store, I did mention about the 3 pillars: operations, store operations that they have a rigid operation, also the product and merchandise development, they have already existing capability, the store development capability. Those are the areas aspects that we would define how they are an excellent local player.

We now take a question from Kazahaya-san of UBS Securities.

This is Kazahaya of UBS Securities. Do you hear me?

Yes, I do.

I also would like to ask a question regarding the M&A project in Europe. Australia was very successful. So I think your eyes are next turn to Europe. But when we talk about Europe, there are not companies like 7-Eleven Australia. So the players or the type of companies that you are focusing on, what kind of companies are you focusing on? And in Australia, there was -- you have bought a company with 700 stores, which turned out to be very successful. But considering your capability and the situation of the counterpart, to what extent can this company or the M&A size be scalable or big? Those are my questions.

Kazahaya-san, thank you very much for your question. I would like to answer your question. In Europe, what kind of type of companies we are focusing on? Well, convenience stores or mini supermarkets to which we will be able to apply our know-how after acquisition. So that's the first type of businesses. Of course, like Australia, having 750 stores network, that kind of -- there are not so many companies as such that we'll be able to acquire all at once. So at the start, we would like to -- there may be a possibility that we will start small. However, even so, as I mentioned earlier, our store development know-how is what we have as our strength. So therefore, even if we do start from small store counts, we would like to in line with our concentrated store strategy, we believe that we'll be able to expand our store counts going forward.

And when it comes to convenience stores or many supermarkets, if we partner with them, we'll be able to gain a local supply chain. And if we do have a local supply chain, we will -- if we -- the supply chain efficiency will go up as we increase more store counts, this will be a win-win strategy as we grow together.

If that is the case, depending on the project, it could be small. I think that is what you said. Considering your company's capability, if you do acquire a company which is double or triple the size of Australia, you do not have any concerns in your company's capability. Is that a case?

Yes. Even if we do acquire such a sizable company, it's not that we have any concerns. And regardless of the size of the acquisition, we believe that our strategy can be applied. And we have focusing on Europe as a fourth pillar. So that is how we made our announcement. However, our strategy is not limited to Europe. In Latin America, if there are brilliant project, we would like to consider that as well. In the other white space areas, similarly, if we can expect high returns and at the same time, with a lower risk, then our strategy is not limited to Europe.

So we would like to next take JPMorgan. Murata-san, please.

This is Murata from JPMorgan. One question. So about the investment and about the basic policy and approach, I would like to ask a basic question. So as you said, so there are some focus countries and you want to have the majority with equity investment. I think that is your basic approach, your basic policy.

So first, I want to confirm whether my understanding is correct. And listening to your explanation, depending on your partner, well, sometimes your requirement may be high and sometimes you are asking for a very high quality, then the counterparts bargaining power may be also strong. Does that mean that in the process of the negotiation, you might not own the majority or you may create a joint venture, that probability rising. Is that also possible? So I wanted to ask and confirm about some of the investment styles.

So the first project, the deal was Australia and 100% investment stake in that case. That is not the only approach. The possibility we are open to joint ventures. So not only 100% stake is our option. As you said correctly, our requirements, what we are looking for, the capability for the local partners, the local partners' capabilities is quite demanding. Yes, I would agree that is true. And it leads to your question, I think what you said is all true. This is our strategy and the capabilities that we are seeking, especially the 2 capabilities, we will not never compromise. If that is lacking, we will not face success. So although it could be time consuming, that is an area that we will be very much focused on the quality.

So you are saying from our view, as a consolidated subsidiary, it might be easier to expect contribution, but that may not be always the case. Am I right?

There is a possibility, but our approach, our first choice would be to become a consolidated subsidiary.

Thank you very much. With this, we would like to end the Q&A session of 7-Eleven International. The next session will be about 7-Eleven Japan. The presenter is [ Tomohiro Akutsu ], Representative Director and President of 7-Eleven Japan. Mr. Akutsu will also be responding to your question after the presentation.

With that, Akutsu-san, the floor is yours.

Yes. Good morning to everyone. This is Akutsu from 7-Eleven Japan. I will be presenting about 7-Eleven Japan today. So if we can go to the next slide. These are the areas that I'd like to cover in my presentation today.

So ever since we have been able to bring the new management to SEJ, it's almost a year. And now I'd like to recap what we've been able to do in FY '25. Ever since we have been able to become the new management structure, there were a lot of challenges that we faced. It was not exactly a rosy environment. And at the same time, we knew that we had some challenges about execution. And so the franchisee owners, people at the [ Gemba ] as well as our employees were losing steam were not exactly fully motivated, and that was exactly the time when I assumed this post as the President of SEJ. So the first thing that I wanted to do was to make sure that we'd be able to have an exciting place to work. It was to really revive the momentum of the company, and that's exactly what I worked for [indiscernible] over the past year.

And so the first thing I did was to redefine what is SEJ? What do we want to be? It was about redefining our purpose, our existence, and we declared that to our customers. And in September, there was a new commercial that we launched. And for the first time, we were able to have the commercial where we were featuring the franchisee owners. For example, [ Yukimami ], as he would say, my dream is to make our customers happy. And so that was really the first declaration we wanted to put forth to our customers. And likewise, within our TV commercials, we wanted to create a new message, what do we have in this new 7-Eleven. We wanted to have customers feel excitement and the feeling to look forward to what they'd be able to find in the 7-Eleven stores. And that was exactly what we have been pursuing to really create the change in the corporate culture.

In the past, it was about trying to make sure we'd be able to do exactly what we've been able to do practice in the past. I think we're changing this culture to challenge to something new. And promotion, product assortment has really been changing. For example, product promotion, we wanted to make sure that we have a seamless product promotion. But now we're trying to encourage our customers to think let's try going to 7-Eleven store to find what they have. For example, rice ball super sale is something that we did for the first time after some years, and there were a lot of excitement felt among our customers. And also in November, Black Friday, we had the flyer sales, and we were able to generate massive amount of sales. And so that is the sales promotion that we've been able to do. And also at the same time, the product that we had, we wanted to review our product category. We always held a theme to work on.

For example, [indiscernible], that's the rice ball. And also for noodle, counter fast food, we also wanted to make sure that we'd be able to promote sweet product and the pastry, we actually did pick your favorite sweet food. So even if we were showing the same product, we wanted to change how we'd be able to communicate these products to our customers. And that's how we have been able to create these initiatives create actual results. And so that's exactly what we have been seeing within our numbers. For example, APSD in Q4, it was 102%. And so we're finding this growth, as you can see on this slide. And what is driving that is the basket price of our customers. We are passing on some of the cost to the price, but still, I think we have come into an environment where our customers are still willing to purchase our products. When unit price goes up, there was a gross margin that we used to lose, but now we have been able to come to the same level that we've been able to achieve last year.

So for -- even on the quantitative level, we are seeing good results. However, with that said, I do understand there still are challenges that we need to overcome. For example, customer count, we still are underperforming versus the previous year. And there are a lot of impact, for example, inflation as well as cost increase after introducing new equipment. And so SG&A ratio is still creeping up. And also our important partners, franchisee owners, their profit level has not come to the level of the previous year. We are gradually narrowing in the gap, but there still are things that we need to do. We do want to make sure that we'd be able to keep on putting in new initiatives so that we'd be able to really show the change.

Next, again, as we try to head towards 2030, what is the direction of the transformation that we're trying to pursue? First of all, it is about increasing top line and the other is trying to drive structural reform. We do believe we need to do both. First of all, for the top line growth. In 2025, the same-store sales growth in APSD, we have, for the first time, been able to clarify the big target of JPY 700,000, and we're going to keep up this pace. And we're going to make sure that we'd be able to bring it to JPY 800,000 as soon as possible. And we're trying to do this by 2030. And to do that, counter fresh food is something that we're going to really be focusing on. And when we enhance this, we need to offer new customer experience.

For example, mobile order ordering. This is really about changing how customers would be able to purchase our products, and that's exactly how we're trying to create new value. And again, we're trying to create a lot of excitement for the customers. What can they find in our 7-Eleven stores? The categories that's been sustaining our growth, I think there still are more room for growth. In other words, as we clarify the target customers and occasion for use, I think we'll be able to really clarify what strategy we have. And on the other hand, there are new areas that we can monetize. For example, how we'd be able to utilize our IP content, trying to go for entertainment. And I think those are some of the drivers in bringing us to JPY 800,000 APSD as soon as possible. At the same time, we're trying to pursue transformation program.

In other words, the structural reform that we've been embarking on from last year. That includes optimization of value chain as well as cost structural reform, especially when it comes to value chain or supply chain. We're trying to again target APSD of around JPY 100,000. And of course, that means there's a lot we'll be able to do and what we'd be able to show inside the store. That is also about how we'd be able to enhance store operation, at the same time, keeping discipline, keeping control of SG&A cost at the HQ. So we're trying to make sure we'd be able to entice on the growth together with our franchisee owners as well as with the entire supply chain. That's exactly the structural reform that we're embarking on.

And so today, I do want to report to you a little more on what we have. First of all, about new value creation. So in the past, we have been trying to identify what everyone wants. In other words, we've been trying to identify for all something that everyone would want and trying to identify that. That was exactly the main driver of our value creation. But then we know that people's way of lifestyle has diversified. It has become more complex. And so from here on, it's going to be important that we need to focus on what individuals would want. In other words, ones so that we'd be able to cater to all these individual needs. It's not about trying to provide for everyone. It's not about trying to provide what's the average or standard. We want to sharpen what we want to provide for whom. And so that's exactly the organization that we have brushed up enhanced from the spring.

