Dive Brief:
- 7-Eleven is shuttering 444 convenience stores in North America, including in the U.S., due to underperformance, parent company Seven & i Holdings revealed in its quarterly earnings presentation on Thursday.
- The world’s largest c-store retailer also agreed last month to offload an undisclosed number of properties in North America via sale-leaseback for a profit of $520 million, Seven & i also revealed Thursday. That deal is expected to close in February 2025.
- Both moves coincide with Seven & i announcing Thursday that it slashed its net income forecast for the fiscal year 2024, as well as created a spinoff company for its supermarkets, specialty stores and other businesses (SST) amid investor pressure to prioritize its c-store arm.
Dive Insight:
Seven & i shared on Thursday that it now expects its fiscal 2024 net income to hit 163 billion yen, which would be a roughly 44% drop from its prior forecast of 293 billion yen.
In North America, the company said it’s enduring “a tough consumer spending environment, particularly among lower-and middle-income earners.” The company said these consumers have exercised “a more prudent approach to consumption.”
Additionally, Seven & i acknowledged that in North America, it’s experiencing “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.”
While the company didn’t point directly to these challenges in North America as cause for its latest store closures and property sale in the continent, the connection between them is clear.
When asked to confirm where the 444 stores its closing are located, as well as how many stores it’s agreed to sell and then lease for the $520 million profit, a 7-Eleven spokesperson only pointed to both moves being part of the company’s long-term growth strategy.
“As part of this, we made the decision to optimize a number of non-core assets that do not fit into our growth strategy,” the spokesperson said. “At the same time, we continue to open stores in areas where customers are looking for more convenience.”
This is the latest move 7-Eleven has made to try to boost returns in North America. Other initiatives have included modernizing its food and beverage offerings and refreshing its stores to improve their appearance and in-store merchandising.
Separate from its earnings presentation, Seven & i shared on Thursday that it will set up an intermediate holding company for its SST business group, which it plans to take public “as soon as reasonably practicable.”
The holding company, York Holdings Co., Ltd., will oversee the “planning, managing, and operating of the company group centered around respective businesses including supermarkets and specialty stores.” York will comprise 31 SST units, including 24 consolidated subsidiaries and seven equity method affiliates. Seven & i is also planning to rename itself 7-Eleven Corp.
Seven & i’s latest strategic restructure comes as it resists a takeover attempt by Alimentation Couche-Tard, parent company of Circle K convenience stores. After rejecting the $39 billion bid in early September, Seven & i announced on Wednesday that it received a revised offer from Couche-Tard, which Bloomberg reported could be as high as $47 billion.
