|
Popular convenience store chain 7-Eleven announced the closure of more than 400 stores in North America.
The parent company of 7-ElevenSeven & I Holdings, based in Japan, announced Thursday that the chain will close 444 “underperforming” stores across North America.
In the earnings report, Seven and I found that the store closures were due to a variety of issues related to changing consumer habits.
“The deceleration in consumer spending remains above previous expectations,” we read in the statement.
For more than 13,000 stores in the U.S., Canada and Mexico, closures represent just 3 percent of their portfolio
7-Eleven's earnings report revealed that changing consumer habits had a significant impact on their store closures, mainly due to inflation
Their earnings report revealed that inflation was one of the main factors, stating that since 2019, rents, utilities, groceries and fuel have increased by more than 25 percent.
In its earnings release, the company said: “Overall, the North American economy remained strong, driven by high-income consumption despite persistent inflation, elevated interest rates and a deteriorating employment environment.”
“In this context, there was a more cautious approach to consumption, especially among middle- and low-income people,” they added.
The company's report shows that consumer habits have begun to focus more on high-quality products at a lower price. The study found that 69 percent of buyers wanted higher quality products and 60 percent focused on good value for money.
Their report shows that traffic to North American locations dropped 7.3% in August, after the company saw traffic decline for six months in a row.
The company also saw a shift in cigarette sales, which saw a 26 percent decline in the total number of packs sold, from 10,300 million in 2019 to 7,600 million in 2024.
This decline was not stopped by shoppers choosing other options – only 18% switched to other nicotine products, with more shoppers switching to cheaper products.
The company's earnings report revealed that traffic to its North American locations dropped 7.3 percent in August, following six consecutive months of traffic declines
For more than 13,000 stores in the U.S., Canada and Mexico, closures account for just 3 percent of their portfolio. The chain also has over 21,000 stores located in Japan.
This was announced by a spokesman for 7-Eleven Szybka Firma: 'We have decided to optimize a number of assets unrelated to our core business that do not fit our development strategy. At the same time, we continue to open stores in areas where customers are looking for greater convenience.
The closures are also expected to result in a $30 million operating income benefit and a $110 million increase in the annual operating rate this year, according to the earnings release.
News of hundreds of store closures comes after Seven and I cut its profit forecast for the financial year ending February 2025.
Fast Company reported that this was also accompanied by plans to split the company in two.
According to Bloomberg, their separation and store closures are also intended to appease disgruntled investors and deter takeover bids.
The company hopes to focus on better-performing locations that are in higher demand.
The Daily Mail has reached out to 7-Eleven for comment.
