Seven & I Holdings Co., the operator of 7-Eleven convenience stores, plans more acquisitions in the U.S. and may more than double North America outlets as consumer spending improves in the largest economy.
In North America the company “could increase our store number to 20,000 or even 30,000,” Chairman Toshifumi Suzuki said in a May 30 interview at the company’s Tokyo headquarters. It currently has more than 8,000 outlets in the region and Suzuki didn’t provide a timeframe for the planned expansion.
Seven & I, the world’s biggest convenience store operator by number of outlets, has been buying small chain stores in the U.S. as it tries to strengthen the competitiveness of the local unit. Strength in consumer spending and business investment is helping the U.S. economy overcome government cutbacks, underlining forecasts for a growth pickup later in the year.
“There will be a huge potential in expansion in large cities in the U.S.,” said Dairo Murata, analyst at JPMorgan Securities Japan Co. “There are over 50,000 convenience stores in Japan with 120 million people. Considering the U.S. population is about 300 million, there is an unlimited potential.”
The company bought 662 convenience stores in North America in its last fiscal year, according to spokesman Nobuyuki Miyaji.
“We will raise the quality of operations, and we will go into the areas where we don’t have outlets,” Suzuki said. The company will continue to make acquisitions in the U.S., the 80-year-old executive said, without elaborating.
The retailer plans to have 10,000 stores in North America, which makes up about a quarter of group sales, as early as 2014.
Seven & I had a 24 percent market share in the U.S. convenience store industry last year, the largest in the country, followed by the 1.6 percent from Circle K owner Canada-based Alimentation Couche-Tard Inc. and 0.1 percent from North Carolina-based The Pantry Inc., according to London-based researcher Euromonitor International.
Seven & I had 50,254 convenience stores worldwide with 8,116 outlets in the U.S. as of March this year, according to the company’s website.
Japanese food retailers are expanding in China, Thailand, Vietnam and other fast-growing overseas markets as they contend with unfavorable demographic trends at home, Bloomberg Industries analyst Thomas Jastrzab noted in March. Convenience-store operator FamilyMart Co. plans to have 8,000 stores in China by 2020 and 40,000 worldwide, he wrote.
Seven & I had 15,218 convenience stores in Japan as of March 2013 and plans to open a record of 1,500 news outlets in the Asian country this fiscal year, it said in an April statement.
7-Eleven Inc., the retailer’s U.S. convenience store unit, will probably have sales of 1.8 trillion yen ($17.9 billion) for the year ending December, an increase of 44 percent from last year, Seven & I said in April. The profit for the unit may increase 13 percent to $540 million, it said.
Seven & I expects net income will increase 23 percent to record 170 billion yen for the year ending February 2014 with sales up 13 percent to 5.6 trillion yen, the company said.