IRVING, Texas -- 7-Eleven Inc., Japanese retail group Seven & i Holdings Co.’s U.S. convenience-store unit, is expected to post a record-high annual operating profit of $682.6 million in 2016, thanks in part to rising food sales, according to a report by Nikkei Asian Review.
The figure would represent a 7% increase in 7-Eleven’s operating profit in a market that it reckons has ample potential for growth, said the report.
7-Eleven, which operates about 8,500 stores in the U.S. and Canada, plans to add 200 new locations this year, according to the newspaper. Capital expenditures are budgeted at around $1.65 billion, up by approximately $300 million from a year earlier.
Although a strong yen will erode the value of 7-Eleven's earnings to its parent company, Seven & i forecasts growth in both sales and profit this fiscal year, expecting another strong performance by its domestic convenience stores and a recovery in earnings at general-merchandise stores, the paper said.
A shake-up in top management, sparked by U.S. activist investor Daniel Loeb, resulted in the appointment of a new president, Ryuichi Isaka, and the resignation of longtime CEO Toshifumi Suzuki.
Loeb has said the company should focus on growing its profitable convenience-store chain and overhaul its weak supermarket, department store and other retail holdings.
Just hours after the company’s shareholders approved his appointment as president following weeks of boardroom drama, Isaka said in late May that he would give himself and his new management team 100 days to come up with a plan to sort out the Japanese retail group as it juggles underperforming businesses and plots expansion in the United States.
Meanwhile, the company's renewed emphasis on quality appears to be paying off in higher customer traffic and sales per customer, the report said. Health-conscious consumers are buying more salads and sandwiches heavy on vegetables. Pizza cooked in-store is also selling well.
Daily sales per store are expected to continue to grow in 2016 after rising 5% to $4,695 last year, said the report.
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