Seven & i Holdings Co. plans to restructure to fend off buyout from Couche-Tard
Seven & i Holdings Co. during the presentation of its quarterly results for the six-months ended on August 31, 2024.
The Japanese retailer reported that it was slashing profit forecast for the current fiscal year, ending in February, to ¥163.00 billion, equivalent to $1.09 billion, from ¥293.00 billion, and that net profit for the six months that ended on August 31, 2024, fell 35% from a year earlier to ¥52.24 billion. The company also recorded a ¥45.88 billion special loss related to the withdrawal of its online supermarket operation.
According to BNN Bloomberg, Seven & i Holdings Co. plans to rename itself as 7-Eleven Corp. and let go dozens of what the company says are non-core businesses, in an effort to restructure itself so as to fend off a new takeover bid by Quebec-based Alimentation Couche-Tard Inc.
Earlier, Couche-Tard sent a revised confidential, private and non-binding proposal to the company of US$47 billion, some 22% higher than the offer of $38.6 billion Couche-Tard made in August.
According to the Financial Times, the restructuring will involve separating 31 subsidiary businesses, including the Ito-Yokado, speciality stores and the Denny’s restaurant brand and pace them in a new holding company, York Holdings.
The company’s Japanese convenience business, along with the U.S. operations and operations around the globe, will be under the new 7-Eleven Corp.
READ: Alimentation Couche-Tard makes revised offer for Seven & i Holdings
The goal is to “unlock value for the company’s shareholders and other stakeholders,” Seven & i said in the statement.
According to Seven & i Holdings Co., its overseas convenience store operations came to ¥4,612,501 million (114.5% year-on-year), and operating income amounted to ¥73,325 million (65.0% year-on-year).
“In North America, 7-Eleven, Inc. is pursuing sustained business growth and enhanced capital efficiency in the context of a tough consumer spending environment, particularly among lower-and middle-income earners,” it said in its financial reporting. “There is a growing polarization of consumption due to a decline in labor incomes, which is a result of challenging employment conditions, as well as inflationary pressures and high interest rates. To this end, 7-Eleven Inc. has promoted four measures: “Grow Proprietary Products”, “Accelerate Digital & Delivery Initiatives”, “Generate Synergies from SEI & Speedway Integration”, and “Grow Store Network”. Furthermore, 7-Eleven Inc. completed on April 16, 2024, the acquisition of a part of the convenience store business and fuel retail business of U.S. company Sunoco LP.”
“In the six months ended August 31, 2024, merchandise sales at existing stores in the U.S. decreased year on year in U.S. dollars, while operating income (before amortization of goodwill) amounted to ¥130,839 million (82.9% year on year). Moreover, total store sales (the sum of sales from directly operated stores and franchisees) amounted to ¥5,331,059 million (110.6% year on year).”
Buried in the financials was also an announcement that the company would also look in the United States "reassessed its asset groupings for purposes of promoting closing underperforming retail locations based on current strategic long-term plans. As a result, the impairment loss is expected to be recorded in the nine months ending November 30, 2024, but the impact is currently being examined."
This will likely result, the company says, in the closing of some 444 underperforming stores in the North America.
More details about the restructuring and plans for the company will presented at an investor relations day on October 24.
