Seven & i Holdings’ plan to hive off underperforming businesses will allow it to expand its core 7-Eleven convenience stores, its chief executive said on Thursday, as the Japanese retailer looks to avoid a $47 billion Canadian takeover.
Seven & i, which is holding an “investor day” briefing with analysts and investors, is fighting to stay independent after Canada’s Alimentation Couche-Tard offered to buy it.
It has said it is “confident” it can unlock shareholder value itself. Under the restructuring announced this month, it aims to split off the supermarket operation and some 30 other “non-core” units into a holding company. Market reception so far has been underwhelming, with shares moving little since the plan was first detailed.
While its Japanese 7-Eleven convenience stores are a money-spinner, Seven & i has been hobbled by poor performance at its supermarkets, including the Ito Yokado stores that make up a part of the holding company it formed decades ago. Some foreign shareholders have long called for a break-up of the business.
By changing its structure, the group will “have the discipline to pursue growth,” Chief Executive Ryuichi Isaka told the briefing. “This will produce shareholder and corporate value. We will move expeditiously.”
But overseas 7-Eleven stores are less profitable. In Japan, the operating margin is 27%, far above the 3.5% of 7-Eleven stores elsewhere.
The U.S. business has been hurt by a weak macro environment that weighed on consumer appetite, North America chief Joseph DePinto said.
The group was focusing on fresh food to boost sales, he said. Fuel revenue has been flat while a decline of cigarette sales compared to before the COVID-19 pandemic has had a “significant impact” he said.
“The last year has been difficult, and we’re not happy with the performance,” he said.
Reuters
