Retailer Presentation

Retailer Presentation

Contents Retailer Summary Seven & I Holdings Banners include: Strategy Management Structure Countries of Operation Global Retail Index Financial Information Key Formats SWOT

Summary Domestic Market: Japan Operating countries: 19 Turnover*: Yen 5,752,393m Store Numbers: 34,944 Number of Formats: 4 Ownership: Public Chairman & CEO: Toshifumi Suzuki * Fiscal year ended 29 February 2008.

Corporate Strategy Mission: Aiming at continuously evolving a new, comprehensive lifestyle industry in a continuously changing society. Medium - Long-term priorities: Strengthening existing fields of business. Will not consider mergers/acquisitions merely to expand market share or scale. Focus on initiatives that contribute to raising turnover on a group basis. Expansion of e-money service (nanaco) to further stores, as well as entering into tie-ups with nongroup companies.

Trading Current Priorities: Price focus on Everyday Fair Prices to combat perception of high prices. Product lifecycles explore new approaches to shorten cycles. Freshness further improvement, coupled with local sourcing policy. Quality improving quality in response to health-related concerns. Use of IT extensive use to improve business processes. Sourcing: Seven & I has been developing a global sourcing structure, as well as direct-import supplier relationships. Supplies mail order company Otsuka with food and other products to distribute via its catalogue. Plans to install e-commerce software to bulk buy goods and services for its employees.

Private Label Strategy Historically, each group company developed its own private label lines. Seven & I launched the Group Merchandising Reform Project to look at group-wide merchandising activities. Launched a new private label food range, Seven Premium, in May 2007. This range is now the group s key private label focus. Range now comprises around 380 SKUs such as soup, drinks and processed foods. Seven & I hopes to increase the range to 1,000-1,200 SKUs over three years. Prices are 20-30% lower than similar national brands.

Board of Directors Toshifumi Suzuki Chairman & CEO Noritoshi Murata President & COO Tadahiko Ujiie Director & CFO

Seven & I Holdings' Store Numbers by Region Note: Includes franchises. NAFTA Europe Asia Australasia 7,504 stores 316 stores 26,760 stores 364 stores Convenience Stores Convenience Stores Hypermarkets, Supermarkets, Convenience Stores, GMS, Restaurants Convenience Stores

IGD Global Retail Index 2007 GRI GRI GRI GRI 2007 2006 Retailer 2007 2006 Retailer 1 2 3 4 5 6 1 2 3 4 5 6 Carrefour Wal-Mart Stores Tesco Metro Group Ahold Seven & I Leading global operators 14 15 16 17 18 14 15 16 18 17 Spar International Aeon Tengelmann Intermarché Leclerc International retailers (less of a global focus) 7 8 9 10 7 13 10 9 Auchan Lidl & Schwarz Rewe Gruppe Aldi Leading international retailers (potential to be global) 19 20 21 22 19 20 23 21 Edeka Gruppe Safeway Inc. Woolworths Ltd Kroger Leading domestic retailers (potential to internationalise their operations) 11 8 Groupe Casino 23 22 Coop Norden 12 11 Costco 24 27 Marks & Spencer 13 12 Delhaize Group 25 24 Cora Louis Delhaize See penultimate slide for definitions.

Top Group Companies Company Revenues from Operations (Yen m) % Change vs. Fiscal year ending Feb 2007 Store Numbers Division Seven-Eleven Japan 2,574,306 +1.6 12,034 Convenience 7-Eleven Inc 1,843,409 +9.0 6,088 Convenience Ito-Yokado Co 1,489,381-1.5 176 Hypermarket York-Benimaru Co 330,145 +5.2 149 Supermarket Sogo Co 502,001 +0.3 12 Department Store Seibu Department Stores Ltd 468,063 +0.5 16 Department Store Seven & i Food Systems Co* 54,958 - - Foodservices Seven Bank Ltd** 83,664 +10.9 13,032 Financial Services Source: Seven & I Holdings at 29/02/08 for Seven-Eleven Japan and 31/12/07 for other divisions. Data for Seven Bank at 31/03/08. Store numbers include franchisees. Other group companies operate within these stated divisions. * Note: Seven & i Food Systems was established in January 2007 by the merger of Denny s Japan, Famil Co and York Bussan. ** Note: Store numbers refers to number of ATMS, Seven Bank does not operate standalone outlets.

Last Full Year Fiscal year ending February 2008 (Yen m) Fiscal year ending February 2007 (Yen m) % Change Turnover 5,752,393 5,337,807 +7.8 EBITDA 281,088 286,838-2.1 Source: Seven & I Holdings Fiscal year ending 29 February 2008. Key points: Revenue rose following consolidation of York-Benimaru supermarket business. Earnings fall was attributed to factors including start-up costs for e-money service, a weak convenience store business and loss-making restaurant chain Denny's Japan.

Five Year Review 2004 2005 2006 2007 2008 Turnover (million Yen) 3,542,146 3,623,555 3,895,772 5,337,807 5,752,393 Turnover growth (%) +0.3 +2.3 +7.5 +37.0 +7.8 EBITDA (million Yen) 207,783 211,950 244,940 286,838 281,088 EBITDA Growth (%) +3.2 +2.0 +13.4 +17.1-2.0 Note: Data refers to year ended 28/29 February.

