7-Eleven to Close Stores
DALLAS -- In a bid to increase profits in 2002, 7-Eleven Inc. said it would accelerate its long-term growth initiatives, which includes plans to shut down 115 to 120 underperforming stores and increase its investments in foodservice and technology.
The store closings will begin immediately and continue over the next two months. The company has not identified the stores targeted for closure.
7-Eleven, operator of more than 5,700 convenience stores in North America, also plans an aggressive marketing effort of its proprietary foodservice business at convenience stores with new menu offerings, improved packaging and higher quality to compete more effectively in the fast-food marketplace.
The company's plan to increase its commitment to technology includes expanding its Vcom program, a self-service vehicle designed to deliver financial and e-commerce products and services.
At Vcom kiosks, 7-Eleven customers can currently cash checks, purchase money orders and obtain other financial services. Vcom kiosks are being tested in 98 stores in Texas and Florida. The company expects to begin deploying additional kiosks in 2002, with up to 3,500 kiosks deployed by the end of 2003.
"By accelerating investment in our technology systems and other strategic growth initiatives, we also will accelerate the benefits of our differentiation strategy," said Jim Keyes, 7-Eleven's president and CEO. "Two areas of differentiation for 7-Eleven include our proprietary fresh food business and our financial services business, Vcom. We anticipate both of these businesses will contribute to the bottom line in 2004."
For the fourth quarter, 7-Eleven reported an 18 percent rise in profits as lower gasoline prices boosted results. The retailer said its core earnings for the quarter ended Dec. 31 rose to $14.6 million from $12.4 million a year earlier. Net earnings for the quarter were $17.1 million compared with $14.2 million a year ago.
Total fourth-quarter revenue, which includes merchandise sales, gasoline sales and other income, grew $11.8 million, to $2.33 billion versus $2.31 billion a year earlier. The company said revenues were hurt by the decrease in the average retail price of gasoline throughout 2001, adding that same-store sales jumped 5.7 percent in the quarter.
"In spite of challenging economic conditions, 7-Eleven achieved its fourth consecutive year of same-store sales growth exceeding 5 percent. The economy did, however, trigger cost of goods increases across a broad range of products with an adverse effect on gross profit margin," Keyes said. "While reluctant to pass along higher costs to customers, more aggressive negotiations and a combination of moderate changes in retail price lessened the decline in margins in the second half of the year."