Japan's Seven & i Reports 24% Decline in Q4 Profit, Intensifying Takeover Pressures

TOKYO: Japanese retailer Seven & i Holdings (3382.T), opens new tab expects to report a 24 per cent decline in quarterly profits on Wednesday, as the weak performance of its convenience store sector hinders its efforts to resist a takeover bid from Canada’s Alimentation Couche-Tard. Seven & i is expected to report an operating profit of 94.45 billion yen ($639.52 million) for December-February, according to the average of eight analyst predictions gathered by LSEG. That would be equivalent to 124.23 billion yen during the same timeframe the previous year.

In recent quarters, the operator of 7-Eleven has seen a decline in profits as its domestic convenience store operations have lagged behind those of its rivals, and its North American segment has faced reduced consumer spending amid rising inflation. Concurrently, Seven & I has attempted to fend off a $47 billion offer from Couche-Tard, the operator of Circle-K, contending that efforts to revamp its business will enhance corporate value and that antitrust issues in the U.S. could void any agreement. A management buyout spearheaded by the founding family of Seven & i fell through in February due to an inability to obtain financing. The company has since adopted strategies such as divesting non-core businesses and naming Stephen Dacus as CEO.

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In March, it revealed a $2 billion share repurchase plan and suggested that its North American convenience store subsidiary could go public by the latter half of 2026. However, analysts noted that Seven & i's share price, fluctuating between approximately 1,850 yen and 2,250 yen since early March, remains significantly lower than Couche-Tard's bid of about 2,700 yen, suggesting that investors doubt Seven & i's strategies. Last month, Seven & I and Couche-Tard announced they were collaborating to seek buyers for about 2,000 of their convenience stores in the U.S., marking their clearest indication of involvement. Seven & I has stated that a divestment strategy is essential to succeed in a U.S. Federal Trade Commission evaluation. According to sources, Reuters has been informed that the main interested purchasers are private equity firms.