Convenience store chain also agreed to $520 million sale-leaseback of stores
7-Eleven and other convenience store chains are expanding offerings of prepared foods to offset a sales slowdown in other areas. (CoStar)The parent company of 7-Eleven is planning to close 444 stores in the United States, Canada and Mexico as it considers an unsolicited buyout offer from the owner of convenience store rival Circle K.
Seven & I Holdings, based in Japan, is closing underperforming 7-Eleven stores because of “a tough spending environment, particularly among lower-and middle-income earners,” trade publication C-Store Dive reported, citing Seven & I’s Thursday earnings conference call.
The closings will generate about $30 million in additional operating profit for the current fiscal year, Seven & I said. The company did not identify the locations earmarked for closure.
7-Eleven said earlier this year that it would close hundreds of stores in the U.S., but the company on Thursday updated the figure to 444 locations in its earnings presentation. 7-Eleven operates about 12,600 U.S. locations, according to the National Association of Convenience Stores.
Canada’s Alimentation Couche-Tard, the parent of Circle K, this week submitted a higher offer to acquire Seven & I, boosting its price by 21% to $47 billion. Seven & I responded that it will consider the offer. The company this summer rejected Couche-Tard’s previous offer.
Seven & I did not address the Couche-Tard offer in its earnings presentation.
Sale-leasebacks
Separately, Seven & I said it will sell an undisclosed number of 7-Eleven locations in North America in a sale-leaseback transaction for a $520 million profit. The buyer and the store locations were not identified. The deal is expected to close by February.
Seven & I also said Thursday that it will create a spinoff company for its supermarkets and other retail locations that aren’t convenience stores.
There is an “urgent need to establish a best-in-class global [convenience store business] platform and accelerate growth through global expansion/deployment of high quality ‘food’ and services of the 7-Eleven brand,” it said in the earnings presentation.
The moves are intended to “unlock and realize values for shareholders,” it added.