The organization that would be taking part in the merchandise strategy would be operation, marketing as well as the merchandise HQ, but then there's also going to be a merchandise strategy division that's been added into the merchandise department. This group is going to -- especially the strategy division is going to identify what is the needs so that they'd be able to tell to the Trinity of the product development team. We thought that is going to be the most optimal way.

In addition to that, we also want to enhance our touch point with our customers. So we have the communication HQ. And at the same time, we do also want to look into some of the knowledge that we can learn from outside. And so as a result, we're now able to create category strategy that is based on target scenes. We've been able to do that for this past year. For example, the most important target to customer, for example, would be the segment that we have not really been able to tap into. In other words, is the younger generation. And within also the demographics, we know that senior population is also becoming a majority. There's also people who's looking for time performance. For example, dual income couples. We have tried to identify what are the scenes that these people would be wanting convenience stores. We have identified the needs and tried to make sure we'd be able to really spearhead in sharpening what we can offer in that scene. That's exactly what we are trying to do.

And first of all, to do that, it's about freshly prepared meals. What kind of counter fast food fresh would we be able to offer. And we have been able to mark a record high growth last -- second half last year, 10% growth. And we're going to make sure that this momentum is going to be continued in 2026 and onwards.

7-Eleven counter food, the uniqueness lies in the live liveness. You'd be able to feel the goodness in using your 5 senses. And so freshly prepared meals, we want to enhance the assortment here. And within FY '26, here are some of the initiatives that we have. For example, bakery, pastry, something that we started [indiscernible] last year. We have been able to implement this within 8,000 stores last year, but now we're going to expand this into 10,000 stores. And we're trying to make sure that all the stores that can implement will be able to offer SEVEN CAFE bakery and pastries. Also of SEVEN CAFE Tea, we have already been able to apply this to 2,000 stores, but we're going to make sure that we will be able to add 8,000 so that it will be 10,000 within FY '26. So we can do more in the freshly prepared meals. But then at the same time, we have -- we're trying to launch more major campaigns because that was a great driver last year.

For example, Black Friday. On the third day of Black Friday, that was Saturday, we offered fried chicken. And we have been able to offer 7.8 million units in that single day. That's real momentum. That was a record high type of sales that we've been able to do. So this type of major campaigns, we are planning that, and I hope you'd be able to look forward to what you'd be able to find. At the same time, what contributes to this freshly prepared meals would be 7NOW, our mobile order. We have been able to full fledgedly start this mobile order from April 2026. We know that this has great affinity with this ready-made counter food. And so in order to support this, within a 7 App, there's also mobile order button in addition to delivery.

So in Japan, it's not really popular for people to do this mobile order. So we do want to make sure we'd be able to let people know that this is available. So people can have a product be delivered, but they can do mobile order so that they'd be able to pick up the products when it's ready. And that will contribute to 7NOW as a total. Once mobile order becomes more known, that means we'd also be able to offer fast food with high value-added features. For example, fryers or bakeries within 7-Eleven stores. We usually would bake and fry and keep it in the shelf for some time. But then keeping it in the shelf can also cause food waste risk, especially if it's for high-priced products, it's not exactly for you to -- for owners to really know how much they should prepare. But now mobile order, you can provide the products once you have the order. So now we can start working on some of the more higher-priced lunch box or even for noodle products that you need to make sure that it is provided when it has just been prepared. And I think this freshly prepared meal is going to create much more room for growth.

And another stream for further profit is the excitement and entertainment. So to create the excitement, 7-Eleven Japan, we have originally had the resources, these IP contents, we want to maximize and utilize these assets. As you all are aware, the fandom activity is expanding every year. I also have my favorites. And sometimes, it is linked with spending. And sometimes you want to save your food for your fandom activities. For FY '26, the toys, which is on the rise, we were able to achieve 25% growth. And also the [indiscernible] lottery at all the stores, it was all sold out. So that is happening now. So once again, the IP content, entertainment, that is an area that we are going to strengthen, especially around the toys initiatives based on toys together with various partners. We're going to strengthen IP content and strengthening the alliance also create new content.

Another area apparently that will contribute to growth is our brand, the 7-Eleven brand. March, we have launched this Happy Lottery 7-Eleven. We started the sales of a lottery. It was very popular, and it immediately contributes to sales. For example, this large cushion that is like a fried chicken, I do receive personal requests that I want to get it. Is there any way that you get one for me? I would always say you have to buy the lottery. And also in apparel, there was the Osaka Expo that was very highly received. In other ways, other IP patents and also IP content holders, collaborations, and there's a lot ongoing, which were not captured as sales, but there could be some add-on additional sales. So we do want to make use of these so that the [indiscernible] will reach 800,000.

Another pillar is the structural reform, our transformation plan, driving comprehensive reforms without no exceptions through 2030. Today, I would like to focus on value chain and also the SG&A. Next slide, please.

Starting with the value chain reform, structural reform. In this area is especially important. I earlier mentioned about the traffic reform, especially also optimizing the selling price at the store. And this area is going to make a large difference in contribution. I would like to give 2 examples, which are already in place, starting from the left, delivering affordable price and the supply chain to support that. In Hokkaido, we have piloted a 2-batch production for rice balls in Hokkaido since February. And we have leveraged that from the -- in the past, it was 3 preparations per day, and it was delivered. But now the delivery is twice.

So the labor cost and also distribution cost is now reduced. And this will first benefit the vendor side to improve their performance. And while they create a new system, it will lead to the GP improvement with a lower cost, and that will result in a more affordable price for our customers. Though this is the entire plan. This is how it started. Area expansion is being planned. The rollout is going to happen so that we listen to the voices and we do not impair the value, we will expand the rollout.

Moving on to the right part, grow customer traffic by optimizing price and value. This is pastries and reviewing the process of the manufacturing. We have started this initiative from April. Our original bread bakery, the process, it starts from the dough and then it goes to the baking factory, distribution center and then to the SEJ stores. So in order to produce a product with a high quality and good taste, you may wonder, and it was said that no wonder that the price is high. So that is why we have had a new food manufacturer enter the process. This food manufacturer at one site can create the dough and also bake the product. And already at the storefront, some of the produce, for example, [indiscernible] bread roll now the selling price is JPY 128 and also the very thick Apple Danish, the same price. This is what we offer. And the existing food manufacturers are also showing some signs.

But we do need to enhance the value at the storefront. So unless the franchisees and also the vendors, we are all going to fail. So that is why everyone is on board to start the new initiatives to improve the efficiency and productivity. So we are revisiting the existing production process so that we can lower the price that resulted in JPY 20 cheaper, affordable bread and bakery. So this is how we are working on with the existing issues. April at the stores, now the pastries, the number of customers that are purchasing has increased 16.6 persons, shares also and also the value in absolute amount, we are seeing results in good progress.

Next is about the structural reform, especially about the disciplined cost control. The SG&A is rising in the past years, that is for sure. Having said that, compared to the sales, we want to control that less than 12% to sales. Recently, we are seeing a rise in the system operating cost. On the right, for the system operating cost, the long-term cost reduction by the cloud adoption and also by promoting DX, we want to make further progress. And by doing so, when the terminal, it was developed, we were doing it in-house with a large investment, but now more star operations depend on the general purpose devices. And also the enabling work style suited for diverse owner work floors and supporting multiple stores is now available. Now we have that infrastructure. In order to cope with the cost inflation, we are making sure that we do have the deliverables.

Also other than that, reducing the electricity bill, we are introducing new technology. Also as equipment increase, the maintenance and repair cost is increasing. But for the first time in several years, we were able to reduce the maintenance and repair cost. So in this way, the SG&A control, we are doing it without any exception.

Finally, operational KPIs towards 2030 for the fresh food and differentiation with a love meal full rollout of equipment to expand freshly prepared meals to all capable stores. And for the store network, as we said, by 2030, net increase of approximately 1,000 stores and for 7NOW, steady and consistent growth. And for SG&A cost control, SG&A ratio below 12% and consumer perception, this is absolutely about the sales, APSD CAGR 2.5% to 3%. And as early as possible, APSD of JPY 800,000 to achieve is our KPI.

In the past 12 months, we have already achieved numerous reforms and change, but still, we are facing issues. We will not stop where we are, and we will make progress. We will execute the changes so that we become profitable.

This concludes my presentation. Thank you.

Thank you, Akutsu-san. Now we'd like to open the floor for Q&A. [Operator Instructions] We will first take a question from Takahashi-san from Mizuho Securities.

Yes. This is Takahashi from Mizuho Securities. I have one question that I really wanted to ask. I also use 7NOW. It is really convenient, and I use this many times. Aside from whether or not a store can provide 7NOW service, it seems like there are some difference between the franchisee owners. There are people who is really proactive in 7NOW delivery. But then there are some differences. For example, even for what you'd be able to do in the store, there are some owners who still haven't really been able to do full [indiscernible], what they're able to do on the counter of products. You mentioned that you have been able to create a lot of difference amongst your employees. And of course, that's exactly something that we can feel when I look at your product assortments. But what do you think you could be able to do in changing the mindset of your franchisee owners? And of course, we could just only visit some limited number of stores.

But from your perspective, I know you're doing a lot of in-depth communication with the franchisee owners. So if you really wanted to enhance the level of understanding and understanding among the franchisee owners, what do you think you can do?

Yes, Takahashi-san, thank you for your question. So what the franchisee owners be able to do? How can we create the evolution amongst them is something that we're really working on. Looking back 12 months ago, even amongst the franchisee owners, there were people who would not really be forward-looking. APSD as well as profit, it was the time when a lot of franchisee owners faced challenge. And so it's not a surprise that not people would be really motivated. And of course, as a company, we had not really been able to show the direction forward. And I'm sure that was really a big point there.

