Focus on the winners (SVNDY)
Seven & i Holdings, the operator of Seven-Eleven, is reportedly seeking to sell a stake in its superstore business as early as 2026. The company is looking to bring in capital to restructure its general merchandise chains, which include Ito-Yokado and York-Benimaru. Ito-Yokado could be reportedly worth $1.3B. The company has denied the report. ValueAct is an activist investor in Seven & i Holdings and has called for divestment. The C-store sector has been a post-pandemic winner, and Seven & i has been held back by its non-C-store banners. Many outperforming brands are seeing strong sales trends in the C-store channel. Are the brands outperforming because of their success in the channel?
Craft declines (SAM, TLRY) – Short craft beer
In the four-week period that ended March 24, off-premise craft beer sales decreased by 1.2%, improving from the -2.7% decline in the previous four-week period. Volumes decreased by 2.6% and prices increased by 1.5%. Total off-premise beer sales increased by 0.9%, with volumes declining by 1.3%. Craft beer sales did see growth in the C-store channel, with sales up 1.2% YOY and volume down 0.3% in the same period.
Tilray (covered by Howard Penney) acquired eight craft beer brands from AB InBev last year. Tilray is now the fifth-largest craft brewer. Its beverage alcohol gross margins contracted from 53% to 38% in FQ3 due to the underutilization of the acquired breweries. In the four-week period that ended March 24, Tilray’s beer portfolio sales declined by 11.7%, and volume declined by 9.6%.
Boston Beer is on our short-list, but the company has been under-earning since hard seltzer lost its fizz. Will the new CEO focus on operations and margins? Craft beer has peaked, so the new CEO must innovate beyond beer. Tilray is on Howard Penney’s short list.
New Creative (HNST)
Jessica Alba, the founder of The Honest Company, is stepping down as Chief Creative Officer. She will continue to serve on the board. The company also reaffirmed guidance. The company should be better off with a dedicated Chief Creative Officer and the actress as a spokesperson.
