Seven-Eleven Japan Co.

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  • Topic: Seven & I Holdings Co., Convenience store, 7-Eleven
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SEVEN-ELEVEN JAPAN CO.
Established in 1973, Seven-Eleven Japan set up its first store in Koto-ku, Tokyo, in' May 1974. The company was first listed on the Tokyo Stock Exchange in October 1979. In 2004 it was owned by the Ito-Yokado group, which also managed a chain of supermarkets in Japan and owned a majority share in Southland, the company managing Seven­ Eleven in the United States. Seven-Eleven Japan realized a phenomenal growth between the years of 1985 and 2003. During that period, the number of stores increased from 2,299 to 10,303; annual sales increased from 386 billion to 2,343 billion yen; and net income increased from 9 billion to 91.5 billion yen. Additionally, the company's return on equity (ROE) averaged around 14 percent between 2000 and 2004. In 2004, Seven-Eleven Japan represented Japan's largest retailer in terms of operating income and number of st9res. Customer visits to Seven-Eleven outlets totaled 3.6 billion that year, averaging almost 30 visits to a Seven­ Eleven annually for every person in Japan. COMPANY HISTORY AND PROFILE

Both Ito-Yokado and Seven-Eleven Japan were founded by Masatoshi Ito. He started his retail empire after World War II, when he joined his mother and elder brother and began to work in a small clothing store in Tokyo. By 1960 he was in sole control, and the single store had grown into a $3 million company. After a trip to the United States in 1961, Ito became convinced that superstores were the

wave of the future. At that time, Japan was still domi­ nated by Mom-and-Pop stores. Ito's chain of superstores in the Tokyo area was instantly popular and soon consti­ tuted the core of Ito-Yokado's retail operations. In 1912, Ito first approached the Southland Corporation about the possibility of opening Seven-Eleven convenience stores in Japan. After rejecting his initial request, Southland agreed in 1973 to a licensing agreement. In exchange for 0.6 percent of total sales, Southland gave Ito exclusive rights throughout Japan. In May 1974, the first Seven-Eleven convenience store opened in Tokyo. This new concept was an immediate hit in Japan, and Seven-Eleven Japan experienced tremendous growth. By 1979 there were already 591 Seven-Eleven stores in Japan; by 1984 there were 2,001. Rapid growth continued (see Table 3-1), resulting in 10,356 stores by 2004. On October 24, 1990, the Southland Corporation entered into bankruptcy protection. Southland asked for , Ito-Yokado's help, and on March 5, 1991, IYG Holding was formed by Seven-Eleven Japan (48 percent) and Ito­ Yokado (52 percent). IYG acquired 70 percent of South­ land's common stock for a total price of $430 million. In 2004, convenience store operations from Seven­ Eleven Japan and 7-Eleven Inc. in the United States con­ tributed 48.2 percent of total revenues and 90.2 percent of total consolidated operating income for the Ito Yokado group. Seven-Eleven Japan contributed 87.6 percent of

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Year Number of Stores Annual Sales (billion yen) Year Number of Stores

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Annual Sales (billion yen)

1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988

15 69 199 375 591 801 1,040 1,306 1,643 2,001 2,299 2,651 2,964 3,304 3,653

0.7 4.8
17.4

39.8 12.5 109.8 153.6 202.1 256.5 319.0 386.7 453.6 521.9 599.1 686.3

1989 1990 1991 1992 1993 1994 1995 1996 ' 1997 1998 1999 2000 2001 2002 2003

3,954 4,270 4,629 5,058 5,475 5,905 6,373 6,875 7,314 7,732 8,153 8,602 9,060 9,690 10,303

780.3 931.9 1,081.8 1,194.9 1,281.9 1,392.3 1,477.1 1,609.0 1,740.9 1,848.1 1,963.9 2,046.6 2,114.0...
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