Now there's been a Zoom conference last year where we have been able to communicate with the franchisee owners. There were owners that we've been able to speak directly. There were people who have not been able to, but we have been able to set a session where we'd be able to speak with 13,000 franchisee owners. I think that's one thing. And so what -- the change that we are going through at the head office, I believe is now being felt by the franchisee owners. I do believe they do understand and appreciate that we're trying to go through the change. But then at the same time, sometimes the franchisee owners might be passive in embarking the change. But I think there are more owners who are trying to be proactive on the other hand. But.

Then if we look at the current situation, there is this labor cost that is burdening the franchisee owners. And so there still is a fact that not all franchisee owners are able to really enjoy the momentum. There is this burden in the operating of the store and some of the benefits has not really been visible, has not surfaced yet. So first of all, it's going to be important that we implement initiatives or sales promotions so that franchisee owners will be able to see this uplift in the top line. That will, I'm sure, enable the store staff, franchisee owners to feel more motivated.

And so also in terms of the structural changes, we're trying to change some of the cashiers so that stores when they're ready, be able to switch to more self-cashiers. And that is going to enable more control in the cost. So top line growth as well as cost control. If the franchisee owners would be able to feel more room to breathe, I'm sure they'd be more motivated in these operational changes. 7NOW as well as the mobile order that we just started, we're trying to make sure that we don't cause any trouble to the users. And so it's going to be important that we make sure there's a seamless inflow into the stores. We're trying to make sure that we can only -- we only start this expanded service to the stores that has been able to have this baseline has this full capability. And so that's exactly what we're trying to identify and clarify at this moment. That's my response.

So from that perspective, what you explained today, these initiatives may -- there's more potential more than what you showed in these initiatives reflecting their goodness into the APSD and top line.

Yes, that's exactly what I believe. For example, within the existing category strategy, for example, April, we did more on pastry, and we know that the effect of this becomes visible in numbers. And so in order to make sure that these offers that we do becomes visible, it's going to be important that we really clarify which target customers that we're looking at and which scenes we're trying to target. So fast food, IP, entertainment, these are also the areas that we have -- we believe there's much more room to bolster the overall sales.

We would like to take the next question, Okasan Securities. Kanamori-san, please.

This is Kanamori from Okasan Securities. I'm asking the same question each time, I'm afraid. So APSD 2030 target by and you want to front-load achieving the goal. So the current situation, 700,000 to 800,000. So once again, you have set that goal. My question is, so what is the likelihood, the probability of the achievement of this goal? So what you have shown, the average basket size and also the traffic, these 2 drivers, at least, well, from bringing it from the 700,000 to 800,000, 15%, 14% uplift is required. So suppose that the customer average basket size is rising about 3%. So that, say, continues for 5 years, then it will be achievable.

What you were saying not only about the unit price per item, but the total number of items purchased and also the traffic and affordable price pricing, supply chain reform, structural reform, all of that is inclusive in your plan. To achieve the 2030 target, there's a lot of possibilities. I think that the company is now trying to raise the unit price to increase, improve the margin, although the traffic is weak. So that is the main focus to improve the franchisees' performance and profit.

But at some point, your competitors, especially in the big city centers, they are going to be much more lower in their price offer. So how -- to which extent are you able to offer an affordable price? Because JPY 800,000, although you have that goal, you -- I cannot deny that the sense of feeling that it is items are expensive. And the 7NOW you mentioned in your presentation and also as part of the plan. In the past, I think it was last year '25 autumn IR Day, you did say that 7NOW 2030 target is that by revenue, JPY 120 billion. And I am going to go dig into the details, the operational KPIs, if I look at it, the very steady and robust achievement that is just by expression and not -- it is just qualitative. And at the store level, is that because you do not have a solid figure that you just gave an expression that you want to achieve steady and consistent growth? Is that the intent? APSD 800,000, the probability, likelihood of achievement.

As you said, not just by unit price, will we achieve the target. So also from both sides, traffic improvement, traffic increase also needs to happen. When we talk about traffic, there's a lot of elements and factors to that through marketing and also sales promotion, we are seeing a positive trend. And what is still lacking in sufficient is the supply chain reform that adds the foundation at the basis, the price also needs some change and reform. What can reflect and what can change the price, I have made some introductions to our initiatives. It is not that we are all going to set at a lower price across the board because the purchasing power of the consumers is rising, so they need to be convinced to pay for the value. And as things are becoming more affordable, that will lead to a larger traffic, that is the kind of a story that we want to create.

Also as an income is rising and as we are entering that cycle that the purchasing power is increasing, we also need to ensure that the quality is there. The quality needs to be felt at a value product needs to be ready and offered on a daily basis for our daily lives in our existing category. So both the affordable price range and also the quality-focused price range. So both customers for their daily use I think that is both sides that we want to grow. That is for the traffic growth.

And talking about new products, new [indiscernible], high price and also the added value food items, I think this is an area that we can differentiate ourselves. The unique and one only to 7-Eleven, even if it is a certain price range with certain quality, I think that the unit price increase would be possible and also would be accepted. So from traffic and also unit price rise, we will achieve the 800,000 APSD.

And I received in the past a question about an app from you. I remember that very clearly. A question about our app and our point schemes. I think we do need to revisit it from scratch because the value that our customers is feeling and how we -- the customers see value in it, there's still room for improvement. We do need to make use of the customer ID and usage of app. Still, there's room for improvement. We're still studying, but we're still not at a phase to share anything in detail. But all of this will, for sure, reflect to improve the traffic and also -- so that is an area that we do want to make sure that reform does take place. And finally, about the 7NOW, we did not provide any numerical target. We actually deleted the numerical target because we only believe in the growth of the 7NOW expansion.

Steady and consistent growth, I am sure, without doubt, it will happen. In the past 12 years, when I look at the 7NOW, as we are entering an inflationary economy and becoming more sensitive to inflation, the scheme with the delivery cost, we may need to apply a cautious view on this business scheme. And also in Japan, in the past, we always had the delivery of food and delivery cost is an area that people are sensitive. So we need to be cautious. So the 7NOW had expanded greatly with speed, but from now, we need to be cautious on the speed and also do not want to invest too much. Also, we do make sure that it permeates and is embedded into the culture. So that is why we have retracted the numerical targets. So we need to understand about the needs. And at some point, we will provide some numerical targets and provide some vision. So that is our current thought for the moment.

And at the front line, at the stores, we do want to provide the value to the customers that visit our store, physical store. Once that happens at the store level, then we want to start the apps and also the 7NOW. So we do have a very clear priority, which is communicated to the franchise owners. For sure, the area is going to grow, and we are going to make sure that the steady growth is there. So that is why we kept the expression. That is my response to your question.

Now we'd like to ask from Shigeoka-san of Daiwa Securities.

Yes. This is Shigeoka from Daiwa Securities. I hope you can hear me. Yes, we hear you. My question is around your supply chain transformation. As you try to align with vendors, I'm sure this is something that you need to deepen this activity. Now looking at what's happening in Middle East, I'm sure this is going to -- you're going to find impact with a time lag, probably in the second half, that can have a little disruption within the supply chain as well as cost increase. Do you do you feel the risk that this is going to slow down the pace of your supply chain transformation? Or is it going to be an opportunity? It may become a key in accelerating this change. I believe the supply chain you have would be much more robust than what the peers would have. So that is why I want you to give a little comment about what is your outlook in this regard.

Yes, Shigeoka-san, thank you for asking around our supply chain. Looking at what's happening in the Middle East, the impact is something that we must expect to visibly create an impact. And so we're trying to look into the details to identify what this is going to cause, especially when it comes to electricity power cost, that is already visible. And for example, anything around packaging or naphtha, is it going to impact the transformation speed -- at this moment, we don't believe that it's going to be a risk. We don't think it is going to slow down our pace.

However, we need to really look into the details of the profitability of our vendors before we'd be able to come up with our decision. We do want to be careful here because there might be an impact. This is something that we would have to expect. But I don't think there's any area at this moment that we find that there's not -- there's no area that we find cannot be pursued at this moment because of what's happening in the Middle East.

Also in regards to this Middle East, especially in the packaging, first of all, we have to think about the business continuity. In other words, we want to prioritize what packaging could be provided on a sustainable basis. For example, any areas that could be switched to paper packaging, any areas that we might be able to pursue more cost reduction. If there are any areas that we might be able to pursue an advantage, that is going to be an opportunity for us as we try to speak with the vendors.

I mentioned that electricity power -- electricity bill may increase due to the Middle East. And this is not really about packaging, but we have -- we are really planning about how we'd be able to change the switch over to some of the equipment that enables us to use less power. So we know that some of the newer equipment is going to create more opportunities to save electricity costs. And that is something that we are discussing with the construction support department within the store development. And so that's how we're trying to handle any disruption that might happen in the overall supply chain.

But then when it comes to electricity cost, even within the transformation plan, those utility costs is something that we have tried to put in more control. For example, power generation using renewable energy. We try to -- we have actually been able to implement much efficiency in the past. And so I think the amount of the increase in power bill, I think we've been able to control it. much better than how we've been able to do in the past. Maybe what's happening in the Middle East may cause a little more increase in the electricity cost, but we do want to make sure that we'd be able to capture any hints or signs of change. That's my response.

So in other words, within your supply chain, it's really about stable supply. And when it comes to agility, I think you do have better resilience compared to the peers. Is that the way I should take it?

Yes, I believe so. Especially when it comes to taste and quality, we need to have raw materials. We also need to have manufacturing infrastructure. And I think we have ample capability to have a sustainable provision of this. How this can be transferred into creating more value in the store and as we gain more purchasing power, what is the new value that we still can keep on offering to the customers is exactly what we want to focus on.

So now we will take the last question. Nomura Securities, Yamaoka-san, please.

