Japan’s 7-Eleven Tycoon Bucks The Trend By Doubling Down On Convenience Stores

This story is part of Forbes’ coverage of Japan’s Richest 2022. See the full list here.

The 7-Eleven convenience store made Japan’s Seven & i Holdings the retailing giant it is today. Everything from the bulk of its profit to its name derives from over 35,000 outlets across Japan, North America, China and Southeast Asia. But if a U.S. investor has its way, Seven will shed its department stores and other non-core businesses to be solely a purveyor of items like rice balls, coffee and burritos.

Seven & i’s honorary chairman Masatoshi Ito brought the 7-Eleven concept to Japan in 1973 through an agreement with its Dallas-based operator Southland. In 1991, his Ito-Yokado, eventually Seven & i, took a majority stake in Southland, fully acquiring it in 2005.

In the fiscal year ended in March, it posted ¥8.75 trillion ($68.9 billion) in revenue, jumping 52%, and ¥211 billion in net profit, up 18%, both goosed by last year’s $21 billion acquisition of U.S. convenience store operator Speedway. Seven & i’s shares are up nearly 25% from when his fortune was last measured, outperforming the overall market. Ito, who’s 98 years old, saw his net worth increase 6% to $4.35 billion.

His firm already says convenience stores are its core, but it’s under pressure from San Francisco-based fund ValueAct Capital to focus on that high-margin business. The fund, which says it owns 4.4% of Seven & i, released a letter in January to management requesting the company to consider spinning off businesses outside of convenience stores.

One target are the Sogo and Seibu department stores. For all department stores in Japan, revenue has plunged about 60% in the past three decades to about $39 billion in 2021. Seven noted in February, after media reports it was finalizing the sale of Sogo and Seibu, that it’s examining “all possibilities.” In April, it went further, announcing the retention of a financial advisor for a strategic review of the department stores.