(Jan 9): Seven & i Holdings Co’s profit declined 24% on broader retail weakness despite some signs of recovery at its convenience stores in Japan and North America, which could make it harder to stave off investor pressure to engage with a takeover approach from Alimentation Couche-Tard Inc.

Operating profit was ¥128.4 billion (US$812 million or RM3.65 billion) during the period that ended in November, compared with ¥169 billion a year earlier, the company reported Thursday. Analysts were projecting, on average, profit of ¥132 billion.

The mixed results mean that Seven & i will probably face challenges convincing investors that it can turn around its all-important convenience store business. The retailer has been spurred into radical action to fend off Couche-Tard’s approach, embarking on a separation of its domestic supermarkets and retail business in order to focus on its convenience-store operations.

Its founding Ito family is also leading a competing proposal to take the company private at a ¥9 trillion valuation to trump the Circle K operator’s ¥7.5 trillion bid. The stakes are high for a company that has become a symbol of efforts to unlock value from staid Japanese corporations.

In the US, where it gets half of its profits, monthly in-store sales rose slightly in November for the first time in 14 months, the company said last month. In Japan, sales also advanced after promoting lower-priced products.

Seven & i’s stock is up almost 50% from an August low, spurred on by that offer. Still, reflecting some uncertainty about the offers and the retailer’s restructuring plan, its currently market valuation still hovers only around ¥6.3 trillion.

For the full fiscal year that ends in February, Seven & i kept its forecast for operating profit of ¥403 billion, as well as its outlook for ¥11.9 trillion in sales.

The third-quarter results may not have much impact on the shares, as the market is focused on the outcome of the company’s plans to split and development of the proposals, said Lorraine Tan, an equities analyst at Morningstar Asia Ltd, adding that restructuring “remains the main driver.”

Uploaded by Chng Shear Lane