LAVAL, Quebec -- Among several initiatives that contributed to a quarter that its CEO described as “strong on many fronts,” integration of The Pantry’s Kangaroo Express convenience stores into its retail network, a related fuel rebranding and the start of its global rebranding effort kept Alimentation Couche-Tard Inc. busy in its fiscal third quarter ended Jan. 31, 2016.
The retailer reported net earnings of $274 million, an increase of 10.4% compared with $248.1 million for the third quarter of fiscal 2015.
Revenues were $9.3 billion for the third quarter of fiscal 2016, up by $223.3 million, an increase of 2.5% compared with the corresponding quarter of fiscal 2015, mainly attributable to the contribution from acquisitions and newly opened stores as well as by the continued growth in same-store merchandise revenues and road transportation fuel volumes in both North America and Europe.
These items, which contributed to the increase in revenues, were partly offset by a lower road transportation fuel average selling price, among other factors.
Strong same-store merchandise revenues grew in all markets--5.0% in the United States, 4.3% in Europe and 3.5% in Canada.
Merchandise and service gross margin increased by 0.5% in the U.S, by 3.4% in Europe and by 0.2% in Canada.
U.S and Europe same-store road transportation fuel volumes growth was solid at 6.2% and 2.9%, respectively. In Canada, same-store road transportation fuel volumes decreased by 0.5%.
Road transportation fuel gross margin was 19.90 cents per gallon in the United States, 8.69 cents (U.S.) per liter in Europe and of 6.29 cents (Canadian) per liter in Canada.
"This quarter has been strong on many fronts. Our teams continue to deliver a great customer experience amidst a lot of competition, resulting in solid growth in merchandise and services gross profits and in fuel volumes,” said Brian Hannasch, president and CEO.
Highlights of the quarter, according to Hannasch, included:
- Global Circle K rebranding initiative. “Our new global Circle K brand has begun changing the convenience landscape in the southeastern U.S., where we are on track to reimage over 400 stores before the end of the fiscal year. I have seen first-hand that our new global brand not only fuels enthusiasm among our employees but also among our customers, who are congratulating our teams when they visit our rebranded sites. In Europe, where we are changing from the established Statoil brand to Circle K, our two pilot stores in Norway are already generating very encouraging responses from customers."
- Pantry integration and fuel brand review. "Back in the southeastern U.S., our integration of The Pantry continues to deliver very positive results and our review of fuel partners and agreements in this region is now complete. As a result, we are changing the fuel branding on more than 1,000 of our stores.”
- Pantry synergies. “We are actively working on realizing identified cost reductions opportunities in connection with The Pantry acquisition in addition to realizing available synergies through growth of in-store sales and fuel volumes in this geographic area, improving our operations, sharing our business awareness and each company's best practices, and optimizing supply conditions.”
- Topaz, Esso acquisitions. “After the end of the quarter, we have welcomed approximately 2,000 new colleagues and 444 stores to the Couche-Tard family with the closure of the purchase of Topaz on Feb. 1. Furthermore, just last week, we announced our intent to further expand in Canada significantly. We have reached an agreement with Imperial Oil for the acquisition of 279 of their Esso-branded sites in Ontario and Quebec. Conditional to its approval by the regulatory authorities, this acquisition would allow us to expand our network and reach more customers in Canada than ever before."
- Other acquisitions and construction. “We acquired six company-operated stores through distinct transactions, which brings the total to 16 stores since the beginning of fiscal 2016. During the third quarter of fiscal 2016, we completed the construction, relocation or reconstruction of 32 stores, which brings the total to 60 stores since the beginning of fiscal 2016. As of Jan. 31, 2016, 38 stores were under construction and should open in the upcoming quarters.”
Laval, Quebec-based Couche-Tard's network includes approximately 8,300 convenience stores throughout North America, including 6,579 stores offering fuel. Its North American network consists of 15 business units, including 11 in the United States covering 41 states and four in Canada covering all 10 provinces.
In Europe, Couche-Tard operates a broad retail network across Scandinavia (Norway, Sweden and Denmark), Poland, the Baltics (Estonia, Latvia and Lithuania) and Russia. It includes approximately 2,200 stores, the majority of which offer fuel and convenience-store products, while the others are unmanned automated gas stations that offer fuel only.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.