Japanese retailer Seven & I Holdings is set to record a 24 per cent drop in quarterly profit on Wednesday as underperformance of its convenience store business hampers its ability to fend off a takeover attempt by Canada’s Alimentation Couche-Tard.
Seven & I is likely to book operating profit of 94.45 billion yen (US$639.52 million) for December-February, showed the average of eight analyst estimates compiled by LSEG. That would compare with $841.703 million in the same period a year prior.
The 7-Eleven operator’s profit has fallen in recent quarters as domestic convenience store operations underperformed competitors and its North American arm suffered from lower consumer spending against a backdrop of accelerating inflation.
At the same time, Seven & I has sought to bat away a $47 billion bid from Circle-K operator Couche-Tard, arguing initiatives to overhaul its business will increase corporate value and that antitrust barriers in the US may nix any deal.
A management buyout led by Seven & I’s founding family collapsed in February after failing to secure funding. The company has since turned to strategies including selling off non-core businesses and appointing Stephen Dacus as CEO.
In March it announced a $2 billion share buyback and proposed listing its North American convenience store subsidiary by the second half of 2026.
Still, Seven & I’s share price, which has traded between around $12.54 and $15.24 since the start of March, is far below Couche-Tard’s offer of around $18.29, indicating that investors are sceptical of Seven & I’s plans, analysts said.
Last month Seven & I and Couche-Tard said they were working together to find buyers for around 2000 of their convenience stores in the US, in their most concrete sign of engagement.
Seven & I has said a divestiture plan is necessary to pass a US Federal Trade Commission review. Sources have told Reuters that interested buyers are primarily private equity firms.
Investors and analysts now await the outcome of store-sale discussions and an update on the listing of Seven & I’s North American subsidiary.
- Reporting by Anton Bridge; Editing by Christopher Cushing, of Reuters.
