ANKENY, Iowa -- Casey's General Stores Inc. has reported cents in earnings per share from continuing operations for the third quarter of fiscal 2008 ended Jan. 31, 2008, compared with 22 cents for the same quarter a year ago. Year to date, earnings from continuing operations were $1.39 per share compared with 90 cents for the same period of fiscal 2007. "We performed very well in the third quarter," said president and CEO Robert J. Myers. "Earnings per share were driven by higher-than-goal gas margins and strong results from inside sales." For the quarter, overall gross profit increased 14.7% [image-nocss] to $159.9 million; for the nine months, it grew 22.6% to $527 million.
Gasoline: Casey's annual goal is to increase same-store gasoline gallons sold 2% with an average margin of 10.7 cents per gallon. Against tough comparatives and near-record retail prices, same-store gallons sold were down 3.9% for the quarter and down 1.8% year to date. For the nine months, total gallons sold were up 2.9% to 923.8 million. Myers linked decreased demand in the third quarter to a 37% increase in the average retail price of gasoline and added, "Our customer counts remained positive despite the rise in prices at the pump, but customers purchased fewer gallons per visit." Favorable market conditions produced an average gasoline margin of 13.5 cents per gallon for the quarter and 14.3 cents per gallon for the year to date. Gasoline gross profit was up 48.2% for the nine months.
Grocery & Other Merchandise: The company's annual goal is to increase same-store sales 4.3% with an average margin of 32.2%. "For the 16th consecutive quarter, we increased same-store sales," said Myers. "Benefiting from steady customer traffic, same-store sales were up 5.4% for the third quarter and 8.5% for the year to date." Total sales for the quarter increased 6.5% with an average margin of 31.9% and were up 12.7% for the nine months with an average margin of 33.1%. Casey's achieved a 16.6% gain in gross profit for the year to date, aided in part by the continued popularity of higher-margin beverage products.
Prepared Food & Fountain: The annual goal is to increase same-store sales 8.4% with an average margin of 62%. Same-store sales were up 8.4% for the quarter and 9.5% for the year to date. Third-quarter total sales were up 9.8% with an average margin of 63.6%, and nine-month total sales were up 13.1% with an average margin of 62.8%. For the year to date, gross profit was up 14.2%. "This category's excellent performance once again proves the value of applying point-of-sale data and refining our marketing strategies," said Myers. "As we expected, we paid more for cheese after the locked-in price expired December 31. Strategic price increases taken earlier in the quarter allowed us to cover that cost and expand our margin."
Operating Expenses: It is the company's ongoing annual goal to hold the percentage increase in operating expenses to less than the percentage increase in gross profit. "In every earnings release, we reinforce our companywide commitment to driving gross profit dollars and managing expenses," said Myers. For the nine months, Casey's held operating expenses to a 17.6% increase and grew gross profit 22.6% to $527 million. Myers added, "We're on target to make our goal despite the increase in expenses outpacing growth in profit for the third quarter. The increase was due mainly to weather-related costs for utilities, snow removal, and insurance claims combined with increased credit card fees."
Expansion: Ankeny, Iowa-based Casey's goal is to acquire 50 stores and build 10 new stores by April 30, 2008. As of January 31, the company had acquired six stores and built no new stores. Myers said, "The acquisition environment continues to be challenging and it appears unlikely we will achieve this goal. We believe high gasoline margins in the Midwest are the primary reason for a disparity between buyer and seller expectations. We currently have written agreements to acquire nine stores and expect most of those purchases to be completed before fiscal year-end."
Board Changes: John R. Fitzgibbon passed away on March 2. John had been a member of the board for the past 25 years, recently serving as the chair of the Compensation Committee. "John was a tremendous resource over the years," said Chairman Ronald M. Lamb. "His leadership and insight will be missed." The board also received notice of the retirement of Donald F. Lamberti as a member of the board, effective March 4. "As one of our founders, Don's many contributions to Casey's cannot be overstated," said Lamb. "He has been instrumental in leading the company to where it is today and he will be greatly missed." The board elected Jeffrey M. Lamberti, Don's son and former president of the Iowa Senate, to fill the board vacancy created by the retirement of Don Lamberti.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.