It’s been a tough week. With all the headlines about COVID-19, many of us have been greatly affected. In the last few days, many retailers have suffered huge sales declines, as people want to stay home and safe.
But one business is thriving, and that’s 7-eleven. The convenience store chain reported a 16% rise in its like-for-like sales in the 52 weeks to March 27, 2020. It achieved this despite operating with less than half the usual number of people. The company has also pivoted to offering more groceries and household essentials.
Speculation About The Speedway Acquisition
The acquisition of the 7-Eleven business has been heavily speculated about for some time. According to Retail Insider, the convenience store chain was once valued at around US$15 billion, and it’s been on the market for around two years.
The business posted its first annual loss in 2018, but it’s still one of the industry’s bigger and more prominent groups. It also operates around 900 stores in Australia, which is around a quarter of the total number of convenience stores there. So it’s a pretty significant acquisition for an international group like DSC.
It was first revealed that Circle Foods had made an offer for 7-Eleven back in November 2019. At that time, the business had $4.52 billion in revenue and 150 million in annual profit. At the time, the deal was considered a match made in heaven. Circle Foods is a major international food company, and its U.S. operations span more than 20,000 stores across the country. Its Australian operations span around 4,000 stores. So it’s an acquisition that will certainly reshape the industry in the coming years. We’ll have to wait and see exactly what DSC’s plans are for this acquisition.
7-Eleven’s Growth Pays Dividends
Like many other retailers, 7-Eleven faced a huge sales decline in the last few days as a result of the pandemic. The same Retail Insider report states that the business’ like-for-like sales fell by 16% in the 52 weeks to March 27, 2020. However, the convenience store chain reported that sales had actually fallen by 23% when adjusted for inflation. So while fewer people are going into retail, those that are are spending more money. This is great news for 7-Eleven, as revenue is up and margins have improved as a result of the rise of e-commerce and online shopping in general.
The business has also benefited from increased dwell time. People are now spending more time at home, so it’s a perfect opportunity for retailers to engage with them. Plus, with more people working from home, there’s more demand for office supplies and household goods. This is a result of the “new normal” that we’re all now living in.
Here are some key takeaways from this report: