ANKENY, Iowa -- As executives as Casey's General Stores Inc. discussed overall positive results for its third fiscal quarter yesterday, discussion of growth inevitably crept in, with vice president and CFO Bill Walljasper noting that the company currently is reviewing a number of chains ranging from 12 stores up to 80 or 90 stores.
Overall, there's certainly consolidation going on [in the industry], and we're a part of that on the buying side, Walljasper said during a company-earnings conference call with investment analysts. We feel there are ample [image-nocss] acquisition opportunities in our current market areas in nine states, but we're also looking at some opportunities outside those nine states.
While the company's third-quarter-earnings report noted its annual goal is to acquire 30 stores, Walljasper said during the conference call that the actual number could vary if the company finds value in a larger purchase. What we want to do is drive return on invested capital, he said. The company also aims to build 10 stores a year.
During Casey's third quarter, which ended Jan. 31, 2006, the company completed the definitive asset purchase agreement to acquire 51 stores from Gas N Shop Inc., closing up to 11 of the locations and rebranding the remaining stores to Casey's General Stores within approximately six weeks. Chairman and CEO Ronald Lamb reported, We began operating 20 of the stores in January and nearly all of the rest in February. We expect all of the stores to be accretive within their first full year of operation.
Overall, the Ankeny, Iowa-based company reported 14 cents in earnings per share from continuing operations for the third quarter, compared with 15 cents for the same quarter a year ago. Year to date, earnings from continuing operations were $1.02 per share compared with 70 cents for the same period of fiscal 2005. All three of our business categories delivered strong sales, giving us a 26.3% increase in total sales to $2.6 billion for the year to date, Lamb said. Gross profit for the nine months increased 16.4% to $402 million.
The company's annual goal is to increase same-store gasoline gallons sold 2% with an average margin of 10.5 cents per gallon. Same-store gallons sold rose 4.2% in the third quarter, bringing the year-to-date increase to 5.7%. We are very pleased with our third-quarter sales gain, achieved primarily because of unseasonably warm weather and advancements in our distribution system, Lamb said. The competitive retail environment resulted in an average margin of 9 cents per gallon for the quarter; the margin came to 11.6 cents for the nine months.
Regarding grocery and other merchandise, the company's annual goal is to increase same-store sales 3% with an average margin of 31.5%. Third-quarter same-store sales were up 5.3%, bringing the year-to-date increase to 6.1%. We benefited from greater store traffic due to the lottery and our use of point-of-sale data to create a better match between product mix and customer demand, Lamb said. The average margin for the quarter was 31%; for the nine months it was 32.1%, above goal. Walljasper said the company found growth here by boosting merchandising of to-go cups of things like mini-chocolate-chip cookies and other snacks.
The company exceeded its annual goal for prepared food and fountain sales by increasing same-store sales 5.5% with an average margin of 60.5% for both the quarter and the nine months. Third-quarter same-store sales were up 9.9% with a margin of 62.5%; year-to-date same-store sales were up 7.4% with a margin of 63.7%. Gross profit gains were driven by improvements in category management, reduction of stales, and a more favorable cost of cheese. Cheese is the most expensive ingredient in our prepared food program, said Lamb. To stabilize the future cost, we recently negotiated a forward buy that locked in the cheese price through December of 2006. Walljasper also noted success with removing novelty items from the counter and replacing them with bakery products.
On operating expenses, Casey's is on target for meeting its annual goal of holding the percentage increase to less than the percentage increase in gross profit despite higher operating expenses in the third quarter. Operating expenses rose 12.8% while gross profit increased 8.7%. Year to date, operating expenses were up 11.6% and gross profit rose 16.4%. Higher retail gas prices in the third quarter led to higher bank charges because of the increasing size and volume of customer credit card charges, Lamb said.
At its March 2 meeting, the board declared a quarterly dividend of 4.5 cents per share. The dividend is payable May 15, 2006, to shareholders of record on May 1, 2006.
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