Seven & i Earnings: U.S. Convenience Stores' Contracting Fuel Margins Depress Profits

Narrow-moat Seven & i’s first-quarter results will likely come as a disappointment to the market, as a correction in fuel dollar margins dragged on overall profits, as we had predicted. We maintain our forecasts and JPY 6,300 fair value estimate, implying that the shares are fairly valued. Our profit forecasts for fiscal 2023 remain a touch below management's guidance, given our less optimistic expectation for near-term growth in the U.S. market.