Gasoline costs did begin to stabilize toward the end of the quarter, he added, which allowed margin improvement to partially offset the earlier pressure.
"The result was a third-quarter margin of 9.9 cents per gallon compared to 13.5 cents a year ago in the same period," he said, adding that in February, gasoline margins were "above our annual goal of 10.8 cents per gallon."
Ankeny, Iowa-based Casey's reported 28 cents in earnings per share from continuing operations for the third quarter of fiscal 2009 ended January 31, 2009, compared with 26 cents for the same quarter a year ago. Year to date earnings from continuing operations were $1.38 per share compared with $1.39 for the same period of fiscal 2008.
"We are pleased with the execution of our strategy," said president and CEO Robert J. Myers. "We were able to exceed third quarter earnings from a year ago despite a gas margin decline of over 3.5 cents per gallon."
Casey's annual goal is to increase same-store gasoline gallons sold 2% with an average margin of 10.8 cents per gallon. In the quarter, same-store gallons sold were up 2.1% with an average margin of 9.9 cents per gallon. "Retail prices were very responsive to the downward movement of wholesale cost, which put pressure on our gasoline margin," Myers stated. "However, as costs stabilized toward the end of the quarter the margin improved." For the nine months, total gallons sold rose 2% to 942.5 million. Same-store gallons sold were up nearly 1% with an average margin of 13.1 cents per gallon.
For grocery and other merchandise, the company's goal is to increase same-store sales 7% with an average margin of 33.2%. "For the 20th consecutive quarter, we increased same store sales," said Myers. Same-store sales were up 6.5% for the third quarter and up 5.3% year to date. Total sales for the quarter were $231.3 million with an average margin of 32.9%, up over 100 basis points from the third quarter a year ago. Gross profit in the quarter rose 11.1% to $76.1 million. Myers stated, "All areas in this category are performing well, lead by solid gains in beer and beverages." For the nine months, total sales were $770.8 million with an average margin of 33.6%.
For prepared food and fountain, the goal is to increase same-store sales 6.8% with an average margin of 61.2%. Same-store sales were up 8.1% for the quarter and 9.9% year to date. Total sales in the quarter rose 10.4% to $81 million, with an average margin of 61.8%.
"We have taken advantage of a recent decrease in commodity costs to lock in the price of cheese through October 2009," Myers said.
For the nine months, total sales were up 11.6% with an average margin of 60.9%.
In the third quarter, operating expenses decreased 1.4% to $118.9 million. "We experienced nearly a 19% decrease in credit card fees due to lower gasoline prices and had a significant decline in our fleet fuel expense," said Myers. "We expect these favorable conditions to continue into our fourth quarter." For the year, operating expenses were up 5.9%.
The goal for fiscal 2009 is to increase the total number of Casey's stores 4%. At the end of the third quarter, the company had acquired 14 stores and completed seven new store constructions. "We expect to have a total of 17 new store constructions open by the end of our fiscal year," Myers added. "The company is positioned very well and we remain optimistic about long-term acquisition opportunities."
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