By Rocky Swift
TOKYO (Reuters) -Japan’s Seven & i Holdings said on Wednesday fourth-quarter profit dropped 15%, a result that could hamper its ability to fend off a takeover attempt by Canada’s Alimentation Couche-Tard.
Although earnings for the operator of 7-Eleven convenience stores came in somewhat better than expectations, it marked the fourth consecutive quarter of profit decline.
High levels of inflation lifted the cost of materials and increased utility expenses in Japan, where it has also lagged rivals in attracting price-conscious customers.
In the United States, sales of merchandise fell and executives noted that uncertainty over President Donald Trump’s tariffs has led to declines in consumer confidence and spending.
Seven & i booked operating profit of 105.6 billion yen ($726 million) for the December-February period, compared with an LSEG consensus estimate of 94.5 billion yen. Revenue edged up 0.4%.
Seeking to bat away Couche-Tard’s $47 billion bid, Seven & i has argued that antitrust barriers in the U.S. may nix any deal and its own initiatives to overhaul its business are sufficient to increase corporate value.
After a management buyout led by Seven & i’s founding family collapsed in February due to lack of funding, it has begun selling off non-core businesses and has named a new CEO.
“Truthfully, we have historically been a bit conservative,” incoming chief executive Stephen Dacus, the company’s first foreign head, said at a briefing. “This has led to us moving a bit slower than we should have and missing opportunities.”
“This is something I intend to change,” he added.
For the full year, operating profit tumbled 21% to 421 billion yen, its first decline in four years. It forecast a slight increase to 424 billion yen for the current business year.
The company in March announced a 2 trillion yen share buyback and proposed listing its North American convenience store subsidiary by the second half of 2026.
In the first tranche of the buyback, Seven & i will repurchase and cancel 600 billion yen of shares this business year.
Dacus said on Wednesday that the timing of the IPO may have to be adjusted if the market environment turned out not to be conducive.
In their most concrete sign of engagement yet, Seven & i and the operator of Circle-K stores said last month they were working together to find buyers for around 2,000 of their convenience stores in the U.S. – a step seen as necessary for their potential merger to pass a U.S. Federal Trade Commission review.
Sources have told Reuters that interested buyers are primarily private equity firms.
Shares in Seven & i closed at 1,848.5 yen on Wednesday before the results. That remains far below Couche-Tard’s offer of around 2,700 yen, indicating that investors are sceptical the bid will succeed.
($1 = 145.3800 yen)
(Reporting by Rocky Swift and Anton Bridge; Editing by Edwina Gibbs)