This is Yamaoka from Nomura Securities. About the store network, may I ask a question. 2030 target is an additional net increase of 1,000. I think it remains unchanged from the previous target that you have given. So the same stores, you are seeing some benefits and reaping the benefits. So are there any changes in your medium and long-term store network building?

Yamaoka-san, thank you for your question. There's nothing that has largely changed. Net increase of 1,000 stores. The foundation with the existing store, same-store, that remains unchanged, but recent high expectations is the local community collaboration model in Fukuoka Prefecture, Yame City, there is a case. So together with the local municipality, actually, by a request of the local municipality, we have created the new store. It is a size, half of an average store and also the delivery is not 3x, but twice a day, not a 24/7 operation model.

And also in order to reduce the operation cost, we received the support and assistance and usage of the local municipality subsidy. The fryers and the fast food, 7 cafe, all of this is offered. So we have created this new model, the Yame model, and the P&L is performing better than we had expected. It is also highly received by the local community. Now that we have created this model from several tens of municipalities, we are receiving requests and inquiries that they want to invite the store opening at their local community. I believe that the potential need is very high.

Per store, the number -- well, the number of inquiries that we receive, there are different issues and local differences. So we do have to look at each case carefully and also the owner, the local operator once it is opened. But once this scheme, we would want to establish this new scheme, which will open the business potential to an area that had -- did not exist, and we will offer the means of shopping to a vacant area that they had no access to purchase their groceries. So we would like to establish this as a new store opening scheme, and I believe that there is potential. This is my answer to your question.

This ends the Q&A session for 7-Eleven Japan.

The next session is on sustainability strategy. The presenter is Seven & i Holdings, Executive Officer, Sustainability Development Office, Mr. Nobuyuki Miyaji. Mr. Miyaji will respond to your questions after the presentation.

Over to you, Mr. Miyaji.

Hello, everyone. Thank you for the introduction. My name is Miyaji. I am very pleased to have this opportunity to speak with you today. Next page, please.

I would like to explain the overview of our sustainability strategy as well as our recent and future initiatives. Next slide, please.

First, let me provide an overview of our strategy. Next slide, please.

This slide looks back at our major initiatives to date. As shown in the upper left, since the establishment of the CSR management department in 2011, we have been promoting various initiatives in environmental and social areas with the support of many stakeholders, bringing us to where we are today.

At this point, I would like to clarify our group's basic stance. We are fully aware of recent trends, including the anti-ESG and anti-DEI headwinds and backlash seen from last year into this year as well as the latest geopolitical uncertainties. However, our core policy remains completely unwavering. We will continue to proactively advance our sustainability initiatives, including environmental efforts and broader SDG relative -- SDG-related activities.

Next, I would like to touch upon the areas outlined in red. Next slide, please. This slide illustrates our strategy map formulated in 2024 to provide an overall picture of our sustainability initiatives and concepts. Briefly explaining from the bottom, this map is based on our corporate creed of trust and sincerity, synergies within the group. and partnerships with our business partners and external stakeholders.

Building upon this foundation, through our 3 core strategies shown in the center, environment, society and communication, we aim to achieve both a sustainable society and sustainable corporate growth as shown at the very top. As you may know, the scope of sustainability is extremely broad. Therefore, today, I would like to just focus specifically on the environment and certain aspects of communication, including the 7 material issues enclosed in the red box. Next slide, please.

Here are our 7 material issues or materiality. We first identified our material issues in 2014, which were 5 at the time. And what you see here is the revised version from 2022. The text in red on this slide are the ones most closely related to today's presentation. Next slide, please.

Next, I would like to explain our recent main initiatives and their progress. Next slide, please.

You may have seen this slide a few times before. So I will omit the details, but this is an overview of our environmental declaration, Green Challenge 2050 formulated in 2019. We have defined targets and our vision for 2030 and 2050 across 4 areas, including CO2 emission, CO2 emission reduction and plastic countermeasures.

I would like to discuss our progress on the next slide. This shows our progress across the 4 areas. These are the figures for fiscal 2024 with actual results shown in orange. Thanks to the proactive efforts of each operating company and the owners of the franchisees, we are progressing almost exactly as planned. Next slide, please.

This slide showcases examples of initiatives undertaken by our operating companies in fiscal 2025. In the upper left, regarding decarbonization at 7-Eleven Japan SEJ, we have partnered with companies like Tohoku Electric Power to utilize new off-site PPAs, and it may be difficult to understand with the pictures. So the center is solar panels. We have sequentially started supplying renewable energy derived from solar panels as shown in the center and wind power as well.

In the lower left, within the circular economy area, SEJ has been installing reverse vending machines since 2015. Currently, they are installed in approximately 4,600 stores. And as of last autumn, the installation area expanded to all 47 prefectures in Japan, the right of that. In order to focus on procuring renewable energy to achieve the goals of our environmental declaration, in 2024, we established an electricity retail company called Seven & i Energy Management, which commenced operations last year.

On the right side are examples of our overseas initiatives. In Canada, 7-Eleven Canada has partnered with a company called Too Good To Go to sell food nearing its best by date at a discounted price as surprise bags at 7-Eleven stores. Additionally, 7-Eleven Australia has partnered with a company called Loop to upcycle decommissioned uniforms into blankets and sleeping bags. In this way, each company is taking the initiatives in areas such as the circular economy and social contribution while also actively disclosing information. Next slide, please.

This slide covers initiatives at the holdings as well as the entire group level. In the upper left, in September of last year, we formulated an integrated TCFD and TNFD report. As shown in the center, within this report, concerning our flagship product, coffee, we analyzed the impact and risks of the external environment in our group. We have disclosed the financial impact as of the year 2050. Having thoroughly shared this analysis internally, we aim to mitigate risks and create new opportunities regarding financial impacts. While we have already begun some of these efforts, we plan to accelerate our support for coffee bean producing regions and farmers as well as collaborative R&D with manufacturers. Next slide, please.

As a result of these initiatives, while we acknowledge there are still challenges to address, we recognize that we have received relatively high evaluations from major ESG rating agencies, including the Dow Jones. Next page, please.

Here, I will discuss our future main initiatives. Next page. Here are our priorities for future sustainability promotion. As indicated at the top green portion, even for sustainability initiatives, we will proceed to establish targets and a framework as a pure-play convenience store group based on the global principles. We shared this internally at the Board of Directors meeting last December and the Sustainability Committee in February of this year. And with the major changes within our group structure last year, we have identified 3 immediate priority initiatives.

First, revisiting and amending our environmental targets Green Challenge 2050 and likewise, our materiality areas. And third, preparations for SSBJ. Concurrently, we want to advance the items at the bottom. This includes rebuilding a new sustainability governance from a global perspective, encompassing the operation of intra-group committees and various meeting bodies as well as setting robust KPIs, not only for the environment, but also for social areas. Furthermore, as I will explain on the next slide, we also aim to strengthen the ability to create positive impacts. Next slide, please.

First, starting from left, this is just an image, conceptual diagram time on the horizontal axis and corporate value is stated on the vertical axis. Starting from the bottom, there is this more protective risk-managed sustainability. We will gradually proceed with the reduction of what we refer to as negative impacts, which I also would like to explain on the next slide.

Now at the same time, moving forward, we will put even greater emphasis on the creation of positive impacts as value-creating sustainability shown above. So both risk managed as well as value-creating initiatives, as indicated in the center, we intend to visualize these efforts, namely nonfinancial information as much as possible, disclose this information, engaged in dialogue with domestic and international investors and analysts and continuously make improvements based on your feedback.

And by continuing these efforts, as shown on the right, what we want to aim is to synchronize, balance the sustainability of society and the earth with corporate sustainability, ultimately leading to the maximization of corporate value. Next slide, please.

Now let me explain a little more of the floor concept that you saw on the previous slide. Again, starting from the bottom, it says their negative impact. We want to reduce that. For example, our initiatives like Green Challenge 2050 we aim to reduce the negative externalities that we generate. Alternatively, mitigating and eliminating risks such as reducing the impact we receive from external environment and nature.

And based on this foundation, as shown in the upper section regarding positive impact creation, we've included product examples here. We aim to develop and sell sustainable and ethical products primarily in food, thereby driving top line growth. So that's what we aim to do. And below that, so we aim to enhance our brand image through activities to share information and raise awareness with such products, services or our stores.

And so in this way, we intend to create impacts through our sustainability initiatives over short, medium as well as over the long term. especially when it comes to information sharing, awareness raising. I do want to introduce more about this on the next slide.

This is my final slide. And so as an example, here you see this diagram design with climate change in mind. So starting from bottom left, many people learn about issues like climate change through news or media coverage. And over the past 2, 3 years, I think a lot of people have experienced also in Japan, extreme heat. And so customers and consumers are starting to feel that something is wrong or we're going to be in trouble if things continue like this.

However, it's difficult for everyone to personalize the issue. It still feels like a distant issue or something far off in the future. So you can't really feel this as a personal matter, even though it's supposed to be such an urgent issue. Climate change really requires movement across society. But if you don't feel the personal ownership, behavior change will not occur.

Consequently, this fails to foster public opinion needed to drive necessary policy changes. And so this recognition of this current challenge is now highly highlighted in the environmental field. And as you are well aware, we have this enormous number of touch points with our customers, as shown at the top. And even if we limit this to Japan and North America, we interact with 30 million customers a day.

While there are various approaches or methods in reaching out to our customers and business partners, this slide illustrates how through information sharing and awareness raising activities at these touch points, we can -- we might be able to encourage even a slight shift in consumers' consciousness, helping them take personal ownership, driving behavior change. The accumulation of these changes will awaken public opinion, ultimately lead to social transformation.

