(Photo : 7-eleven)

• Seven & i Holdings, known for 7-Eleven stores, unveiled a growth plan, ignoring a $47 billion takeover bid from Alimentation Couche-Tard.
• CEO Ryuichi Isaka emphasized the company's restructuring path for growth, aiming to double sales to 30 trillion yen by 2030.
• The company plans to split off its supermarket and non-core units into a holding company, despite lukewarm market reception.
• Despite challenges, Seven & i Holdings remains committed to its restructuring plan and growth strategy, focusing on fresh food offerings and global expansion.

In a recent development, Japanese conglomerate Seven & i Holdings, known for its 7-Eleven convenience stores, unveiled a growth plan that conspicuously sidestepped any mention of a $47 billion takeover bid from Canada's Alimentation Couche-Tard. The plan was presented during an investor day, where the company's top brass briefed analysts and investors on its future strategies. The company's growth plan is centered around its core 7-Eleven convenience stores, with a focus on expanding overseas and hiving off underperforming businesses.

The company's CEO, Ryuichi Isaka, did not address the takeover bid or the longstanding shareholder criticism of capital allocation and other aspects of the business. Instead, he emphasized that the company's restructuring path would provide the discipline needed to pursue growth. We're now at a stage where we can expect to further increase our corporate and shareholder value by seizing growth opportunities in the global market, Isaka said. This statement underscores the company's intent to remain independent and focus on its own strategic path, despite external pressures.

The company's ambitious plan aims to roughly double sales to 30 trillion yen ($197 billion) by 2030. This growth is expected to be driven by expansion in overseas markets such as Vietnam and Australia. The company plans to replicate its domestic success in fresh food offerings in these markets to attract customers and bolster profit margins.

Restructuring and Market Reception

As part of the restructuring, Seven & i announced that it would split off its supermarket and some 30 other non-core units into a holding company. However, the market reception to this plan has been lukewarm, with the company's share price showing little movement since the plan was first detailed earlier this month.

The company's other businesses, which include restaurants and a bank, have been a point of contention for some foreign shareholders. One investor, U.S. fund Artisan Partners, said the latest restructuring plan was too little, too late and urged Seven & i to engage with Couche-Tard. Despite these criticisms, the company's Japanese 7-Eleven convenience stores have been a consistent source of revenue.

However, the company has been grappling with poor performance at its supermarkets, including the Ito Yokado stores that make up a part of the holding company formed about two decades ago. The company's overseas 7-Eleven stores have been less profitable. In Japan, the operating margin is 27%, far above the 3.5% of 7-Eleven stores elsewhere.

Challenges and Future Prospects

The U.S. business, in particular, has been hurt by a weak macro environment that has dampened consumer appetite, according to North America chief Joseph DePinto. Fuel revenue has been flat, and a decline in cigarette sales compared to before the COVID-19 pandemic has had a significant impact, DePinto said. To boost sales, the group is focusing on fresh food offerings. Clearly the last year has been difficult, and we're not happy with the performance, DePinto admitted.

This situation is reminiscent of similar instances in the past where companies have faced takeover bids while trying to implement their own growth strategies. For instance, in 2019, U.S. home improvement retailer Lowe's Companies Inc. faced a similar situation when it received a takeover bid from Canadian retail conglomerate, Alimentation Couche-Tard. However, Lowe's chose to remain independent and focus on its own growth strategy, much like Seven & i Holdings.