Couche-Tard’s New Fuel Brand

Shared strategies boost sales in North America and Europe

Couche-Tard’s New Fuel Brand

LAVAL, Quebec -- A new gasoline brand and a sharing of best practices between its North America and Europe assets added up to net earnings growing 26.8% for Alimentation Couche-Tard.

Although the company did not share too many details in its earnings release, president and CEO Alain Bouchard did report, “The results for the second quarter were very strong and confirmed the trend from the first quarter, especially in Europe where our fuel brand “miles” and our fresh-food initiatives continued to deliver strong results.”

Couche-Tard’s new fuel brand “miles” launched in some of its European markets this year and “is delivering encouraging results and was a nice contributor to the second-quarter performance,” the company stated.

Additionally, best-practice sharing has been a benefit since Couche-Tard entered the European market with its April 2012 purchase of Statoil Fuel & Retail based in Scandinavia.

“In Europe, the exchange of best practices, the implementation of new and sustainable merchandising strategies, as well as the investments made through extensive marketing campaigns to promote in-store offering allowed Couche-Tard to turn around the negative sales trend that existed when it acquired Statoil Fuel & Retail,” the company stated. “Consequently, same-store merchandise revenues posted a nice growth of 1.9% for a second consecutive quarter.”

In the United States, Couche-Tard remained busy with multiple acquisitions.

Completed transactions

  • In September 2013, Couche-Tard acquired nine stores operating in Illinois from Baron-Huot Oil Co.
  • During the second quarter of fiscal 2014, Couche-Tard acquired one additional company-operated store, one additional store operated by an independent dealer and three road-transportation-fuel supply agreements.

Outstanding transactions

  • On Oct. 24, 2013, subsequent to the end of the second quarter of fiscal 2014, Couche-Tard signed an agreement to acquire, from Publix Super Markets Inc., 13 company-operated stores, 11 of which are located in Florida and the other two in Georgia.
  • On Nov. 15, 2013, Couche-Tard signed an agreement to acquire 23 company-operated stores operating in New Mexico from Albuquerque Convenience and Retail LLC.

Couche-Tard expects to close both transactions in December 2013.

Store construction

Couche-Tard completed the construction of six new stores during the 12-week period ended Oct. 13, 2013.

For its second quarter of fiscal 2014, Alimentation Couche-Tard Inc. announced net earnings of $229.8 million, up $48.6 million or 26.8%, which equals $1.21 per share on a diluted basis, an increase of $0.24 per share or 24.7% over diluted net earnings per share of the second quarter of fiscal 2013.

“Both in-store revenues and road-transportation-fuel volumes had a positive impact and were further supported by strong fuel margins and a nice contribution from our recent acquisitions,” Bouchard said. “In North America, the pricing strategies we put in place in the first quarter to support in-store traffic growth proved their effectiveness in both the U.S. and Canada, where same-store merchandise revenues increased significantly without affecting the margin as much as it did in the first quarter.”

In North America, Couche-Tard has embraced a lower-price-at-the-pump strategy that drove store traffic but decreased margin at the pump.

As of Oct. 13, 2013, Laval, Quebec-based Couche-Tard’s network comprises 6,207 convenience stores throughout North America, including 4,698 stores with road-transportation-fuel dispensing. Its North-American network consists of 13 business units, including nine in the United States covering 38 states and the District of Columbia and four in Canada covering all 10 provinces. In Europe, Couche-Tard operates a broad retail network across Scandinavia, Poland, the Baltics and Russia with 2,276 stores.