April 7, 2022

Company Name: Seven & i Holdings Co., Ltd. Representative: Ryuichi Isaka

President & Representative Director

(Code No. 3382/Prime Market of the Tokyo Stock Exchange)

Regarding the Management Message to our Shareholders and Other Stakeholders

Seven & i Holdings Co., Ltd. (the "Company") hereby announces that, as of today, April 7, 2022, the Company has sent out the Management Message "To Become a World-Class Global Retailer Group" to our shareholders and other stakeholders, based on the unanimous decision of the Board of Directors.

Please see the Appendix for the full letter.

April 7, 2022

To Become a World-Class Global Retailer Group

To our stakeholders including shareholders

Thank you for your continued support to the Seven & i Group. Your support has meant even more to us over the past two years, with the global pandemic still showing no sign of ending.

With the rapidly evolving management environment, we believe it is of utmost importance to deepen the understanding of and gain the support from our stakeholders including shareholders, regarding our Group objective and what we are focusing on. We have engaged in serious discussions with the aim of achieving "sustainable growth and mid-to-long term corporate value enhancement of the Group", by continuing the constructive dialogue with shareholders and listening to the voices of a wide range of stakeholders. This year, we have engaged in numerous discussions with shareholders, including meetings where Outside Directors actively participated. With consideration of these discussions, we have decided to make this letter public, to demonstrate the current state of the Group as well as how we see our future clearer to our stakeholders including shareholders.

The Group's corporate creed and basic principle

Since our founding in 1920, the Seven & i Group has experienced drastic changes in society and the economy, including large-scale natural disasters and wars. Throughout this time, the Group has continued to grow by catering to the needs of each individual customer, and building a business that is deeply embedded in local societies. During this period, the basic format of our business has evolved together with changes in the economic and social environment. However, the underlying principle of our business, outlined in our Corporate Creed of "We aim to be a sincere company that our customers, business partners, shareholders, local communities and our employees trust" has not wavered over the years. This represents the foundation of our management, born through our experience and held firm over the years, as we respond to your trust and support.

Progress and achievements of the Medium-Term Management Plan

Based on the above principle, we have outlined our "Basic Stance" (*1), together with "Ideal Group Image for 2030" (*2) as our future aspiration of the Group, and announced the current "Medium-Term Management Plan 2021-2025" in July 2021. In this Medium-Term Management Plan, we aim to achieve sustainable growth as well as to create social value through Group-wide initiatives that bring together each of the Group companies. Moreover, we are promoting various strategic measures to become a world-class global retailer group, including the acquisition of the shares of Speedway LLC ("Speedway") by our U.S. subsidiary 7-Eleven, Inc. ("SEI").

As a result, our total shareholder return ratio was 157% for the period from the end of February 2020 to the end of February 2022, and was 141% during the period from the end of February 2021 to the end of February 2022, both outperforming the averages of TOPIX and S&P 500, and the average of major convenience store

("CVS") stocks in North America.

In promoting sustainable management with a focus on ESG, we have placed sustainability-related initiatives at the heart of the Medium-Term Management Plan. Tackling climate change is now an imminent concern for the whole world, and the Group announced its environmental declaration "GREEN CHALLENGE 2050" in 2019, and is making a Group-wide effort to work on initiatives such as reducing CO2 emissions. We also believe climate change-related disclosure is critical, and expressed our support to the TCFD proposal in 2019. In June 2020 we made a disclosure in accordance with the TCFD proposal, and in March 2022 we quantified and disclosed the business impact assessment results. This disclosure was for Seven-Eleven Japan ( "SEJ") in Japan, but in FY2022 we are planning to make the same disclosure for the Superstore Business which includes Ito-Yokado Co., Ltd. ( "IY") and York Benimaru Co., Ltd., and in FY2023 for SEI. We will continue to take a global perspective and contribute to realizing a sustainable society, including the analysis of the risks and opportunities arising from climate change.

  • (*1) "Basic Stance"

    We aim to contribute to the local community both in Japan and overseas by providing new experiences and values form the customer's point of view.

  • (*2) "Ideal Group Image for 2030"

    A world-class global retailer group that leads retail innovation through global growth strategies centered on the 7-Eleven business and proactive utilization of technology

Key management focus areas and action plans

A. Review business portfolio and accelerate initiatives to optimize operations

In the Medium-Term Management Plan, we have clarified our framework regarding the business portfolio, and are working to review the business portfolio and accelerate initiatives towards optimal operations. We are especially focused on maximizing Group-wide business synergies, and are fundamentally reforming the focus restructuring areas where we face challenges in both efficiency and growth potential, as well as considering the best owners of such businesses in parallel.

Following the strategic direction of the Group thus far, and from the perspective of further promoting our global growth strategy with 7-Eleven at the core, we outline below our initiatives regarding the 3 core strategies related to our business portfolio:

1. Accelerating profit growth through domestic / overseas convenience store business collaboration

The 7-Eleven business in Japan and overseas has been recognized as having the potential to become a "Global CVS Champion", in the proposal received on February 8th, 2022, from ValueAct Capital Management L.P.

