Seven & I Holdings Co. is closing roughly one out of every four of its Ito-Yokado stores in Japan, marking the retailer’s latest response to pressure from an activist investor to streamline its business.
(Bloomberg) — Seven & I Holdings Co. is closing roughly one out of every four of its Ito-Yokado stores in Japan, marking the retailer’s latest response to pressure from an activist investor to streamline its business.
Shares in the the world’s largest convenience-store operator rose 4.1%, the most in two months, after public broadcaster NHK reported the store closings. The Tokyo-based company confirmed later on Thursday plans to reduce the number of Ito-Yokado stores to 93 over the next three years, from 126 now.
ValueAct Capital Management LP has been pushing Seven & I to narrow its business focus on its 7-Eleven stores, asserting that the steps would help to more than double its share price. In November, the retailer announced a sale of its Sogo & Seibu Co. department store for an enterprise value of about ¥250 billion ($1.8 billion) to Fortress Investment Group.
Seven & I, which operates more than 83,000 stores globally, will focus more on its core food and convenience-store operations, the retailer said in a mid-term business plan presentation. Most of the 33 Ito-Yokado store closings will be in regional cities.
At the remaining Ito-Yokado stores, a general merchandising franchise selling everything from clothing to groceries, the company plans to rent out clothing floorspace.
The store closings are a bittersweet development because the business was originally called Ito-Yokado. A retailing pioneer, the company brought the 7-Eleven and Denny’s franchises to Japan in 1974. After purchasing the convenience-store chain outright, Seven & I later changed its name to reflect its key businesses. It acquired the Sogo and Seibu department stores in the mid-2000s, and paid $21 billion two years ago to buy Marathon Petroleum Corp.’s Speedway gas-station outlets.
Seven & I shares have climbed 16% this year and are now at a record since the holding company was listed in 2005. The stock rose 12% last year, on top of a 38% gain in 2021.
Last April, Seven & I said it would overhaul its board so that a majority would be independent outside directors. Ryuichi Isaka, Seven & I’s chief executive officer, has overseen Seven & I’s evolution since taking the helm in 2016 with the backing of another activist investor, Daniel Loeb, after a boardroom struggle with the prior CEO.
(Updates with official announcement.)
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