Seven & I Appoints Activist Investor Loeb's Candidate as Group Presidentby
CEO Suzuki to step down after failing to oust unit head
Japanese retailer's board voted unanimously for reshuffle
Seven & i Holdings Co. has appointed the head of its Seven-Eleven Japan Co. convenience store unit Ryuichi Isaka as its president, capping a tumultuous month for Japan’s largest retailer that saw its chairman resign after failing to oust the executive.
Seven & i also appointed Chief Administrative Officer Katsuhiro Goto vice-president of the group, while executive Kazuki Furuya will replace Isaka as president at Seven-Eleven Japan, the Japanese retailer said in a statement. The appointments are effective May 26, it said.
Activist investor Dan Loeb intervened late last month to stop a plan by Chairman and Chief Executive Officer Toshifumi Suzuki to remove Isaka. Loeb said in a letter dated March 27 -- first reported by Bloomberg News -- that the 58-year-old should instead be rewarded for Seven-Eleven Japan’s strong results.
All 15 directors including Suzuki took part in a board meeting Tuesday and unanimously agreed to the management reshuffle, said Mayumi Ito, a Tokyo-based spokeswoman for Seven & i. Suzuki will step down, the company said. The 83-year-old announced his resignation April 7 when its board came one vote short of removing Isaka.
With a succession plan in place, Japan’s largest retailer faces the task of turning around poorer performing units, such as the department store and supermarket divisions, said Yasuhide Yajima, chief economist at NLI Research Institute in Tokyo.
“The new leader of 7 & i would have to aggressively be creative and move faster to set a trend to keep attracting retail customers -- who seem to get easily bored with one product nowadays with a slew of attractive goods and services raining down on them from many retailers,” said Yajima by telephone.
Seven & i rose 1.2 percent to 4,738 yen by the close of trading in Tokyo, before the announcement of the management changes. The stock was on a roller-coaster ride in the past month as Isaka’s fate at the company hung in the balance, and was also roiled by a series of earthquakes which hit the Kyushu region last week and hurt Japanese shares.
Noritoshi Murata, the current president and COO of Seven & i, will step down from the posts, according to Tuesday’s statement.
In his letter to Seven & i’s board, Third Point LLC founder Loeb raised concerns about Suzuki’s “chronic health problems” and claimed the CEO planned to anoint his son as successor. He also praised Isaka as “instrumental to the success” of the profitable convenience stores unit and should be promoted for his contribution to shareholders.
Seven-Eleven, which operates 58,711 convenience stores worldwide including directly-owned outlets and franchises, has been beating McDonald’s Corp. at feeding customers in Japan, and its wide range of hot meals make it the country’s largest fast food chain by sales.
The convenience stores unit posted its best results on record April 7 with operating income of 304 billion yen ($2.8 billion) for the fiscal year ended February. The unit contributed to 84 percent of Seven & i’s operating income, overshadowing all other divisions including superstores and financial services.