Convenience store retailer 7-Eleven plans to build up to 500 new convenience stores in 2025 through 2027, the company said at an investor presentation posted late last week by Japanese parent company Seven & i Holdings Co.
The news comes as 7-Eleven’s management team has pledged to grow the business by focusing on successful new formats and while its Japanese owner looks to repel a mega-offer from Canada’s Couche Tard.
In the U.S., 7-Eleven said that it aims to achieve its rapid expansion by rolling out what the company has dubbed its ‘New Standard’ format stores, which have been developed following the company’s ‘Evolution’ store trial, which include in-store restaurants and more premium products. The first Evolution store debuted in Dallas, Texas in 2019.
“We plan to open 125 of these new stores in 2025, and we are ramping up and growing our pipeline with plans to open over 500 of these new stores by 2027,” 7-Eleven CEO Joe DePinto said on the investor call.
“In our Evolution stores, the feedback we received from our customers was pretty straightforward,” DePinto added, saying that customers wanted larger-format c-stores, that were “food forward” and that provided innovative digital offerings, personalized offerings and shopping experiences, plus more gas pumps.
“So, we built these stores with our customers’ sentiments in mind,” he said. “Our new store standard, and these new-format stores, are performing better than our existing portfolio in both merchandise sales and traffic, delivering 13% higher same-store sales in the first year of opening. We’re projecting that at full maturity, four years, that these new standard-store sales will further increase by 30% to $8,219 average per store day.”
7-Eleven Store Closures
Earlier this month, 7-Eleven announced in a filing that it would close 444 under-performing stores in the U.S., citing consumer pull-back on purchases because of inflationary pressure o their wallets and continuing declines in sales of cigarettes as hitting turnover.
According to the presentation, 7-Eleven has about 13,229 locations in the U.S. and Canada and a presence in 47 of the top 50 markets.
“These 13,000 stores are within two miles of 51% of the U.S. population, allowing us to be where our customers are and providing us with an unmatched last-mile distribution network.” DePinto stressed. “And we are not done, we have a significant amount of room to grow.”
The company also plans to broaden its roster of proprietary products, with a focus on innovation, quality improvement and value, including fresh food, restaurants, proprietary beverages and private label brands.
Its expansion plans also include investing in restaurants, such as the company’s quick-service Mexican restaurant Laredo Taco, Speedy Café and its Southern-inspired fast food brand Raise the Roost Chicken and Biscuits.
Bid For Seven & i Holdings
Seven & i Holdings is hoping that these initiatives can boost its stock value by hiving off under-performing businesses and focusing on its mainstay 7-Eleven stores. The outcome of its strategy will determine whether it can see off a $47 billion Canadian takeover bid from Circle K owner Couche Tard.
Under its latest plans, Seven & i said that it will split off its supermarket operation and some 30 other non-core units into a holding company called York Holdings. It will then rename itself 7-Eleven Corp. to emphasize its fresh focus and it will seek strategic investors for York and eventually will list it as a separate entity.
Seven & i has said that it was confident that by taking such measures it could unlock shareholder value and had laid out near-term growth targets, including an EBITDA earnings target of around $670 million in the next financial year for the York unit.
However, disgruntled shareholders Artisan Partners and ValueAct Capital have previously called on Seven & i to divest some of its operations to become a leaner and more efficient business.
The Japanese giant employs some 157,000 people worldwide across a multi-sector brands that includes apparel stores, supermarkets and restaurants, plus its flagship 7-Eleven c-stores.
Read the full article here