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Seven-Eleven separates non-convenience stores, changes name and holds intermediate shares in anticipation of IPO

JAPAN
Wednesday, October 16, 2024, 00:10 (GMT + 9)

August interim results show 22% drop in operating profit

On the 10th, Seven & i Holdings announced that it will establish an intermediate holding company on the 11th to consolidate its supermarket, restaurant and specialty store businesses, including Ito-Yokado. This is a measure in anticipation of a future listing of the business. In line with this, the company will change its name to "Seven-Eleven Corporation (tentative name)" next year. With foreign companies offering takeovers, the aim is thought to be to avoid takeovers by quickly divesting from businesses other than its mainstay convenience stores and increasing its corporate value.

In an online press conference, President Ryuichi Isaka stated the aim of the group reorganization, "The supermarket business grows at a different pace, so it is difficult to invest in growth under the same roof," emphasizing his intention to concentrate management resources on convenience stores. Regarding the approximately 7 trillion yen (aprox.U$D 47 billion) takeover proposal from Canadian convenience store giant Alimentation Couche-Tard, he said, "If it is a proposal to increase the company's value, we will respond sincerely."

The intermediate holding company will be called York Holdings. It will be fully owned by Seven & i, but will become an equity method affiliate by the end of the fiscal year ending February 2026 through outside investment and joint investment with the founding Ito family, and will boost its profitability in preparation for a future listing.

York Group has 31 companies under its umbrella, including supermarket chains, general merchandise store Loft, baby goods store Akachan Honpo, and Seven & i Food Systems, which operates the Denny's family restaurant chain. In addition, with regard to the financial business centered on Seven Bank, "we will consider the optimal capital relationship," according to Isaka.

The company announced its interim consolidated financial results for the fiscal year ending August 2024 on the 10th, reporting that convenience stores both at home and abroad struggled, with operating profit, which represents the profit from the company's main business, falling 22.4% year-on-year to 186.9 billion yen. In addition, the company recorded an extraordinary loss of approximately 45.8 billion yen due to Yokado's withdrawal from the online supermarket business. The company revised down its net profit forecast for the fiscal year ending February 2025 from 293 billion yen to 163 billion yen.

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