By Megumi Fujikawa

TOKYO--The Japanese operator of 7-Eleven convenience stores will keep looking for ways to revamp its business, its incoming chief executive said as he warned that retail conditions in the U.S. will get tougher due to tariffs.

"My assumption is that we are going to be facing a somewhat more challenging retail environment," Seven & i Holdings' Stephen Hayes Dacus said in a group interview on Friday.

Many economists and businesses worry that President Trump's tariffs will hurt consumer spending in the U.S. by raising prices of imported goods and potentially slowing the economy.

Dacus, a former executive at Walmart and Uniqlo owner Fast Retailing, said the higher duties could change consumer patterns but that their ultimate effects are difficult to predict, given the quickly changing conditions.

That uncertainty comes at a tough time for Seven & i. The Japanese retail giant has been battling inflation headwinds in the U.S. and reported a roughly 28% drop in operating income at its overseas convenience store business for the financial year ended February.

The 7-Eleven owner has also been fending off a takeover bid by Canada's Alimentation Couche-Tard that has ramped up pressure to boost profits. It rejected an initial $39 billion buyout bid from the operator of the Circle K convenience store chain in September, saying it underestimated the company's value.

Dacus, who was named as Seven & i's first American CEO in March, said that the company will look to improve its supply chain and control costs.

Seven & i has made various efforts to head off the Canadian company's advances and show shareholders that it can improve profitability on its own, including a $5.4 billion deal to sell non-core assets to private-equity firm Bain. A buyout bid led by its founding family was scrapped after failing to secure financing.

Though the two companies have now signed a confidentiality agreement to consider the sale of some of their U.S. stores to clear regulatory hurdles, Seven & i continues to say that antitrust issues could sink a potential merger.

Dacus has previously said the company doesn't want to spend two years on anti-trust issues only to be rejected by a U.S. court. Couche-Tard Chief Executive Alex Miller has countered by saying it wouldn't take two years to get approval.

At Friday's interview, Dacus said the two companies are still working on a divestiture package.

"The one thing I do want to make very clear is we have had very good constructive engagement. We are moving forward," he said, refraining from commenting further on the discussions.

"The special committee is totally objectively looking at whatever opportunities are on the table," he added.

Couche-Tard raised its offer to about $47 billion and in January submitted a revised yen-denominated proposal at Seven & i's request.

Seven & i's planned initial public offering of its North American convenience-store business could help the company ramp up investment in its supply chain and stores, Dacus said.

"Doing the IPO will give us the financial flexibility to invest a bit more aggressively in our stores which will obviously benefit our consumers," the CEO said, adding that Seven & i will do everything it can to "make customers happy."

"Even if they have less money, they still have basic needs. They still have a choice of where to go," he said. "If you can make sure that you are the first choice, you're still going to do just fine, even if the economy goes down."

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

April 25, 2025 02:20 ET (06:20 GMT)

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