Seven & i Holdings Co. is considering selling its department store unit Sogo & Seibu Co. due to slumping business amid the coronavirus pandemic and increased competition with online shopping operators, sources close to the matter said Monday.
The plan emerged as ValueAct Capital, a U.S. investment company with a 4.4 percent stake in Seven & i, is stepping up pressure on the major Japanese retailer to sell the department store business.
Seven & i, the Tokyo-based parent company of Seven-Eleven Japan Co., is expected to hold talks with the San Francisco-based ValueAct and other shareholders about issues such as the price and timing on the planned sale of Sogo & Seibu.
With Seven & i struggling with even the most profitable unit of the convenience store business, the company will shift its focus from the slumping department stores to convenience stores in Asia and other foreign countries, according to the sources.
In an open letter to the Seven & i board of directors dated last Tuesday, ValueAct said, "The company is strategically unfocused and vastly underperforming its potential."
"If Seven & i narrows its focus to 7-Eleven, it can become the global champion in a growing industry," the letter said.
ValueAct, which calls itself "the largest actively managed institutional shareholder of the company (Seven & i)," is expected to make proposals during a shareholders' meeting Seven & i plans to hold around May.
Sogo & Seibu operates 10 stores across Japan, including the Seibu flagship department store in Tokyo's Ikebukuro district. The number of outlets, however, has fallen from 28 in October 2009.
The company posted 430.6 billion yen ($3.7 billion) in sales in the business year ended in February last year.
