ANKENY, Iowa -- Casey's General Stores Inc. has reported that its fiscal second-quarter profit fell as costs increased, said the Associated Press. In the quarter ended Oct. 31, the company earned $17.2 million, or 34 cents per share, compared with $22.2 million, or 44 cents per share, the year before. Revenue rose 5% to $1.01 billion from $963.9 million. Costs jumped 6% to $983.4 million from $928.8 million.
Casey's reported 34 cents in earnings per share from continuing operations for second-quarter fiscal 2007 ended Oct. 31, 2006. For the same quarter [image-nocss] a year ago, earnings were 44 cents per share. This fiscal year to date, earnings came to 68 cents per share versus 89 cents for the first half of fiscal 2006.
President and CEO Robert J. Myers gave this assessment: Second-quarter total and same-store sales were up in all three of our business categories, but earnings were affected by tighter gasoline margins.
Gasoline: The company's fiscal 2007 goal is to increase same-store gasoline gallons sold 2% with an average margin of 10.8 cents per gallon. Same-store gallons sold were up 2.7% in the second quarter. Total gallons sold were up 9.4% for the second quarter and up 5.6% for the year to date.
We benefited from increased demand as the retail price of gas came down, said Myers, but we couldn't keep pace with the post-Katrina margin we reported a year ago.
The quarter's average margin was 9.4 cents compared with a record 14.1 cents in the previous second quarter. Gasoline gross profit was down 26.8% to $28.6 million for the quarter and down 21.6% to $57.1 million at midyear.
Grocery & Other Merchandise: The annual goal is to increase same-store sales 3.9% with an average margin of 32.2%. Same-store sales were up 3.5% for the second quarter and up 2.7% for the year to date.
This is the 11th straight quarter of positive same-store sales, Myers said. We are encouraged by the steady progress we continue to make in this category.
Total sales for the quarter were up 9.4% with an average margin of 32.6% and up 8% at midyear with an average margin of 32.4%. The second-quarter gross profit was $70.9 million; for the year to date, it was $143.7 million.
Prepared Food & Fountain: The goal is to increase same-store sales 7.9% with an average margin of 63.4%. Same-store sales were up 13.7% for the quarter with an average margin of 61.6%. For the six months, same-store sales were up 11.6% with an average margin of 62.2%. Total sales rose 19.4% for the quarter and 16.9% year to date.
Despite difficult quarter-to-quarter comparisons, all areas of this category are performing exceptionally well, Myers said. Gross profit was up 13.8% to $42.6 million for the quarter and up 13.2% to $84 million for the year to date. Management expects continued benefits from an expanded fountain program, strategic price increases, and a favorable cheese price that is now locked in through the end of the next calendar year.
Operating Expenses: It is an ongoing corporate goal to hold the percentage increase in operating expenses to less than the percentage increase in gross profit. For the quarter, operating expenses increased 8.5% while gross profit increased 0.7%. Year to date, operating expenses rose 10.5% as gross profit increased 2.3%.
Being off target was primarily due to the margin shortfall in a gasoline market over which we had little control, Myers said. We did a good job of building inside sales to drive gross profit. Inside sales in the second quarter were up 11.9% while gross profit including commissions rose 10%. For the year to date, inside sales rose 10.3% and gross profit increased 9.9%.
Expansion: The company's goal is to acquire 50 stores and build 10 new stores in fiscal year 2007. In early October, Casey's closed on the HandiMart acquisition, adding 33 stores.
These sites already are performing very well for us, said Myers. By midyear, Casey's had acquired eight other stores and completed six new constructions. The acquisition environment continues to be favorable, Myers added, and we have 7 written agreements, giving me confidence we will meet the annual goal.
Meanwhile, a new Casey's General Store in Rossville, Ill., had a ribbon-cutting ceremony yesterday, reported the Urbana/Champaign News-Gazette. The new store, which offers gasoline, groceries, pizza, doughnuts, cookies and other merchandise, sits on the lots left vacant by a fire that wiped out an entire block of buildings and businesses in downtown Rossville in the winter of 2004, the report said.
"They are quite a revenue generator, and that's what the community needs," Mayor Terry Prillaman told the newspaper. "There's no revenue generated from vacant lots."
He said Casey's, which has 1,440 corporate stores mostly in the Midwest, has made about a $275,000 investment in the community by building the new store. That's about $20,000 in real estate taxes each year, he said, which will directly benefit the area. And, he estimates that it could generate about $5,000 in quarterly sales tax revenue for the village.
"This is going to be a real cash cow, I hope," said Prillaman, who has studied sales tax reports of neighboring communities and has watched their sales tax revenues escalate after Casey's comes to town.
The store also will generate some jobs, the report said. According to Casey's officials, they will employ two to four full-time workers and six to eight part-time employees.
Prillaman hopes it also will be good for other shops and businesses in Rossville. Instead of people driving through town and glancing over at the vacant lots, the hope is that they will stop at Casey's and notice the other shops across the street. "I think that will happen," he told the paper.
"We welcome [Casey's] with open arms," he added. "We hope that they do a very successful business. When they prosper, we'll prosper, and so will all of the community."
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