Seven & i Holdings Co., the parent company of the 7-Eleven convenience store chain, has decided to postpone the initial public offering (IPO) of its US convenience store business, which was originally scheduled for the final quarter of this year. The retail giant stated that it requires additional time to turn around the performance of this business unit amidst a highly uncertain market environment. A key objective for Seven & i's management is to strengthen the growth trajectory and maximize the valuation of the US business before a potential listing within the current fiscal year ending in February 2027. The company announced on Thursday that it aims to significantly enhance the unit's performance and valuation prior to an IPO within this timeframe. The decision by CEO Stephen Dacus to delay the offering underscores how heavily the valuation of the business unit depends on a successful turnaround of its US operations, which contribute approximately half of the group's convenience store profits. Weak fuel demand and softer consumer spending have reduced store traffic, highlighting the company's reliance on sales closely tied to gasoline purchases, which have historically driven higher-margin in-store sales. The current macroeconomic backdrop, characterized by high oil prices and persistent geopolitical uncertainty, introduces additional execution risk for Seven & i's planned IPO. News of the postponement, reported shortly before the close of trading in Japan, triggered a 4.6% drop in Seven & i's share price, bringing its year-to-date decline to 6.8%. The stock had already fallen 9.5% in 2025. The company's latest forecasts indicate that full-year operating profit for the current fiscal year may fall below Wall Street analyst expectations, weighed down by weak customer traffic and fuel sales in North America, with uncertainty stemming from high oil prices clouding the global operating environment. The company projected operating profit of 405 billion yen (approximately $2.5 billion) for the twelve months ending February 2027, down from about 423 billion yen in the previous fiscal year. This compares to the average analyst expectation of 423 billion yen. The latest overall sales forecast was slightly revised down to 94.5 trillion yen, just below market expectations of 100 trillion yen. By postponing the listing, management is betting that operational improvements and a more stable macroeconomic environment by February 2027 will boost profitability and allow the business to debut on the global capital markets from a position of greater strength. Dacus has been seeking to overhaul the company's US operations, involving leadership restructuring and comprehensive reforms to the management of its vast US convenience store network. The weak performance in the US stems from a significant decline in fuel-driven foot traffic, which is critical as gasoline purchases bring customers into stores and subsequently drive sales of higher-margin items. Since the end of February, following a US-Israeli airstrike on Iran that escalated Middle East geopolitical tensions, high prices at the pump and persistent inflation have reduced driving frequency and discretionary spending. The company also faces significant operational challenges, including underperforming stores and a slow rollout of high-margin food products. Collectively, these factors have hurt profit margins and exposed the company's dependence on fuel-related demand. According to the American Automobile Association, the average price for regular gasoline in the US exceeded $4 per gallon in April for the first time since August 2022, as renewed conflict in the Middle East effectively disrupted oil supplies from the Persian Gulf region. In the US, Seven & i's convenience stores are often co-located with gas stations, making fuel purchases a key driver of store traffic, which frequently leads to additional in-store spending. Dacus has stated that the IPO plan for the US subsidiary is contingent on a full recovery in the business's performance there, as US consumer spending has been subdued by prolonged inflation. Proceeds from the IPO were expected to be used partly to support a share buyback program totaling approximately 2 trillion yen, to be executed through the fiscal year ending February 2030. The company has already repurchased shares worth about 600 billion yen. According to management, the share buyback plan remains unchanged. The potential IPO involves a listing of the US convenience store business on a US stock exchange, targeting US capital markets, rather than a spin-off and listing in Japan. Management had previously referred to this plan in March 2025 materials as a "U.S. IPO of SEI," noting that execution conditions included US equity market environment and the effectiveness of a registration statement with the US Securities and Exchange Commission (SEC). North America and Japan each contribute roughly half of the company's global convenience store profits. Seven & i recently suggested that its successful model in the Australian market could provide a template for global expansion and for turning around its US operations.
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