Seven&i Holdings Co. Ltd.

The outlook is stable. In our base-case scenario, we assume debt to EBITDA worsened to about 1.7x in fiscal 2018 (ended Feb. 28, 2019) as a result of the acquisition of part of Sunoco. The ratio is likely to improve gradually in the coming year or two thanks to its robust convenience store business in Japan and elsewhere. We may downgrade Seven&i and its subsidiaries if the group's profitability drops substantially as a result of its main convenience store business in Japan losing market share. We might also consider a downgrade if we believe debt to EBITDA will hover at about 2x as a result of aggressive investments in the convenience store business in North America. Conversely, we

...Maintains strong profitability in its convenience store business, primarily in Japan, backed by excellent product policy and a strong business model. S&P Global Ratings believes that the Japanese and overseas convenience store businesses drive the competitiveness and profitability of the Seven & i Holdings Co. Ltd. group--one of Japan's two largest retailers. Seven-Eleven Japan Co. Ltd., which operates a Japanese convenience store business, is highly competitive. Excellent merchandising policies, store development in good locations, and infrastructure strengths such as ordering systems and logistics support the business, in our view. The company maintains average daily sales per store at a level more than 20% higher than its competitors. The company will continue to play a leading role in the domestic convenience store market, and its EBITDA margin will remain high, at over 30%. In the overseas convenience store business, the group further strengthened its market position and business base...

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