Seven & i Holdings Shares Fall After Disappointing Quarterly Results

By Kosaku Narioka

Seven & i Holdings Co. shares fell sharply early Friday after it reported a weaker-than-expected fourth-quarter net profit and said its board would continue to analyze strategic options such as potential spinoffs of its businesses.

The shares were recently 3.8% lower at 5,648 yen ($42.86) after falling as much as 7.5% earlier. The benchmark Nikkei Stock Average was recently 0.3% higher.

The Japanese operator of 7-Eleven and other retail stores said Thursday after market close that net profit rose 33% to Y280.98 billion ($2.13 billion) for the fiscal year ended Feb. 28 on greater earnings from its convenience store businesses, despite weakness in its superstore operations.

Fourth-quarter net profit was Y46.27 billion, given the net profit of Y234.71 billion in the nine months ended Nov. 30, according to a Wall Street Journal calculation. That fell short of the estimate of Y49.35 billion in a poll of analysts by FactSet.

San Francisco-based activist investor ValueAct Capital has asked the Japanese retailer to consider a spinoff of the 7-Eleven convenience-store business to remove the stock-price discount associated with a conglomerate structure.

Seven & i said the board would continue its objective analysis of strategic options, such as potential initial public offerings and spinoffs of its businesses.

The recently established strategy committee that is tasked to advise the board on these options said the company is trying to achieve synergy between the convenience and superstore businesses by realizing the group's core strength of its food products.

Fiscal-year operating profit for Seven & i's international convenience store business surged 81% and that of its domestic convenience store business increased 3.9%, while operating profit from its superstore business dropped 36%.

Seven & i has projected revenue to fall 5.6% to Y11.154 trillion and net profit to rise 1.4% to Y285.00 billion for the fiscal year that started on March 1.

Write to Kosaku Narioka at kosaku.narioka@wsj.com

(END) Dow Jones Newswires

April 06, 2023 22:09 ET (02:09 GMT)

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