7-Eleven Owner Plans Revamp of Noncore Businesses Amid Buyout Interest From Couche-Tard
Seven & i Holdings said net profit fell 35% from a year earlier for the six months ended August
TOKYO—Seven & i Holdings 3382 -0.43%decrease; red down pointing triangle slashed its profit outlook and announced plans to revamp its noncore businesses as the convenience-store giant faced a revised takeover bid from Canada’s Alimentation Couche-Tard ATD -0.82%decrease; red down pointing triangle.
The Japanese owner of 7-Eleven convenience stores said Thursday that net profit fell 35% from a year earlier to 52.24 billion yen, equivalent to $349.9 million, for the six months ended August, missing analysts’ consensus estimate.
The weak first-half result prompted Seven & i to cut its profit forecast for the current fiscal year ending February to ¥163.00 billion from ¥293.00 billion forecast previously.
In a bid to reorganize its business portfolio, Seven & i recorded a special loss of ¥45.88 billion related to the withdrawal of its online supermarket operation, the company said.
The Japanese company has been trying to improve profitability by focusing on its core convenience-store business and restructuring other segments. A successful effort could raise the bar for a potential acquisition by the Canadian owner of Circle K.
In early September, the 7-Eleven owner rejected the initial $39 billion buyout offer from Couche-Tard, saying the proposal underestimated the value of the company and failed to sufficiently address regulatory issues.
The Japanese company on Wednesday said it received a new proposal, without disclosing details.
Seven & i on Thursday said it plans to set up an intermediate holding company for its supermarket and other noncore businesses, including baby-goods chain Akachan Honpo.
Responding to pressure from some foreign shareholders, the company has already shed some businesses, such as unprofitable department-store operator Sogo & Seibu. Seven & i in April said it was considering listing the supermarket business.
On Thursday, the company said it will bring in strategic partners and realize an initial public offering “with certainty and speed.”
The latest results showed, however, that the convenience-store business is also struggling to grow.
Sluggish demand among middle- to low-income consumers in North America amid inflation and higher interest rates hurt its overseas sales, Seven & i said. First-half operating profit for its overseas convenience-store business fell to ¥73.33 billion from ¥112.83 billion a year ago.