ANKENY, Iowa -- On July 15, 2010, Casey's General Stores Inc. reported June 2010 same-store sales results for stores open for one full year. Same-store sales for prepared food and fountain increased 2.9%, and grocery and other merchandise increased 2.1% in June 2010 compared to June 2009, the company said in a filing with the U.S. Securities & Exchange Commission (SEC).
Same-store gasoline gallons sold increased 2.4% in June 2010 compared to June 2009. The gasoline margin was above the company's fiscal 2011 goal of 13.5 cents per gallon. The average retail price of [image-nocss] gasoline sold during June 2010 was $2.56 per gallon.
Robert Myers, Ankeny, Iowa-based Casey's president and CEO, said, "These strong June results demonstrate that Casey's business is firing on all cylinders. We're particularly pleased to report both strong gas volume increases and above-goal gas margins for the June period. We also achieved positive inside same store sales growth and a strong customer count despite one of the wettest Junes on record in our marketing regions. These results underscore why Casey's is widely recognized as the best operator in the industry."
Meanwhile, one analyst said Laval, Quebec-based Alimentation Couche-Tard Inc.'s hostile takeover bid for Casey's has a "medium-to-low" chance of succeeding at the current offer price, according to a report by the Canadian Press. Vishal Shreedhar of UBS said Casey's investors appear to want a higher bid while Couche-Tard continues to claim its offer is "full and fair."
Couche-Tard extended its offer deadline to August 6 after only 19.2% of Casey's shareholders tendered their shares. (Click here for previous CSP Daily News coverage.)
The Canadian convenience store operator said it was pleased with the takeup and signaled again Tuesday that it is unlikely to sweeten its bid. There appears to be little room for a much higher price since the company sold nearly two million shares at $38.43 on the day it disclosed its $36 per share offer price, said the report.
Shreedhar added that earnings expectations for Casey's have increased since Couche-Tard disclosed its offer in April.
The analyst said Couche-Tard investors have already priced into the company's share price a 40% probability that the $1.9 billion deal will go through. While many factors could have driven up Couche-Tard's stock, it increased 5% since the April 9 offer while the S&P/TSX composite fell 4%.
Martin Landry of Desjardins Securities said he wouldn't be surprised if Couche-Tard raises its offer to gain additional support for the acquisition. "Even in a scenario where Couche-Tard raises its offer to $39, we believe the transaction could be accretive to EPS [earnings per share] by 27 cents, representing potential upside of $2.50 (Canadian) to our target price," he wrote in a report. "Overall, with or without this acquisition, we continue to hold the view that Couche-Tard's shares represent an attractive investment at current levels."
The company reported $68.8 million in net earnings in its fourth quarter, driven by strong U.S. gasoline margins, higher merchandise sales and a $11.4 million gain from the opportunistic sales of Casey's shares. Couche-Tard's key catalyst last year was a cost-savings program that appears to have run its course, he said. U.S. gross merchandising, which represented about half of its gross profit, is slowing.
Shreedhar projects 4% growth in earnings per share over the next 12 months.
"Ironically, while Couche-Tard is in the midst of a potential accretive deal for Casey's, its options of boosting near-term EPS are limitedshare buybacks and other potential acquisitions are expected to be modest," he said.
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