Japanese conglomerate Seven & i Holdings has revealed a new growth strategy centered around its core 7-Eleven convenience stores, while avoiding mention of a recent $47 billion takeover offer from Canada’s Alimentation Couche-Tard. During an investor briefing, the company outlined plans to streamline its operations by divesting underperforming units and expanding internationally as part of efforts to enhance profitability and maintain independence.
CEO Ryuichi Isaka focused on restructuring the business to improve capital allocation and strengthen its global presence. He expressed confidence that the company is now in a position to boost both corporate and shareholder value by seizing opportunities in international markets. By 2030, Seven & i aims to nearly double its sales to 30 trillion yen ($197 billion), with a focus on expanding its presence in countries such as Vietnam and Australia. The strategy involves replicating its success in Japan by emphasizing fresh food offerings, a move designed to attract more customers and increase profit margins.
As part of the restructuring, Seven & i will create a holding company to separate its supermarket and 30 other non-core businesses. Despite the ambitious plan, market response has been lukewarm, with the company’s share price showing little movement since the initial announcement. The restructuring comes in response to long-standing calls from foreign shareholders, including U.S.-based Artisan Partners, for a break-up of the conglomerate. Critics argue that the company’s latest efforts may be too late, urging Seven & i to consider engaging with Couche-Tard regarding the takeover offer.
Although the company’s 7-Eleven stores in Japan remain highly profitable, with an operating margin of 27%, its international operations have struggled. In comparison, 7-Eleven stores outside Japan have an operating margin of just 3.5%. The U.S. segment, in particular, has faced challenges due to a weak macroeconomic environment, which has dampened consumer demand. Joseph DePinto, head of North American operations, acknowledged the difficulties, citing flat fuel revenues and a decline in cigarette sales since the COVID-19 pandemic.
Despite these challenges, DePinto emphasized the company’s focus on boosting sales through fresh food offerings. “Clearly the last year has been difficult, and we’re not happy with the performance,” he admitted, highlighting the need for continued efforts to improve profitability in key international markets.
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