7-Eleven Group posts higher revenue of RM1.07b for Q4’23

PETALING JAYA: The 7-Eleven Group registered overall revenue of RM1.07 billion, an increase of RM80.3 million or 8.1%, while core profit decreased by RM3.7 million or 18.2% to RM16.4 million for the fourth quarter of its financial year ended Dec 31, 2023.

The convenience stores segment recorded higher average per store day and customer count as consumer spending and trading activities remained buoyant in the quarter under review. Revenue increased by RM36.5 million or 5.5% compared with the previous year’s corresponding quarter. Notably, revenue across all product categories grew in the quarter, resulting in higher gross profit by RM5.6 million or 2.7% to RM213.1 million.

“Operating expenses increased by RM6.9 million or +3%, driven by higher store operation related expenses vis-a-vis longer operating hours and with +94 net new stores added; an expansion in our workforce to meet anticipated business demands also contributed to this increase. Excluding corporate exercise expenses, the convenience store segment recorded a core profit after tax of RM13.5m, an increase of RM6.4m or +89.2% as compared to previous year corresponding quarter,” 7-Eleven Group said in a statement today.

The group added that in the fourth quarter, it rolled out 62 new 7-Café format stores, with one non performing store closure, bringing a total count of 247 7-Café stores for the period ended Dec 31, 2023.

“It is encouraging to note that these 7-Cafés are more productive and have higher fresh food sales participation compared to a classic store. Total store count stood at 2,566 stores,” it said.

The pharmaceutical segment recorded a revenue of RM378.2 million for the current quarter, an increase of RM43.8 million or +13.1%, primarily driven by new stores sales contribution. Correspondingly, gross profit increased by RM11.1 million or +16.9% while gross profit margins increased from 19.6% to 20.3%, mainly due to higher rebate income received.

The group said core profit from pharmaceuticals experienced a decline of RM10 million or 77.3% compared with the same quarter last year due lower off-take of higher margin Covid-19 test-kits and face masks. Total store count stood at 250 stores, a net increase of 30 stores.

Net corporate exercise income of RM207.5 million primarily consists of the gain on disposal of pharmaceutical segment offset by related expenses incurred. The Group’s Consolidated Profit after Tax for the current quarter after corporate exercise income and expenses is reported at RM223.9 million, an increase of RM215.4 million or +2,525.0%.

“Notwithstanding the continued positive turnaround in trading conditions and retail sentiment, the Group is cognizant and will remain steadfast in monitoring potential headwinds arising from global supply chain disruptions, workforce supply constraints and cost pressures on the back of an increase in minimum wages, rising interest rates and inflation; essentially, we will take appropriate measures to mitigate these impacts, as necessary,” the group said.

It added that its focus for the convenience stores segment continues to be on the expansion of the 7-Café store format, aimed at enhancing product offerings and elevating the in-store customer experience.

Anticipated to drive growth in their fresh food category, the 7-Café format will play a pivotal role in diversifying our sales mix and improving margins. On-going initiatives include the establishment of new 7-Cafés outside of Klang Valley, complemented by tactical plans to penetrate specific high potential locations.

“As at the date of this report, we are pleased to share that our new commissary is already fully operational. Designed to accommodate up to 1,000 stores in the Klang Valley, this facility incorporates advanced equipment and automation to streamline key processes such as prepping, cooking, and packing, thereby enhancing the quality and consistency of our fresh food offerings. In addition, efforts to enrich our fresh food product assortment will be enhanced, further bolstering our sales strategy,” it said.

Additionally, the group is also delighted to announce the completion of its first self-operated ambient warehouse. Covering 300,000 square feet, this facility operates on a comprehensive inventory put-away model, complemented by automated handling activities. “With increased efficiency in delivery lead times, on-shelf availability, and picking accuracy, we anticipate better in-store service levels and customer experience, marking a significant milestone in our supply chain infrastructure enhancement endeavors,” it said.

In the coming year, the group has plans to introduce My7E Online Store, offering on-demand delivery to customers through the My7E Mobile App platform.

“We will also continue to enhance our supply chain planning and efficiency by implementing a Transport Management System, coupled with Digital E-Proof-of-Delivery, both of which are anticipated to simplify logistical operations across the value chain. Last but not least, in line with our customer-centric strategy, we will be conducting more regular consumer research and insights, leveraging the voice of the consumer through social listening and brand health studies to continuously improve our services and product offerings,” it said, adding that the successful disposal of their pharmaceutical segment provides an opportunity for the group to unlock and realise the value of its investment.

In addition, it said, cash proceeds from the disposal will be reinvested into strategic initiatives, including their convenience store segment, which are expected to contribute positively to the group’s future income.