CONSUMER STAPLES: Alimentation Couche-Tard (Baa1/BBB+) 7-11 earnings

7-11 parent has reported revenue growth of +9% for 6m to August but abysmal performance further down; operating profit at ¥187b (-22.4%) on a 3.1% margin (-130bps) driven by overseas 7-11 stores EBIT down -35%. Reminder this is the same co that turned down Couche-Tard's offer on grounds it didn't reflect value of business including its apparent growth strategy. As rumoured its splitting out its non-core supermarket and speciality stores to 'unlock shareholder value'.

• FY guidance (to end of Feb 25) sees revenue guidance boosted by +6% to leave it +4%yoy. EBIT has been cut by -26% and leaves it down a similar 25%yoy. It leaves a implied margin of 3.4% down 140bps (!) original guidance for 4.8% and down 130bps from last year's 4.7%.
• Cuts are being driven by overseas 7-11 stores (3/4 of group revenues); it is expected to run a 2.3% margin now vs. last year 3.5% (-120bps). ATD for reference runs a mid-5% EBIT margin.
• On drivers; across the group it still has declining merchandise same store sales (-4.1% in Q1, -2.4% in Q2) which it blames on inflationary pressures and cigarette declines. Fuel volumes also declining (Q1 -5.2%, Q2 -1.2%) which it says is better than industry.
• Dividend hasn't been bumped significantly - ¥20/share this half and annual expected to be ¥40 (1.7% yield).

The important for ATDBCN bondholders;