7-Eleven Parent to Seek North American Expansion
October 06 2016 - 8:20AM
Dow Jones News
TOKYO—Seven & i Holdings Co., the parent of 7-Eleven, said
it would expand its profitable convenience store business in North
America and seek acquisition opportunities there, following
prodding from American activist investor Daniel Loeb of hedge fund
Third Point LLC.
The company also plans to divest some money-losing businesses in
Japan, including department stores.
"We will speed up expansion in North America by accelerating
acquisitions," said Ryuichi Isaka, president of the Tokyo-based
company, at a news conference Thursday.
Mr. Isaka took over as president of the company following a
boardroom clash earlier this year that resulted in the abrupt
resignation of Toshifumi Suzuki, who had been at the helm since
1992.
Mr. Isaka survived the battle with Mr. Loeb's backing after the
activist investor criticized a plan by Mr. Suzuki to oust Mr.
Isaka. Mr. Suzuki's plan was rejected by the company's board in
April. Mr. Loeb, whose Third Point fund owns hundreds of millions
of dollars in Seven & i Holdings common shares, had advocated
for the company to focus on its convenience stores and turn away
from department stores.
On Thursday, Mr. Isaka avoided directly saying whether he took
Mr. Loeb's opinions into consideration when planning his new
business strategy. Instead, he said he is confident that it will
satisfy all shareholders.
Seven & i plans to increase its store count in North America
to 10,000 by fiscal 2019; at the end of June, it had nearly 8,900
stores in the U.S. and Canada. More than 80% of convenience stores
in the region are owned by smaller companies or individual
proprietors, which Mr. Isaka said made for plenty of acquisition
opportunities.
Japanese-style convenience store models will also be introduced
in North America, he said, where customers can buy cooked foods
from snack counters.
The company has already embarked on its North American
expansion. In June, it said it would buy 79 gas stations and
convenience stores in California and Wyoming from CST Brands Inc.
At the end of June, Seven & i had 59,831 7-Eleven stores
world-wide, including 18,785 in Japan.
On the department store front, Seven & i said domestic
retailer H2O Retailing Corp., will operate some of its department
stores in western Japan. Mr. Isaka said H2O was selected because it
has achieved high operating margins and due to its experience with
department stores.
In the March-August period, Seven & i posted an operating
profit of 181 billion yen ($1.75 billion); ¥ 160 billion of that
came from convenience store operations. It reported an operating
loss of ¥ 1.823 billion for its department store segment.
Convenience store competition has also intensified at home. A
merger of two smaller rivals created the country's second-largest
chain of convenience stores, called FamilyMart UNY Holdings Co.
Meanwhile, Mitsubishi Corp. is trying to enhance operations at
Lawson Inc., the third-largest convenience store operator, by
raising its stake and making it a consolidated subsidiary.
Write to Megumi Fujikawa at megumi.fujikawa@wsj.com
(END) Dow Jones Newswires
October 06, 2016 08:05 ET (12:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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