TOKYO --The new head of Seven & i Holdings Co., the Japan-based parent of 7-Eleven Inc., said he plans to increase the number of 7-Eleven convenience stores in the United States to boost overall market share amid slowing demand in Japan and as the chain contends with intensified competition, reported Bloomberg.
In a briefing held in Tokyo on May 26, hours after the company’s shareholders approved his appointment as president following weeks of boardroom drama, Ryuichi Isaka said he is giving himself and his new management team about three months to come up with a plan to sort out the Japanese retail group as it juggles underperforming businesses and plots an expansion in the United States, the news agency said.
“I want to sort out major issues, work up a growth strategy and a structural reform plan and announce them to everyone in 100 days,” he said.
Seven-Eleven has a network of approximately 27,000 subsidiary convenience stores around the world, including 18,250 in Japan and 8,000 in the United States, and a further 30,400 area licensees including in South Korea, Southeast Asia and Europe.
Isaka did not specify a number of stores for U.S. expansion.
But in North America, the company “could increase our store number to 20,000 or even 30,000,” former chairman Toshifumi Suzuki said in a May 30, 2014, interview with Bloomberg. “We will raise the quality of operations, and we will go into the areas where we don’t have outlets.”
The company will continue to make acquisitions in the United States, he said.
“There will be a huge potential in expansion in large cities in the U.S.,” Dairo Murata, analyst at JPMorgan Securities Japan Co., told the news agency at the time. “There are over 50,000 convenience stores in Japan with 120 million people. Considering the U.S. population is about 300 million, there is an unlimited potential.”
With his new team in place, Isaka faces the task of reforming less profitable divisions that U.S. activist investor Dan Loeb pushed to be restructured or divested. Seven & i will also need to figure out how to expand its core business of operating convenience stores, amid lethargic economic growth in Japan and intensifying competition from chains such as FamilyMart Co. and Lawson Inc.
Billionaire Loeb had backed Isaka to run the group in a management struggle with former chairman and CEO Suzuki. In a letter to Seven & i’s board in late March, the Third Point LLC founder also said he wants the company to restructure its Ito-Yokado Co. general-merchandise unit and divest other retail holdings.
Isaka signaled he wasn’t in a hurry to force changes at the group’s weaker businesses, which have under-performed compared with Seven & i’s convenience stores unit amid Japan’s economic malaise.
“I want to review the roles that they play in the community, not just judging by their business types,” said Isaka, who served as president of Seven-Eleven Japan Co. since 2009.
“All we are expecting from Seven and i’s new management led by Isaka is a speed-up of restructuring of its unprofitable businesses,” Dairo Murata, an analyst at JPMorgan Securities Japan Co., told Bloomberg. “They own a lot of problematic businesses. We’re hopeful but anxious at the same time.”
Japan’s first 7-Eleven convenience store, operated by Seven-Eleven Japan Co. Ltd., opened in 1974. In 1991, the Japanese company then known as Ito-Yokado acquired The Southland Corp, Dallas, the U.S. operator of 7-Eleven stores. Today, the global 7-Eleven business is fully owned by Seven & i Holdings, with its approximately 60,000 convenience stores in 17 countries.
Irving, Texas-based 7-Eleven operates, franchises and licenses more than 10,700 convenience stores in the United States and Canada.