And of course, climate change in itself is a very, very large issue. There's a massive challenge that it cannot just be accomplished by us, a single company or just the retail chain alone. It must be based on co-creation with external initiatives, including other companies, other business partners, other platforms. That's really going to be the baseline.

However, we believe that if such behavior changes, social system transformation occur, there will be opportunities in creating new markets, new business opportunities. And so in this era where social issues are becoming increasingly severe and complex, we're committed to actively taking on the challenge of information sharing and awareness raising initiatives uniquely suited to our group.

This concludes my presentation. Thank you very much.

[Operator Instructions] From Mizuho Securities, Takahashi-san, please.

This is Takahashi once again. Thank you for the explanation on ESG. It was a long time since your last explained, but I was able to understand your progress today. Now I would like to ask Miyaji-san. You have a franchise business model. And in addition, you have a lot of private brands. So you have vendors as well as transportation vendors and manufacturers, all different kinds of stakeholders. Stakeholders which you do have some certain control on, how are you communicating with these stakeholders or with your employees, those who are working for Seven & i, franchise owners, vendors, vendors may include factories as well as transportation carriers as well as manufacturers.

How are you communicating with those? And needless to say, is how the human rights are protected amongst the supply chain? In order for making all people happy who are working for Seven & i, I would like to know how your communication policies.

Thank you very much, Takahashi-san. First of all, with regards to business partners and makers or PB-related manufacturers, I don't know whether this will answer all of your questions. But PB products or in particular, premium products, every year, our sustainable conduct guideline is explained on an annual basis to vendors. And the other day, on an online basis to 437 companies -- and we had 631 participants participate. We explained the conduct guidelines. And also at the factory audit, there were a lot of points findings regarding labor as well as hygiene. And so we have provided explanation regarding those issues as well.

And as a result, more than 200 factories overseas and more than 500 factories have conducted CSR audits. And there, we were able to have opportunities to communicate with the people working at the fields. And through those opportunities, sustainable or ethical concepts and the recent trends have been communicated to business companies and other entities as well.

With regards to the internal communication, with regards to how we penetrate this throughout the company. First, e-learning is being utilized, e-learning regarding environment as well as human rights. At the merchandise department, we're also conducting trainings as well on these topics. In addition, in some business companies, OpCo's Sustainable Smile app, which is focused on SDGs are being launched. And every day, they can use this app to know more about sustainability like a game.

And at holdings, we used to have an group meeting where everybody participates to have communication regarding climate change so that people will be able to have a sense of ownership in these topics. So communication with the vendors, partners as well as employees, we believe, are very important. So we would like to continue to focus on these topics.

This is not a question but a request. As you disclose these topics, I think you include franchise stores in Scope 1 and Scope 2. But if you include Scope 3 to a wider scope, then things will all be mixed up. This will include fuel business as well. So if you can at least set out your private brand specific targets, I would appreciate it. For example, UNIQLO, they are saying that they have a target to reduce 30% in Scope 3 just for the production parts. So if you can have such kind of specific targets, I would appreciate it.

Next, this is going to be the final question that we would like to entertain for this section. Shigeoka-san from Daiwa Securities.

Yes. This is Shigeoka from Daiwa Securities. I'd like to turn to Page 8, Green Challenge 2050. So as you try to pursue your environmental initiatives, I'm sure that is also going to create better business performance. You have laid 4 themes. Which do you think would have larger contribution to your business performance? I'm sure, for example, energy efficiency or trying to control food waste might be a good candidate, but what is your thought?

So contribution to your business performance. Anything around energy efficiency or food waste? What are some of your initiatives that you're trying to implement so that we might be able to see better contribution? You mentioned about -- or Mr. Akutsu did mention a lot about power efficiency. But if there's anything you'd be able to share with us in regards to renewable energy and so forth, please?

Yes. Thank you for your question. I don't know if I'd be able to give a straightforward answer, but all the we expect would be able to contribute to our business performance one way or the other. For example, even for CO2 reduction, as we use more renewable energy or trying to work for power generation or use less energy, in the end, we'd be able to curb down the amount of CO2 emission, but then that's also going to create more better power efficiency. That's going to be better for our business.

Even for plastic, any material to be used for packaging, if it could be -- if we'd be able to switch to environment-friendly packaging, that in the end, there's going to be more value that we'd be able to offer in regards to saving the environment. You may think that's going to mean higher price tag, but for example, some of the more unique food, there might be some areas where the customers may not need these conventional packaging. Maybe there could be some areas where we might be able to expect the customers may be able to come up with a unique idea, especially when it comes to some unique niche food. And I think this, in the end, eventually would lead to saving SG&A.

We also want to think about sustainability. For example, this coffee bean 2050 issue, and we're thinking more about biodiversity. And so unlike the situation, even when we try to procure materials, there's a risk that we may no longer be able to. That's going to have a financial impact, and we try to quantify how much risk could that be. so that we'd be able to raise awareness inside the company. And we want to make sure that risk would not prevail. That's why we need to implement initiatives. That is about supporting the providers, the farmers. And that's not about social contribution per se. It really impacts our business performance if we don't put this initiative. And that's exactly how we want to position the meaning of Green Challenge 2050.

One more thing. I think there was this discussion about the conflict in Middle East. The urgency of geopolitical risks nowadays. For example, it relates to energy security. But for example, renewable energy or EV penetration, that's really about decarbonization initiative. What's happening in the Middle East may bolster the needs of, for example, EVs and so forth. And even for plastic packaging, we're seeing the increase in naphtha price.

Would there be any renewable plastic that would be more immune to, for example, what can happen in Middle East. Japanese companies trying to go for such alternative items. That's going to have a good contribution for sustainability in the overall perspective. And so that's what we want to keep an eye on. I don't know if I really answered your question, but that's what we're trying to focus on.

So quantitative disclosure, I know you're working on a lot of things to show your progress in this regard. I'm hoping that you'd be able to present your disclosure so that it will be easier for understand. I'm hoping to be able to see more from you.

Yes, we're all very aware. Thank you very much.

So with this, we would like to conclude the Q&A session for the sustainability strategy. We will move on to the final session. Now we would like to start the final group Q&A session. The speakers will be Mr. Dacus, CEO; and also Seven & i Holdings Executive Officer and CFO, Takagi Tetsuya, will respond to your questions.

First, at the outset, Mr. Takagi, CFO, will say a few words. Takagi-san, the floor is yours.

Thank you very much for taking the time to join us today. My name is Tetsuya Takagi, and I've been recently been appointed as CFO of Seven & i Holdings.

First of all, I would like to express my sincere appreciation to our shareholders and investors for your continued support of our group. Having been involved with our group as a supplier, I have witnessed firsthand the strength of our operations and the power of our brand. I've also experienced 7-Eleven from the customers' perspective. As someone who shopped at the stores on a daily basis, I personally purchased products such as Ven-Cafe, hydrogen roasted coffee on a regular basis as I now take on this new responsibility with a clear sense of purpose to help bring that quality and value to customers around the world. Every day, we welcome approximately 60 million customers to 7-Eleven stores around the world.

As for our company, I strongly believe that we have significant potential to expand our business globally and achieve sustainable growth. And I am committed to contributing firmly to the realization of that potential from the finance and accounting perspective. At the same time, I believe that our group is now at a point where we have a very significant growth opportunity and where an even greater degree of discipline and execution is required to realize it.

As the world's largest convenience store network, we serve customers every day across the globe. At the same time, Capital markets are asking more of us higher expectations for the quality of growth, capital efficiency and consistent execution on a global basis. My mission as the CFO is very clear. It is to further accelerate disciplined execution across our global operations and to enhance corporate value and create long-term shareholder value with speed and determination.

To achieve this, we will ensure stronger alignment across the group under a globally unified brand by establishing common frameworks and enhancing coordination across businesses and regions. By maximizing knowledge sharing and scale across countries and regions and leveraging individual strengths, we will drive more consistent execution across the group and pursue further global growth.

In particular, as CFO, I intend to further strengthen and embed a management approach that places a strong emphasis on capital efficiency. Rather than treating ROIC simply as a management metric, we will continue to implement it more deeply as an operating framework embedded in organizational decision-making and day-to-day operations so that a capital efficiency focused management approach takes root across the group. Our starting point has always been and will always be the customer.

As we advance global growth and operate more as one group, the customer will remain at the center of everything we do. We are fully committed to being the first choice of our customers. To do so, we must continue to deliver products and services that combine superior quality and compelling value. Finance is a means, not an end. Our ultimate objective is to maximize customer value. That is how we will drive sustainable growth in corporate value and long-term shareholder value.

In our capital allocation and financial strategy, we will focus on allocating management resources appropriately and executing steadily. We will continue to invest proactively in ongoing innovation, while at the same time, decisively implementing structural reforms to improve profitability. strengthening our business fundamentals and scale the future, balancing these 2 priorities is, in my view, the most important responsibility of a CFO.

We also have a clear commitment to shareholder returns. We will continue to uphold our shareholder return policy, including share repurchases totaling up to JPY 2 trillion as well as our progressive dividend. This is not a short-term measure, but a reflection of our confidence in our ability to generate strong and sustainable free cash flow. We will continue to make decisions with a consistent and disciplined approach to balancing growth investment and shareholder returns.

Finally, regarding Investor Relations and disclosure. Dialogue with analysts and investors is extremely important to me. In both favorable and challenging times, I am committed to transparent disclosure and honest, constructive communication so that we can clearly convey our value creation story. Building on this commitment, we will move beyond one-way communication and place 2-way communication at the core of our approach. Insights gained through our dialogue with you will be shared across the group and leveraged to further enhance our management and business operations.

