UPDATE: This story has been updated to include a statement from 7-Eleven.
Convenience-store giant 7-Eleven plans to close 444 underperforming stores in North America, parent company 7 & i Holdings revealed in an earnings presentation Thursday.
The chain is struggling with the same inflationary pressures that are impacting traffic and sales at restaurants, plus a decline in demand for cigarettes. Traffic at North American 7-Eleven locations has been negative since early last year and fell 7.3% in August.
As a result, the company downgraded its U.S. profit guidance for the year and said it will close weaker stores. The closures are expected to deliver a $30 million operating income benefit this year and a $110 million boost to annualized run rate, according to the presentation.
“Aligned with our long-term growth strategy, we continuously review and optimize our portfolio to deliver convenience where, when and how customers need it," 7-Eleven said in a statement to Restaurant Business. "As part of this, we made the decision to optimize a number of non-core assets that do not fit into our growth strategy. At the same time, we continue to open stores in areas where customers are looking for more convenience.”
The chain also has a deal to sell some North American properties in a $750 million sale-leaseback that will net it a profit of $520 million. It did not say how many locations were involved in that transaction.
Irving, Texas-based 7-Eleven has more than 13,000 U.S. locations and is the largest convenience-store chain in the country. Its scale and array of prepared food make it a serious competitor for restaurants.
The closures come amid a broader strategic shift for Tokyo-based 7 & i as it works to fend off a takeover bid by rival Alimentation Couche-Tard, the owner of Circle K. The deal would bring together the two largest c-store chains in the country.
Earlier this week, Couche-Tard raised its offer to acquire Seven & i from $14.86 per share, or approximately $39 billion, to $18.19 per share, or approximately $47.2 billion.
On Thursday, 7 & i announced that it is creating a separate company for its non-convenience-store businesses, such as supermarkets and specialty stores, so that it can focus more on c-stores. The spun-off company will be called York Holdings Co.
To further illustrate its c-store focus, 7 & i is also considering changing its name to 7-Eleven Corp.
Greg Lindenberg of CSP Daily News contributed to this story. CSP is a sister publication of Restaurant Business.
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