(This April 8 story has been corrected to fix the share repurchase amount to 2 trillion yen, not $2 billion, in paragraph 6)
By Anton Bridge
TOKYO (Reuters) - Japanese retailer Seven & i Holdings is set to record a 24% drop in quarterly profit on Wednesday as underperformance of its convenience store business hampers its ability to fend off a takeover attempt by Canada's Alimentation Couche-Tard.
Seven & i is likely to book operating profit of 94.45 billion yen ($639.52 million) for December-February, showed the average of eight analyst estimates compiled by LSEG. That would compare with 124.23 billion yen in the same period a year prior.
The 7-Eleven operator's profit has fallen in recent quarters as domestic convenience store operations underperformed competitors and its North American arm suffered from lower consumer spending against a backdrop of accelerating inflation.
At the same time, Seven & i has sought to bat away a $47 billion bid from Circle-K operator Couche-Tard, arguing initiatives to overhaul its business will increase corporate value and that antitrust barriers in the U.S. may nix any deal.
A management buyout led by Seven & i's founding family collapsed in February after failing to secure funding. The company has since turned to strategies including selling off non-core businesses and appointing Stephen Dacus as CEO.
In March it announced a 2 trillion yen share buyback and proposed listing its North American convenience store subsidiary by the second half of 2026.
Still, Seven & i's share price, which has traded between around 1,850 yen and 2,250 yen since the start of March, is far below Couche-Tard's offer of around 2,700 yen, indicating that investors are sceptical of Seven & i's plans, analysts said.
Last month Seven & i and Couche-Tard said they were working together to find buyers for around 2,000 of their convenience stores in the U.S., in their most concrete sign of engagement.
Seven & i has said a divestiture plan is necessary to pass a U.S. Federal Trade Commission review. Sources have told Reuters that interested buyers are primarily private equity firms.
Investors and analysts now await the outcome of store-sale discussions and an update on the listing of Seven & i's North American subsidiary.
($1 = 147.6900 yen)