The move is part of the Japanese retailer’s strategy to shift its focus to its highly-profitable convenience store unit, 7-Eleven Japan Co., according to local sources, and could raise more than $1.7 billion, according to a report by Nikkei Asia.

The Sogo & Seibu department store business unit, previously called Millennium Retailing, was acquired by Seven & I Holding in 2006. It has 10 stores across the country, 18 fewer than it had in the year to February 2007.

Sogo & Seibu was reported to have been struggling since the pandemic as consumers migrated online and the trading hours of physical stores were impacted by Covid-related regulations. In the fiscal year to last February, the department-store business lost about $150 million, according to The Japan News.

According to Nikkei Asia, the company will commence negotiations with prospective bidders this month in order to narrow the bidder list. While Seven & I has not confirmed a sale process, on Tuesday it issued a statement saying it was looking into all possibilities regarding changes to its business portfolio, including the sale of shares in Sogo & Seibu. That prompted an 8.8 percent surge in its share price in early trading.

Last August, Seven & I Holdings sold down its stake in home-decor chain Francfranc, one of a string of forays into other retail categories as the company struggled to diversify its holdings. The group’s current portfolio also includes upscale department store Barneys Japan, homewares giant The Loft, maternity-goods retailer Akachan Honpo, and Tower Records.

The sale of Sogo & Seibu follows campaigning by institutional investors who want to see the company focus on its lucrative core convenience-store business, but it comes amid a modest recovery in Japan’s department store market. Last month, five Japanese major department stores, including Sogo & Seibu, reported an increase in sales ranging from 10 to 30 percent. Driven by sales of luxury brands, Sogo & Seibu’s January sales rose by 19.7 percent on year.

However, with the convenience store business at home and abroad believed to contribute the vast majority of Seven & I’s profitability, the impact any future sale of the group’s department store unit on its profitability remains unclear.

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