By Anton Bridge
TOKYO (Reuters) - Japan's Seven & i Holdings, operator of the 7-Eleven convenience store chain, said operating profit fell 24% in the latest quarter, missing analysts' estimates, as inflation hit consumer spending in Japan and North America.
The poor showing piles pressure on the sprawling retailer as it tries to fend off a $47 billion buyout offer from Canada's Alimentation Couche-Tard (ACT).
Profit tumbled to 128 billion yen ($810 million) in the three months to end-November, short of an average estimate of 138 billion yen from seven analysts polled by LSEG.
This was Seven & i's lowest third-quarter profit since September to November 2021, even as revenues have grown.
After ACT's bid, the group's founding family started talks to take the company private for an estimated $58 billion, which would be the largest management buyout in Japanese history.
Such a move would allow the group to continue under current management and relieve pressure to offload unprofitable assets, though some analysts reckon it may simply be a gambit to induce a higher bid from ACT.
The firm has also hastened plans to focus on its convenience store business by selling a range of non-core assets, among them several supermarket chains and specialist retailers.
In October, Seven & i announced it would create a separate business unit - York Holdings - to house 31 subsidiaries, for which it would solicit external investment before an eventual public offering.
Last month, it concluded the first round of bidding for the assets, with private equity giants Bain Capital and KKR each offering over $5 billion, sources said.
Regardless of the restructuring plans, the group's core convenience store business has struggled this financial year.
Chief financial officer Yoshimichi Maruyama said Seven & i was rolling out initiatives to respond to changing consumer behaviour through "trial and error and with a sense of speed."
Maruyama said he believed management's current approach was the right one, adding that raising corporate value on a standalone basis without being bought out remained an option.
Seven & i retained its profit forecast of 403 billion yen in the year to the end of February. Last October, it lowered its forecast from 545 billion yen as inflation looked set to continue to hit customer spending.
($1=158.1400 yen)