Through these efforts, we aim to further improve the quality of our growth. Seven & i Holdings is still on a journey of growth. As CFO, I will move forward with clear resolve, driving transformation and working tirelessly to build one of the most trusted corporate groups in the world. I would also like to speak directly in my own words to our international shareholders and investors.

Let me briefly switch to English to speak directly to our global investors. Thank you for your continued support. I believe that meaningful engagement with our investor is essential in achieving truly global growth. We welcome constructive and continuing dialogue with our investors. And I'm personally looking very much forward to speaking with you in the near future.

Thank you very much, and I look forward to your continued candid feedback and support.

Thank you, Mr. Takagi. With that, we'd like to open Q&A session for Seven & i Holdings. Mr. Dacus, our CEO; and Mr. Takagi, our CFO, will be answering your questions. [Operator Instructions]

With that, we will take your question. Kazahaya-san from UBS Securities, please.

I hope you can hear me.

Yes, we do.

This is Kazahaya from UBS Securities. And I think Takagi-san, this is the first time I'll be able to speak with you. My name is Kazahaya from UBS Securities. I actually have one question that I wanted to ask to Mr. Takagi. Listening to you, for example, Marayama-san was a perfect CFO. He was able to improve discipline of the finance, has been able to implement ROIC. I understand you're going to be succeeding this endeavor, and I'm really happy to hear that.

Just one thing. So in the past, when it comes to financial discipline, you made sure that you'd be able to keep A rating. That was the baseline. And I think that was exactly the investment discipline that the company always talked about. Now when it comes to -- what about you? Would you also be prioritizing keeping the A rate?

Yes. Thank you very much for your question. So as we try to head to 2030, we have this transformation plan underway. And within that, we do want to make sure that we'd be able to strike the good investment efficiency. And so we're trying to manage this efficiency through setting KPIs like ROIC. But like we mentioned earlier, we need to make sure the execution is disciplined. Otherwise, we will not be able to drive corporate value or shareholder value growth in the midterm. And so this road map to 2030, what we've said there. For example, debt EBITDA ratio, those are some of the KPIs that we want to keep our attention to so that we'd be able to maintain our ratings to A. That's going to be really important. And that policy will be strongly kept.

So Mr. Takagi, is it single A for single year? Is that the way to take this?

Well, there is this ebbs and flows in investment, and it really depends on what you are investing for. But single A rating is something that we do want to secure as a principle even for a single year basis.

Next, Nomura Securities, Yamaoka-san, please.

This is Yamaoka from Nomura Securities. This perhaps question will be directed to Mr. Dacus. Considering your past explanation, the function of holdings is what I would like to know from the past, no more. CVS. As a business group focused on convenience store business, and I think you have been talking about upgrading the holdings business to convenience store focused business. What is the progress? The holdings function as you become a more pure CVS company, how do you think holdings function needs to evolve? That is what I would like to know.

So Yamaoka-san, thank you very much for your question. In terms of the function of the holding company, I see it as really boiling down to 4 key areas. The first one is coordinating the global strategy. You have to make sure that everybody is moving in the same way that we have a coordinated aligned global strategy. By the way, hopefully, you got that strong impression today from the presentations by our global leaders. Hopefully, it came out very clear that we have a very clearly aligned global strategy. We have similar challenges in different markets, and we are addressing them slightly differently, but we are addressing the same challenges with the same strategy. So that's one thing.

The second really key role of the holding company is capital allocation. And by that, I mean both financial capital and human capital. I think these are some of the most critical decisions we make. We need to make -- we need to obviously make sure that we get that we invest our money in the right places and get the right returns, but also that we develop and grow our people, and we put our people in the right places to deliver the best results and that they have the tools that they need to succeed. So capital allocation is the second item.

The third item that I think is important for the holding company is just, I guess, you call it generally governance and monitoring the operating companies' results. That's something that we implemented. You've heard me talk about this before, but we implemented that very early on when we started with the new leaders. And I think that's going very well. It's helped us to understand at Holdings, it's helped us to understand the operating companies' situations, their landscape, their environments and their challenges as well as how we can help them.

But it's also helped the operating companies understand our expectations as well as the expectations of our shareholders and all of our stakeholders. So it's -- I think it's -- it not only helps improve performance, it helps improve communication. So the monitoring function, the governance function, that's the third big element.

The fourth element that I think -- the fourth significant role of Holdings, I believe, is really linking the entire organization together and ensuring that we are leveraging our scale, leveraging our capabilities and getting the best value for our customers and delivering the best value to our shareholders. So I think of it as global leverage, leveraging the business across. And that includes best sharing best practice and so forth.

So those are all things that really the holding company needs to coordinate. In terms of the operating companies are responsible for execution. And within the framework of the strategy that's been agreed with them and the framework of the capital allocation that's been discussed, they have the freedom to execute aggressively and with urgency. And hopefully, you sense that today as well.

If there's any takeaway I would want you to take away from today's meeting, it would be the sense of focus, of urgency and aggression that you heard from the leaders of our business today, whether it's 7-Eleven, SEJ or SEI. And I think a lot of that comes from knowing that you are accountable and that you have the freedom and the autonomy to do what you need to do within that global strategic framework. Hopefully, that answers your question. Thank you.

The so-called global alignment or the -- in terms of coordination, the role of holdings that needs to be played, perhaps, I think, has been enhanced in the past, and you have been working on enhancing those roles of holdings. Is that the case?

Yes. Yes, we have. I am not satisfied. We still have a long way to go, if I'm being really honest. We've made some good progress. And the progress has been a changing process. We've stood up our global center of excellence for technology, and they're starting to move. And we've got -- the other areas are starting to move. We're making some progress. We've still got a lot more to do. And honestly, we need to accelerate. But the short answer is yes. We've made some progress there, and I'm very pleased with the progress, but I'm never satisfied if that makes sense.

Next, we will take a question from Kawano-san, Goldman Sachs.

This is Kawano from Goldman Sachs. I hope you can hear me.

Yes, we do.

I actually -- first of all, this is the first time I speak with Mr. Takagi. I hope we'd be able to have a very good engagement and dialogue. So I want to ask Mr. Dacus, listening to your presentation today, and I was thinking about the 2030 road map, you have that. And within this road map, if it's like 2030, that's far off.

So let's say, the plan for 2028. And of course, you have that as well. And so looking into 2028, that's JPY 1.1 trillion for EBITDA, EPS, JPY 148, ROIC, 8.6%. So you do have a lot of KPIs under 2028 goals, like 5 or 6 -- so after a year, I mean, you talked about urgency, aggression. But I'm sure the competitive landscape is really changing now and some -- a lot of geopolitical risks that can impact your business performance, starting with what's happening in Middle East.

So looking at all of that, as you head to 2028, how confident are you? Are you more confident? Or do you think there are areas where you find more room for growth or areas where you find more risks? If you'd be able to sort that for us, I'd like to know. And at the same time, so listening to the presentation today, my take was, I think you're trying to invest like JPY 3.2 trillion over the couple of years.

But there are a lot of areas where you have to invest. Disciplined investment is, of course, necessary, like you mentioned. But then at the same time, when you look at what you need to do, this ROIC target, of course, there's a lot of improvement that could be created by SEI. But what is your outlook in making the investment, making the returns? Sorry for asking a lengthy question.

Kawano-san, thank you for your question or I should say, questions. I thought it was quite neat how you got several questions into one. So congratulations for that.

No, congratulations, well done. So in terms of -- you called out a number of really important things. So yes, I'm confident in the steps that we're taking. I'm very confident in our approach. I'm confident in this team's ability to execute, and I'm confident about the various initiatives that are underway, all of which have been shared with you.

But you're quite right, there are risks, and there are risks that are beyond our control, and we're seeing that right now. The geopolitical risks are significant. For me, ultimately, the biggest single risk is anything that impacts our customer because that impacts customer behavior. And so that is all the more reason for us to act with a sense of urgency and to be agile.

As things change, as the environment changes, as risks appear and disappear, being agile with a sense of urgency is how we will adapt to it. Perhaps that's a bit more cultural. But that's why I emphasize how important that sense of urgency and focus and aggression is because I think that's how you get through the various issues that might come up. We are always looking at the risks that we think might pop up and considering what are our options to deal with that.

Obviously, right now, we're thinking hard about the current geopolitical situation and what that might mean for our business. I don't have an answer for you. So don't bother asking the fourth question. But it's something that you should know that is top of mind for us and particularly how that might impact our customers' behavior.

You asked a question -- I think your last question was about investment. Yes, we've got a lot of money to invest. Well, we've got a lot of investing to do is another way to put it to deliver this plan. we believe, as you heard from the presenters, that our approach to investing will be very disciplined. We have clear objectives in delivering returns on those investments. And if we don't believe we will get adequate returns on an investment, we will adjust and we will adapt.

The overall road map is a road map. It doesn't mean that there won't be any changes at all along the way. That's the nature of any plan. But I feel pretty confident that we have the processes in place, the thinking, the targets, the KPIs that will allow us to manage and monitor our business and adjust to whatever might come our way, even though we can't see it today. And we have no idea what that might be.

I think a year ago, if you had asked me that we would be in this conflict in the Middle East, I would have said that's probably a very low probability item, and I would have been wrong. So none of us can predict the future. So what we have to do is just stay agile with a high sense of urgency and adapt. And that includes adapting our investments. But again, we feel very confident that we have the right strategy and the right approach to deliver this. I'm not sure if that answered your questions or not, but if they didn't, I'm sure you'll tell me.

No, I think it was a long question. I think that really suffice.

Are there any other questions? With this, we would like to end the Q&A session. Thank you very much for your participation for long hours to our IR Day presentation. With this, we would like to end Seven & i Holdings IR Day 2026 Spring. Once again, thank you very much for your participation.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good evening, everyone. Thank you for joining us today. Let me start by framing the environment in which we operate. I shared this perspective back in October, and it remains unchanged.

