Itochu eyes $5.4b FamilyMart Japan buyout

It might bring agricultural producer associations as minority stakeholders.

Japanese trading house Itochu has signalled its intent to take full ownership of the FamilyMart convenience store chain in the country for an estimated $5.4b (JPY580b), IGD reported.

Itochu already holds 50.1% of FamilyMart business and is predicted to take the company private should the bid succeed. The investor has plans to develop new businesses that go beyond conventional retailing.

According to IGD, the chain has shown signs of instability since last year: it reduced its operational costs by letting go of 800 employees or about 10% of its total staff count, and has made moves to allow franchisees to operate shorter opening hours.

Its performance has also been slipping behind competitor chains, with its daily turnover of $4,926.64 (JPY528,000) lagging behind that of Lawson and 7-Eleven, which recorded $4,991.95 (JPY535,000) and $6,120.97 (JPY656,000), respectively. The chain also suffered the largest YoY sales decline from March to May during the current pandemic.

Critics blamed this on weakness in the assortment. “FamilyMart, on the other hand, has been trying to develop new lines of business around its convenience stores. However, few initiatives have taken off, other than its cashless payment app, FamilyPay,” the report stated.

“It is suggested that Itochu may bring onboard several agricultural producer associations as minority stakeholders, which would broaden the chain’s access to supply sources and boost its capacities in fresh produce,” the report added.

FamilyMart has 16,613 stores in Japan as of end-May and serves more than 10 million customers a day.