Seiyu reforms to lift Trial Holdings' operating profit 28% in fiscal 2027

2026-08-13

Seiyu reforms drive sales growth

Trial Holdings on Thursday said it expects consolidated operating profit for the fiscal year ending June 2027 to rise 28% from the previous year to 39 billion yen. At its subsidiary Seiyu, a new format incorporating tech features such as checkout carts will boost sales. The company will step up investment to improve Seiyu's profitability.

Net profit is expected to triple to 10.7 billion yen. Lower M&A-related costs at Seiyu than in the previous year will also help lift profit. Sales are projected to rise 8% to 1.4582 trillion yen.

Transplanting technology through joint stores

The sales increase is being driven by Seiyu's recovery. Seiyu's sales for fiscal 2027 are expected to rise 8% to 495.8 billion yen. Even on a simple comparison with fiscal 2024, when it was under U.S. investment fund KKR, sales would increase 2.5%. Supporting the turnaround at Seiyu, which had long been struggling, is the store reform initiative Trial is pursuing.

The emblematic example is 'Trial Seiyu,' a hybrid format launched in November 2025 with Trial. In addition to refurbishing aging stores, it has introduced 'checkout carts' with register functions and digital signage to improve customer convenience and encourage purchases. It is also expanding higher-margin non-food categories such as cosmetics and home appliances, helping improve profitability.

Trial Seiyu already operates four stores in Tokyo and Chiba Prefecture. The first store, 'Trial Seiyu Hanakoganei,' in Kodaira, Tokyo, posted sales for the five months from December 2025 to April 2026 that were about 40% higher than in the same period a year earlier before the conversion. At the second store, 'Trial Seiyu Musashinakashinjo,' which opened in February in Kawasaki, sales in the two months from March to April rose 50%. Customer traffic also increased by roughly 40% to 50%.

Food recovery also advances

In food, which had been a challenge, Seiyu's seafood and meat divisions teamed up with Trial's prepared-food subsidiary Kohakuhonpo in Fukuoka to launch the seafood prepared-food brand Uofukusai and the meat prepared-food brand Nikujiru Diamond.

Naoki Deguchi, president of ST Retail in Fukuoka, which leads new format development under Trial, said Seiyu has many stores in prime locations, but until now its product strength in fresh foods such as deli items and meat had been weak. Trial plans to convert 30 of Seiyu's 240 stores into Trial Seiyu by the fiscal year ending June 2029, and will consider gradually expanding new prepared-food brands in the future.

Synergies improve profitability

Cost reductions are also starting to show results. Trial is introducing its private-label products and prepared foods into about 200 existing Seiyu stores. Consolidation of suppliers following Trial's acquisition of Seiyu, along with the reorganization of central kitchens that handle food preparation and processing, has also been effective.

'Synergies with Trial, including consolidation of procurement partners and joint development of private-label products, are driving Seiyu's comeback,' Seiyu President Hitoshi Naragino said at the earnings briefing on Thursday.

In its consolidated earnings announced the same day for the fiscal year ending June 2026, sales rose 68% from the previous year to 1.3471 trillion yen and operating profit increased 44% to 30.3 billion yen. As cuts in selling, general and administrative expenses and improvement in gross margin progressed, Seiyu's operating margin for the fiscal year ending June 2026 was 2.9%, exceeding Aeon's supermarket business at 0.96% for the fiscal year ending February 2026.

Even so, uncertainty remains over sustaining the recovery trend. Trial Holdings is targeting an operating margin of 3.9% in the fiscal year ending June 2029, up from 2.2% in the fiscal year ending June 2026, through investment effects. But with operating costs such as labor and utilities staying elevated, it will not be easy to balance low prices with profitability.

Competition is also intensifying with rivals such as Pan Pacific International Holdings, operator of Don Quijote, as consumer thriftiness grows. How far Trial can pull ahead with its core tech capabilities will determine the outcome of Seiyu's reform, now in its second year under Trial Holdings, and shape the company's future growth.

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