We're operating in an industry that is undergoing profound structural change. There are three shifts that are defining the future of convenience. First, customers are becoming more value-conscious. Second, expectations for food quality and freshness continue to rise. And third, convenience itself is being redefined as customers shift across channels and engage more through digital platforms and delivery.

These are not short-term trends. They are reshaping the industry. In addition, in North America, we are seeing continued declines in fuel volumes and increased volatility in oil prices. As this volatility continues, we may begin to see impacts in consumer sentiment across markets.

Now against this backdrop, our ambition is clear: to remain the first choice for convenience, globally. To do that, our advantage starts with merchandising. We stay close to our customers, and we focus relentlessly on what matters to them. We develop differentiated products that stay ahead of their needs. And we deliver them with superior quality at compelling value. That is how we win.

And we combine this with our proven framework for store operations, tailoring product offerings and store formats to each local customer base. Our merchandising and operational excellence are supported by a strong integrated value chain, helping us move faster and execute better and deliver consistently.

Now all of this is powered by our unmatched global store network of more than 85,000 locations as well as our franchise model, which makes this network even stronger. Each franchise owner is an entrepreneur with real ownership and accountability. This local entrepreneurship keeps us close to our local customers every day.

In addition, 7NOW is a critical driver of our advantage. It is more than a delivery platform. It turns our stores into a true on-demand network. It allows us to meet customers wherever they are, whenever they need us. And in the current environment, where higher fuel prices are potentially impacting customer driving habits, 7NOW brings our offering directly to the customer.

These advantages form a powerful platform. We outsell our peers in merchandise sales per store by approximately 20% in Japan. And in North America, we outperform the average of our listed competitors by about 10%. On top of all that, in those two geographies, we serve more than 30 million customers every single day. All of this gives us scale. It gives us reach and it allows us to move fast. And importantly, this platform that I just spoke of is gaining momentum.

Now since becoming CEO, my focus has been clear. I've said this many times, disciplined execution. That has been my priority from day 1, and we are seeing the impact. Across the group, we are more connected globally and with stronger alignment, clear accountability and a shared focus on delivering value for our customers.

We said we would focus on execution. We are executing, and we are delivering. As a result, in 2025, we have regained momentum. Execution is improving, customer engagement is strengthening and our performance is now reflecting that.

Looking ahead to 2026, we will build on this momentum. We will accelerate our transformation while strengthening our fundamentals. We are doubling down on our competitive edge. We are sharpening our merchandising and strengthening our value chain to deliver better products at even better value. We are elevating operational excellence and investing in our unmatched store network to elevate our customer experience. 2026 will be a year of acceleration and execution. From 2027 onwards, we will see accelerating financial impact as the transformation continues to deliver tangible results.

Now let me look back at our performance in 2025. Despite a challenging market environment, we delivered record net income and record earnings per share. That is the result of disciplined execution, and it reflects the tangible progress that we have made.

2025 made two things very clear. First is the resilience of our business model; and second, the value that we can unlock through sharper execution. Together, these position us well for the next phase of growth. Also importantly, we completed a major structural transformation. By deconsolidating YORK Holdings and Seven Bank, we are now a pure-play convenience store business. That means greater focus, greater clarity, stronger capital discipline and enhanced profitability.

For our shareholders, we continue to deliver on our commitment to enhance returns. We completed this first JPY 600 billion tranche of our JPY 2 trillion share repurchase program through 2030. And we remain fully committed to the remainder of that program, along with progressive dividends.

Now let me turn to 2026. We will build on this momentum and accelerate. Excluding the impact of the deconsolidation of YORK Holdings and Seven Bank, we expect solid growth in merchandise store revenue, operating profit and EBITDA for 2026. We are already seeing encouraging signs in our first quarter.

The momentum that began in late 2025 is continuing into 2026. Our focus is clear: to elevate customer experience for sustainable growth. It is built on quality and value, executed with greater speed and discipline. To support this, we are executing our plan to invest up to JPY 3.2 trillion through 2030 to strengthen quality, deliver value and build a stronger foundation for sustainable growth.

We are investing with intent to strengthen our stores and drive organic growth because store quality matters. It shapes the customer experience. It builds the brand and it drives long-term growth. 2026 will be a pivotal year for us.

So let me begin by outlining some of the specifics, beginning with SEJ. Under new leadership, SEJ is improving customer engagement, stabilizing performance and restoring operational discipline. These actions are now translating into stronger sales momentum. SEJ is now entering the next phase of its structural transformation. We are strengthening our franchisee partnerships, tightening our cost disciplines and optimizing the value chain. This will take time, but the direction is clear and momentum is building. You should expect steady progress over the next year with more meaningful financial impact over a 2-year horizon.

Now let me turn to SEI. Our largest growth opportunity lies in North America. We are taking decisive action to evolve our approach. SEI has defined its North Star, a clear vision for 2030. Importantly, this is being driven by our teams on the ground. And based on this North Star, organic growth will be our priority. To enhance customer experience, we are prioritizing store renovations to elevate store quality and strengthen our brand equity. Now this all goes beyond just physical upgrades. We are elevating every element of the customer experience from safety and cleanliness to product quality and excitement. We will share more details on this at our upcoming Investor Day.

And at the same time, we will continue to expand our store network with discipline, and cost discipline remains fundamental. SEI is evolving its value chain and logistics network to optimize our distribution centers and improve price competitiveness.

And at the same time, 7NOW remains a core pillar of our growth. Convenience is evolving rapidly. 7NOW allows us to meet customers wherever they are, whenever they need us. 7NOW has grown at a compound annual growth rate of 25% over the last 4 years and is now about $1 billion in revenue and significantly -- and it has significantly expanded our customer reach.

Here, let me briefly address leadership at SEI. We are continuing our search for the next CEO of SEI. But in the meantime, we have two highly capable interim co-CEOs leading the business. I feel very fortunate to have Stan Reynolds and Doug Rosencrans leading our team in North America. They are working closely together, delivering steady performance and advancing our strategy. We will provide an update as soon as we have new information to share.

Now I'd also like to address the proposed IPO for SEI. The first thing I want to say is that our objective is clear. It is to unlock the intrinsic value of our North American business, position SEI for accelerated growth and improve shareholder value. And at the same time, we are ensuring that the business is fully prepared. We are strengthening leadership, executing the transformation program and continuing to deliver strong performance.

Our approach is and will remain disciplined. The timing of any IPO will be driven strictly by value. We will proceed only when SEI is ready and when market conditions appropriately reflect its strength and potential. That discipline matters even more as we navigate uncertainty in the market and shifts in customer behavior. In this environment, more than ever, we remain focused on being here for our customers. As a result, the earliest timing we are targeting for an IPO is fiscal year 2027.

Now at the same time, let me reiterate, Seven & i remains fully committed to completing the JPY 2 trillion share repurchase program that we previously announced through 2030.

Now beyond Japan and North America, we continue to pursue opportunities globally. We will focus on markets where we believe our value proposition can win. We will refine and strengthen our winning formula, leveraging the lessons from our successful investment in Australia as we expand into new geographies.

So let me close with this. The convenience industry is changing fast, and we intend to lead that change. We will stay ahead of our customers. We will remain their first choice for convenience. We will continue to surprise and delight them with better stores, better products and better service. And by doing that, we will create sustainable long-term value for customers, franchisees, shareholders and all of our stakeholders.

In 2026, we will stay on this course and accelerate. We expect continued improvement in same-store sales, margin and operational performance. We will remain disciplined on costs while continuing to invest for growth. 2026 will be a defining year for us, setting us up for tangible accelerating profit growth from 2027 onwards.

Our targets are clear. On an organic basis, we will drive compound annual growth in merchandise sales per store of between 2.5% and 3% for SEJ and 3% to 5% for SEI through 2030, while delivering 7% compound annual growth in consolidated EBITDA. I'm confident that we will deliver on these targets and stay on our growth trajectory.

To deliver on this, we will stay agile in how we respond to rapid industry change and in how we lead it. We will continue to review and refine our strategy to ensure that it remains aligned with long-term value creation. I look forward to sharing more on all of this, including the details at our upcoming Investor Day, where we will explain the initiatives in a fair bit of detail as well as the updates to our transformation plan.

Thank you all for your attention. Now let me hand over to Maruyama-san to walk us through the results.

[Interpreted] Good evening, everyone. This is Yoshimichi Maruyama from Seven & i Holdings. I will be covering our full year results for fiscal year 2025 as well as our financial forecast for fiscal year 2026.

Let me begin with our results for fiscal year 2025. Please look at Page 10. These are the highlights of our consolidated results for FY 2025. Group's total sales amounted to JPY 16.992 trillion, corresponding to 92.1% of the previous year and 99.5% of the revised plan. EBITDA was JPY 942.8 billion, representing 94.7% of the previous year and 102.2% of the revised plan. Operating income was JPY 422.9 billion, representing 100.5% of the previous year and 104.7% of the revised plan. Net income was JPY 292.7 billion, representing 169.2% of the previous year and 108.4% of the revised plan.

As these figures show, while we recorded a decline in group's total sales, we achieved profit growth at the operating income level and below. Following the completion of the deconsolidation of YORK Holdings and Seven Bank last year, group's total sales and EBITDA fell below the previous year's levels. However, profits at the operating income level and below increased, and we successfully achieved the plan which had incorporated these impacts.

Net income exceeded the revised plan target due to the improvement in special gains and losses. Furthermore, aided by the completion by February of share repurchases totaling approximately JPY 600 billion, EPS grew significantly to 178.3% on a year-over-year basis, exceeding the planned target. Additionally, foreign exchange effects had a negative impact of JPY 3.1 billion at operating income.