Turnover 6,000,000 5,752,393 5000% 5,337,807 4500% 5,000,000 4000% Yen m 4,000,000 3,000,000 2,000,000 3,530,317 3,542,146 3,623,555 3,895,772 3500% 3000% 2500% 2000% 1500% 1000% % Annual Change 500% 1,000,000 0% -500% 0 2003 2004 2005 2006 2007 2008 Turnover million Yen % Annual Change -1000% Note: Data refers to year ended 28/29 February.

% Segmented Turnover by Region (Fiscal year ending February2008) 1.1 (0.9) 32.4 (32.4) Japan USA Others 66.5 (66.7) Note: Data refers to year ended 29 February, split by geographic segment as reported by Seven & I. Others consists of results mainly from the People s Republic of China. Note: Figures for Fiscal year ending February 2007 are shown in brackets

% Segmented Turnover by Operations (Fiscal year ending February 2008) 2.0 (2.3) 2.0 (1.9) 0.6 (0.6) Convenience Store Hypermarket 17.7 (18.4) Department Store 41.3 (41.8) Foodservices 36.4 (35.0) Financial Services Others Note: previous year s figures are shown in brackets. Foodservices was previously known as Restaurant division.

Operating Profit (EBITDA) 300,000 286,838 281,088 70% 60% 244,940 50% EBITDA (million Yen) 200,000 100,000 164,865 201,301 207,783 211,950 40% 30% 20% 10% 0% -10% -20% % Annual Change -30% -40% 0 2002 2003 2004 2005 2006 2007 2008-50% Operating Profit million Yen % Annual Change Note: Data refers to year ended 28/29 February.

Store Numbers 40,000 Store Numbers 30,000 20,000 24,210 26,028 27,384 29,895 30,646 32,818 34,944 10,000 0 2002 2003 2004 2005 2006 2007 2008 Note: Data refers to year ended 28/29 February. Source: IGD estimates, Seven & I Holdings.

Hypermarkets 188 hypermarkets 2 markets Revenue from operations: Yen2,109,050m Priorities include: Working to develop Seven Premium private label range. Store closures in Japan to help improve profitability. Development of Ito-Yokado Net Supermarket service. Tokyo, Japan In March 2007, Ito-Yokado Otaka no Mori was first to open a supermarket focused primarily on food. New store openings in China, particularly Beijing and Chengdu. 10 new stores targeted by December 2010. Source: Retail Analysis photo gallery

Convenience 33,913 stores 17 markets Revenue from operations: Yen2,395,220m Priorities include: Japan Strengthen development of counter fast food. Build on openings of small satellite stores. Aggressive expansion of Seven Premium. Melbourne, Australia Overseas Accelerated store openings in Canada and US. Store renovations. In China, begin fully-fledged franchise development (Seven- Eleven Beijing) and open stores in Shanghai via area licensee (Seven-Eleven China).

Supermarkets 209 supermarkets 1 market Revenue from operations: Yen330.1bn Priorities include: Development of differentiated, unique products. Bolstering Seven Premium range. Maintain pace of store openings. Integration of merged operations of Super Kadoya and Fujikoshi.

General Merchandise Stores 58 General Merchandise Stores 5 markets Revenue from operations: Yen1,025,355m Priorities include: Introducing more prestige brands at Sogo. Remodelling of both Sogo and Seibu stores. Specialist store openings at Seibu including: Beauty Building health & beauty. Fashion Building leading-edge designer brands. Development of The Loft Co Ltd, which was made an official subsidiary in 2007. Source: Wikimedia, discoverhongkong.com

Discount Seven & I opened its first discount store on 29th August 2008 in Tokyo. The 3,000 sqm pilot store occupies a former Ito-Yokado supermarket in the Nishiarai area of Tokyo. Trading under the fascia 'The Price, it will offer products at prices 25-30% lower than those in Ito-Yokado supermarkets. The store aims to cut costs by employing fewer full-time staff and sourcing some goods directly from manufacturers. In-store decoration and marketing efforts will be minimal. The assortment will include 70-80% food as well as clothing and small electricals. It will be at least 30% smaller than that in group supermarkets. Private label will not be present. The concept will be rolled out, if successful, mainly in the Tokyo metropolitan area.

Other Formats Seven & I is active in a number of non-grocery retail areas including restaurants, financial services and e-commerce. Priorities include: Cost-cutting and restructuring in foodservice operations to facilitate a return to the black. Expansion of nanaco to stores outside the group. Development of online services IY Net and Seven-Eleven Net. Installation of ATMs inside and outside group stores. Forecasts around 14,000 ATMs by Fiscal year ending March 2009. Source: various.

SWOT Analysis Strengths Strong position in domestic market. Global store portfolio and scale. 7-Eleven brand strength. Superior IT capability. Weaknesses Cost of re-structuring. Prices perceived as expensive. Heavy reliance on franchising. Dependence on 7-Eleven format. Profitable retail strategy. Opportunities Further development of e-commerce operations. Expansion of financial services. Increased supplier collaboration. Exploit growing demand for convenience. Further expansion into China. Threats Foreign entrants into Japanese market. Increased price competitiveness. Vulnerability of GMS format due to pressure on non-food spending. Pace of globalisation. Competition in other operations e.g. banking.