Seven & i Holdings and Japanese domestic retailer H2O Retailing have announced that they have entered a capital and business alliance, with the former struggling to improve its department store business in the sagging domestic market.
Realign department store business
Seven & i said it will sell three of its department stores, two Sogo department stores in Kobe, Hyogo Prefecture and a Seibu department store in Takatsuki, Osaka Prefecture, to the Osaka-based operator of Hankyu and Hanshin department stores.
Under the agreement, Seven & i will acquire 3% of all outstanding shares in H2O Retailing, which was worth some JPY5.7b (US$55m). Meanwhile H2O Retailing will take an equivalent stake in Seven & i in terms of value, which is around 0.1% of Seven & i shares.
Focus on department store operations in Tokyo
Seven & i would focus its management resources on department stores in areas around Tokyo to accelerate its restructuring efforts, while H2O would aim to restore the three stores by making use of its home court advantage.
"A new linchpin (for management) is necessary," Ryuichi Isaka, president of Seven & i, said at a press conference in Tokyo, pledging to shift the company's focus to "selection and concentration," instead of business expansion.
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