Please take a look at Page 11. The chart on the left shows the change in operating income by segment on a year-on-year basis. Operating income for Domestic Convenience Stores, CVS, Operations decreased by JPY 11 billion, while Overseas CVS Operations saw an increase of JPY 5.9 billion. I will go over the results of SEJ and SEI later in the presentation.

For the Superstore Operations, Financial Services and Others, because operating income through the first half of FY '25 for companies subject to deconsolidation was included in the consolidated results, there are some irregularities when comparing with the full-year results for FY 2024. However, if you look at the results versus the plan, you can see that performance was largely in line with the plan.

Eliminations/corporate recorded an increase in profit, mainly due to a review of IT and DX-related developments. As a result, consolidated operating income increased by JPY 2 billion.

The chart on the right shows operating income by segment versus the plan. The overperformance of the Domestic CVS Operations and the upside in the eliminations/corporate, partly because of the assumed risk buffer was not needed, largely offset the downside in the Overseas CVS Operations, where fuel market conditions stabilized in the second half of the fiscal year and gross profit fell below assumptions, resulting in an outperformance versus the plan of JPY 18.9 billion.

Please turn to Page 12. I will explain the primary factors behind the significant increase in consolidated net income. This slide shows the year-over-year changes in special gains and losses, broken down by factor. The chart on the left shows the change in special gains. Special gains increased by JPY 27.2 billion, primarily driven by gains associated with the deconsolidation of YORK Holdings. Meanwhile, as shown in the chart on the right, special losses decreased by JPY 135.1 billion, thanks to the completion of the group's structural reforms in fiscal year 2024.

Please look at Page 13. Now I will explain the results of our major operating companies, starting with SEJ. The chart on the left shows a breakdown of the year-over-year changes in operating income by factor. And the chart on the right shows the trend in same-store sales growth.

Since May, SEJ has been driving various transformations under the leadership of our new President, Mr. Akutsu. The effects of these initiatives started to bear fruit in the second half of the year. As you see in the chart on the right, our sales momentum has steadily increased.

However, SG&A expenses increased by JPY 24.7 billion. This was primarily due to higher costs associated with initiatives to strengthen customer engagement through the strategic launch of new promotions. We also saw an increase in expenses related to the next-generation store system, which is essential for our sustained business growth going forward. As a result, operating income decreased by JPY 13.5 billion on a year-over-year basis.

Please refer to Page 14. This page shows the results of SEJ's key initiatives for fiscal year 2025. Regarding our fresh food differentiation, the rollout of SEVEN CAFE Bakery and SEVEN CAFE Tea proceeded as planned. By strengthening the appeal of our just-made counter merchandise in conjunction with promotions, APSD grew by 8.3%.

As for our store plan, we strategically leveled out the concentration of new store openings towards the end of the fiscal year, shifting some of them to the first quarter of fiscal year 2026. However, having reviewed our plans for fiscal year '26 and beyond, we will achieve our target of a net increase of over 1,000 stores by fiscal year 2030. SEJ's transformation plan has finally entered the execution phase. I will explain this in more detail later in the presentation.

Please look at Page 15. Next, I will explain SEI's performance. As with the SEJ performance slide, the left side breaks down the factors behind the change in operating profit, and the right shows the trend in same-store sales growth rate.

Operating profit decreased by USD 29 million due to merchandise, et cetera. However, as we are optimizing our store network, excluding the impact of strategically executed store closures, merchandise actually increased profit by USD 42 million. In addition, SG&A contributed a USD 97 million increase in profit, reflecting the effects of our ongoing cost leadership initiatives. As a result, operating profit increased by USD 48 million to $2.221 billion.

As shown in the chart on the right, amid the changing consumer environment in North America, the trend is improving, supported by a continued promotional initiatives and product promotions that respond to customer preferences. To build on this momentum, we will further accelerate our efforts in FY 2026.

Please look at Page 16. These are the results of SEI's key initiatives for FY '25. To differentiate our fresh food offering, we have been expanding the rollout of QSRs and introducing private-brand products. We are also moving forward with new store openings, including our new standard store format that enables us to offer these higher value-added products, thereby further strengthening our store network. In addition, 7NOW, which responds to changing consumer behavior in North America, has also been performing steadily.

Next, I will explain the financial forecasts for fiscal year 2026. Please note that the situation in Iran, geopolitical risks, the impact to our business, there are some uncertainties, and please note that our full year financial forecast do not incorporate the potential impact of geopolitical risks on our business as there is currently a high degree of uncertainty. We will continue to closely monitor the situation and provide updates in a timely manner.

Please look at Page 18. First, I will explain our consolidated financial forecast for fiscal year 2026. Before going into the numbers, however, allow me to explain two key assumptions underlying the figures I'm about to present.

First, with the deconsolidation of YORK Holdings and Seven Bank completed during fiscal year '25, fiscal year '26 will mark our first full fiscal year as a pure convenience store business group. To help you accurately understand the true state of the financial forecasts of our convenience store business group, when explaining the FY 2026 plan, we have presented the '25 actual figures on a like-for-like basis, excluding the impact of deconsolidation, that is as like-for-like adjusted comparisons, meaning that YORK Holdings and Seven Bank are regarded as an equity method, so such adjustments are made and a comparison is presented.

Second, starting in fiscal year 2026, we will disclose the total merchandise sales of the group's convenience operations as Convenience Store group merchandise sales. The reason why we will disclose the convenience store group merchandise sales is because the revenue of 7-Eleven, how you define it, it will vary the revenue, and it may not reflect the reality. So in order to accurately reflect the reality, we need to include the revenue of the franchise and also the group convenience store, the entire merchandise and the sales to be compared. So that is the reason why. So in this way, we will be providing the figures for a better understanding.

So based on these assumptions, I will now go over the highlights of our consolidated financial forecast for fiscal year '26. Convenience store group merchandise sales are projected at JPY 10.030 trillion, corresponding to 102.7% of previous year. EBITDA is projected at JPY 891 billion, 102.8% of the previous year. Operating income is projected at JPY 405 billion, 105.3% of the previous year. Net income is projected at JPY 270 billion, 105.9% of the previous year. EPS is projected at JPY 117.42, 113.5% of the previous year. As you can see, we are planning an increase in both sales and profits. Later on, we will walk you through the business strategies for SEJ and SEI.

Next is Page 19. First, I would like to explain SEJ's profit plan and key initiatives. We will further accelerate our co-creation marketing, an initiative we have strengthened since fiscal year '25, to build our greater momentum. As explained earlier by Mr. Dacus, to this end, we will proceed with our initiatives by making quality and value our top priorities. We will roll out just-made products centered around SEVEN CAFE Bakery and SEVEN CAFE Tea under the Live-MEAL brand to further enhance their appeal to customers.

Additionally, as part of our category strategy, we will strengthen our product proposals tailored to the diversifying lifestyles of our customers. To strengthen our earnings structure, we will structurally transform the value chain that has been built over more than 50 years to achieve further sustainable growth. And for cost structure, the business process will be revised and reviewed.

Please turn to Page 20. I'll repeat in saying we believe that it is essential to further strengthen our management foundation to respond to various changes in the business environment and achieve sustainable profit growth forward. Starting March, we entered the execution phase of the transformation plan and the effects will begin to materialize.

At the core of this plan is a value chain reform, where we will drive fundamental structural reforms across the board from procurement to manufacturing and logistics. We expect this will increase flexibility in merchandise development and improve our gross profit margin while also enhancing our competitiveness in pricing.

In addition, we will build store operations that elevate the quality of customer service and strengthen our services and entertainment offerings, thereby achieving growth in sales and gross profit. Regarding SG&A expenses, we will review our management structure from a zero-base perspective, including headquarters and IT-related costs and vigorously push forward with initiatives aimed at optimization.

Please take a look at Page 21. Next, I will explain SEI's profit plan and key initiatives. Supported in part by the impact of the key initiatives we have been implementing in '25, momentum in merchandise is on a recovering trend. In FY '26, with the aim of further growing merchandise sales and expanding gross profit amounts, we will continue to elevate the customer experience by expanding our proprietary product lineup and upgrading existing stores. We will also accelerate franchising while advancing the modernization of our store network. At the same time, we will strengthen cost control and steadily deliver profit growth.

We are currently updating the transformation plan. In doing so, we will directly address the fundamental challenges SEI is facing and incorporate initiatives aimed at resolving them so that we can better reap the benefits of transformation. We will face the issues that SEI is facing, and we will make a progress to reap the benefits. This is an initiative that will significantly change customers' perception of 7-Eleven in North America, and we will explain the details at IR Day on April 23.

Please take a look at Page 22. This page outlines our approach to shareholder return. As Mr. Dacus mentioned in his opening remarks, while the IPO of SEI has been postponed, our shareholder return policy remains completely unchanged. Under our progressive dividend policy, we plan to increase the annual dividend by JPY 10 to JPY 60 per share for fiscal year 2026.

Regarding the total JPY 2 trillion share repurchase program through fiscal year 2030, we have JPY 1.4 trillion remaining after executing JPY 600 billion last fiscal year. We are currently finalizing the details for this fiscal year's repurchases, and we will disclose the information as soon as it is decided.

Please turn to Page 23. Including the initiatives discussed today, we will pursue sustainable EPS growth and the creation of shareholder value through the solid business growth, the execution of fundamental transformation and disciplined capital allocation. Following today's presentation, at our IR Day scheduled for April 23, our business leaders will explain their specific strategies in more detail from a medium- to long-term perspective. We look forward to continuing our constructive dialogue with all of you.

This concludes our presentation for today. Thank you for your time.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]