Seven & i Unveils Growth Plan, Avoids Addressing $47 Billion Buyout Bid from Couche-Tard

On October 24, Seven & i Holdings revealed a growth strategy focused on its core 7-Eleven stores and international expansion but made no mention of the $47 billion buyout bid from Alimentation Couche-Tard. The company plans to double its sales by 2030 through global market expansion and fresh food offerings.

Seven & i Outlines Global Expansion Strategy, Aims to Double Sales by 2030 Amid Restructuring Plans

Seven & i conducted an "investor day" to inform analysts and investors of its strategy to separate underperforming businesses and expand internationally to maintain its independence and appease critics.

The offer and longstanding shareholder criticism of capital allocation and other aspects of the business were not addressed by Chief Executive Ryuichi Isaka, who stated that the retailer's restructuring path would provide the "discipline to pursue growth."

"We're now at a stage where we can expect to further increase our corporate and shareholder value by seizing growth opportunities in the global market," Isaka said.

According to Reuters, Seven & i anticipates its sales will increase approximately twofold to 30 trillion yen ($197 billion) by 2030. This will be achieved by expanding into foreign markets, including Vietnam and Australia, and replicating its domestic assets in fresh food offerings to attract customers and increase profit margins.

Seven & i Announces Restructuring, Market Reaction Muted as Shareholders Push for Collaboration with Couche-Tard

Seven & i has announced that it will divide its supermarket and approximately 30 other "non-core" entities into a holding company as part of the restructuring. The market response has been underwhelming thus far, as the share price has mostly stayed the same since the plan was initially disclosed earlier this month.

The conglomerate, which operates restaurants and a bank, has been the subject of calls for dissolution by certain foreign shareholders for an extended period. One investor, Artisan Partners, a U.S. fund, criticized the most recent restructuring plan as "too little, too late" and encouraged Seven & i to collaborate with Couche-Tard.

Couche-Tard's offer was not addressed during the three-hour briefing and materials on October 24, and neither analysts nor shareholders inquired about it.

Seven & i Struggles with International 7-Eleven Profitability, Shifts Focus to Fresh Food Amid U.S. Challenges

Seven & i Holdings has been hindered by the poor performance of its supermarkets, including the Ito Yokado stores that are a component of the holding company established approximately two decades ago, even though its Japanese 7-Eleven convenience stores are profitable.

However, the profitability of 7-Eleven stores located abroad could be higher. In Japan, the operating margin is 27%, significantly higher than the 3.5% of 7-Eleven stores in other regions.

During the briefing, Joseph DePinto, the North American chief, stated that the U.S. business has been adversely affected by a lackluster macro environment affecting consumer appetite.

He stated that the COVID-19 pandemic has had a "significant impact" on cigarette sales, which have decreased while fuel revenue has remained constant. He noted that the organization was emphasizing fresh cuisine to increase its sales.

"Clearly the last year has been difficult, and we're not happy with the performance," DePinto said.