7-Eleven Parent Company Makes Case for Food-Focused Strategy
TOKYO — With its annual general meeting three weeks away, Seven & i Holdings Inc. is outlining the company's food-focused strategy and investments in convenience as it continues to face shareholder unrest.
In a letter to shareholders, the parent company of Irving, Texas-based 7-Eleven Inc. also asked shareholders to vote for the company's slate of board nominees at the May 25 meeting.
According to Seven & i, the division of the company that includes Japan's Seven-Eleven Japan Co. Ltd. (SEJ), North American 7-Eleven Inc. (SEI) and other overseas 7-Eleven International LLC (7IN) businesses "contributes over 80 percent of the company's revenue and profit."
This was achieved through strategic investments and divestitures of noncore assets, and leveraging the food expertise of SEJ, including its private brand, product development and procurement networks, and delivery model to expand private label food offerings throughout its global business, including SEI, to enhance sales and margin expansion, the company said.
"These initiatives are driving our strong performance, prompting us to raise our medium-term targets. It's important to understand that key to this successful strategy is a deep understanding of the role that our strength in 'food' plays as a growth and profitability driver as we expand our global CVS business," the letter said.
Seven & i pointed out that the organization's "food ecosystem" — whereby group companies collaborate at each stage of the product development and procurement process — is a competitive advantage.
"Given that there are 15,000 food-related items across the entire company, we have a significant opportunity to leverage this network to continue growing the 2,000 food-related items currently offered by CVS," Seven & i said.
The company also cited its food expertise and fresh food offerings as drivers for global growth, and its strength in food is currently being leveraged across the globe.
"We are installing SEJ's private brand product development and food production processes at SEI and the other countries we serve through valuable business partnerships," the company wrote. "For 7IN, further growth will also be pursued in East Asian countries achieving economic growth, with the benefit from our differentiated fresh food offerings."
To read the full letter, click here.
Calls for Change Continue
The shareholder letter comes as San Francisco-based ValueAct Capital, a global investment firm that has been a major shareholder of Seven & i since 2020, released a presentation supporting calls for change at the company, citing concerns with the "status quo conglomerate strategy."
The presentation can be accessed here.
ValueAct previously called on 7-Eleven Inc.'s parent company to remove four directors from the board, citing a "failed corporate structure," and notified Seven & i that it planned to make a shareholder proposal regarding the appointment of directors one of the items for the 18th annual shareholders meeting on May 25.
"ValueAct invested in Seven & i Holdings with the strong belief that with greater focus, 7-Eleven could become the best convenience store operators in the world. ValueAct has submitted shareholder proposals because they have concluded that change is needed for 7-Eleven to reach its full potential," the firms stated on May 1.
"ValueAct urges shareholders to vote for its nominees, four new outside directors to strengthen the existing board with their global experiences, strategic skills and the voice of a long-term shareholder," the shareholder added. "The addition of ValueAct's nominees and the removal of the entrenched president and his supporters will allow the whole board to execute a pro-governance, pro-stakeholder mandate including a careful and deliberate president succession process, an objective and thorough strategic review and the appointment of an independent chair."