("ValueAct"), who is also our shareholder. We deeply appreciate their interest in our Group's business.

CVS business (North America)

SEI, which covers the CVS business in North America, has seen dramatic growth; for example, net profit has grown from USD 17 million in FY2005, to USD 1.317 billion in FY2021, and is projected to grow more than 20% per annum during the period of FY2020 to FY2025.

The Group growth strategy outlined in the Medium-Term Management Plan positions the overseas CVS business as the main driver. For SEI, we will work to realize the synergies of integration with Speedway, reform the business for the next growth, and improve profitability. We will strengthen the food business by building a value chain through collaboration with SEJ, expanding the sales of fresh food, original beverages and private brand products, as well as the restaurant business. We will also focus on establishing a sustainable business structure while improving profitability, through the adaptation to a decarbonized society by strengthening the food business and lowering the fuel business exposure to accommodate with the transition to EVs.

In addition, we recognize DX (Digital Transformation) as an important management priority both in Japan and overseas. "7NOW", the delivery service for orders from smartphones etc., is already in operation in approx. 4,000 stores in the U.S. and approx. 1,200 stores in Japan, backed by the rising demand in recent years. We plan to expand the service globally, rolling out our trial model in Japan and the U.S., providing to better convenience for our customers, and enhance the value of 7-Eleven as a global brand.

Global strategy

In terms of promoting our business globally, our Group has the track record of rebuilding the 7-Eleven business in the U.S. starting from the 1990's, leading SEI to dramatic growth. Today, we operate our 7-Eleven business in 18 countries and regions throughout the world. We are fully confident that, by utilizing the business innovation methodology that we have established in Japan, the U.S. and other countries, we can bring out the strong growth potential of these businesses. Moreover, through the further global expansion, we aim to provide incremental value to customers in each region, while contributing to the prosperity of society overall through an innovative supply chain.

In order to achieve this goal, we have established 7-Eleven International LLC ("7IN") jointly by SEJ and SEI.

7IN will be responsible for the collaboration between the 7-Eleven businesses in Japan and the U.S., and accelerate our global strategy. 7IN will build a network of 50,000 stores in areas other than Japan and North America by FY2025, and aims to operate in 30 countries and regions around the world, including Japan and North America, by FY2030. We are currently in the process of deploying specific initiatives, and will be disclosing the KPIs, actual roadmap and other details going forward.

2. Strengthening CVS and Superstore businesses' competitiveness centered on grocery business strategy

In the Medium-Term Management Plan, we have positioned the CVS business both in Japan and overseas as our Group's growth driver, together with the food business which generates more than 60% of domestic revenue (FY2021 actual results) as our strategic focus growth area.

The Group aims to gain market share in the food market, by enhancing competitiveness of the food business, and will bring together the Group's strengths in each retail format to strengthen our brands. The Group's private brand "Seven Premium" which started in 2007 is serving as the source of our competitiveness, due to its innovativeness, brand awareness as well as the support from customers. The development of Seven Premium is made possible by bringing together SEJ's original development process, wide-ranging sourcing abilities of IY in areas such as fresh foods and processed foods, diverse expertise and information within the Group, as well as the long lasting relationship with business partners, making it unique and unprecedented among the brand strategies carried out by a retail service company.

With the structural changes in domestic consumption market, including aging society and decline in population, it is crucial for the Group to deploy its unique business model of "Placing SEJ's sales capability and competitiveness at the core, while utilizing the expertise and supply chain of the Superstore centered around IY, including the tracking of the location of production, sourcing of merchandise, production management etc.".

We believe that this is the optimal way to maximize Group's strengths and to continue our sustainable growth in the domestic CVS business together with our franchisees. The inseparable collaboration between the domestic

CVS business and the Superstore business centered around IY is only made possible by having the businesses in one Group. With COVID-19 bringing dramatic change in customers' consumption activities and values, detailed analysis of the commercial areas as well as diversified customer touchpoints are important than ever; it is precisely in an environment that we can leverage our strength of having both the CVS business and the

Superstore business within the Group.

The Group has already been working on catering to demand for deliveries (last-mile initiatives), which continues to grow, through the 7NOW service of SEJ as well as the online supermarket business of IY. 7iD, which is the common ID of the Group, will organically link the store networks, app membership and distribution centers, thereby evolving the Group's original and competitive services.

In addition, IY will complete their continued business restructuring by the end of FY2022. To put IY back on the growth trajectory, we will focus on initiatives such as making use of distribution centers for the online supermarket business, concentrating to urban areas, and applying the vertically integrated business model to food products. IY will contribute to enhancing the competitiveness and corporate value growth of the Group, as well as strengthen its own earnings capabilities.

Some investors have proposed to sell or spin off IY to enhance the Group's corporate value. However, as mentioned above, we are convinced that having the Superstore business centered around IY and SEJ in one

Group contributes to the future growth of the Group, including SEJ and our franchisees. We will continue to refine our core business model and work to enhance corporate value.

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Seven & I Holdings Co. Ltd. published this content on 07 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 April 2022 06:02:08 UTC.