Seven & i Holdings this week reported operating profit rose 9.7% in the March to May quarter (Q1), helped by improved performance of its overseas convenience store business.

Profit in the first quarter was 65.1 billion yen ($445.19 million), compared to an estimate of 58 billion yen from six analysts polled by LSEG, reported Reuters. Profit fell at the company's domestic convenience stores business while overall net profit was boosted by the sale of store assets by retailer Ito-Yokado.

In the United States, Seven & i said gross profit margins improved due to the expansion of proprietary products and optimization of labor costs.

"It's a tough retail environment in the U.S.," Stanley Reynolds, president of 7-Eleven Inc., said in an earnings briefing. "The customer in the U.S. is really looking for value, so we are leaning in with value offers.”

The retailer stated that it is maintaining its earnings forecast.

Also in the report, the retailer highlighted its goals to promote sustainable management by reducing CO2 emissions, taking measures to reduce plastic consumption, reducing food waste and sustainably sourcing materials.

Earlier this year, Alimentation Couche-Tard (ACT) confirmed it “signed a non-disclosure agreement with Seven & i Holdings Co., Ltd. to progress transaction discussions, facilitate due diligence and collaborate on plans to engage with regulators. There can be no assurance that these discussions will result in a transaction,” ACT said in a statement.

The companies are taking steps to divest thousands of stores they collectively own in North America to ease regulatory concerns ahead of a potential merger.

Alex Miller, Couche-Tard president and CEO, said, “We appreciate the Special Committee of Seven & i engaging in substantive discussions regarding our proposal and providing access to diligence. We look forward to working collaboratively with Seven & i in the interests of all stakeholders.”