LAVAL, Quebec -- Healthy same-store sales results and “cost reductions” from incorporating recent purchases—including The Pantry’s Kangaroo Express stores—into its network drove Alimentation Couche-Tard to nearly 20% growth in net earnings during its second quarter of fiscal 2016 compared to 2015.
“This increase is attributable to the solid contribution from acquisitions, including The Pantry Inc. store network, to strong organic growth from both convenience store and fuel operations and to slightly higher road transportation fuel margins,” the company said.
“Cost reductions” at the convenience stores purchased from The Pantry Inc. have saved Couche-Tard approximately $60 million since the deal closed in March 2015, and the company expects annual synergies and cost savings to amount to about $23 million.
As a result, excluding certain one-time income and expenses, net earnings for the second quarter of fiscal 2016, which ended Oct. 11, 2015, grew to 375.0 million compared with $313.0 million for the second quarter of fiscal 2015, an increase of $62.0 million, or 19.8%.
Click here to read more about how Couche-Tard improved earnings this quarter.
"The work to bring our new, global Circle K brand to our customers is well underway this quarter,” said president and CEO Brian Hannasch. “Our first new-look sites are now serving customers in the Illinois area of the United States, and our plans are in hand for rolling out to the southeastern United States beginning January 2016."
The company’s revenues were $8.4 billion for the second quarter of fiscal 2016, down by $509.5 million, a decrease of 5.7% compared with the corresponding quarter of fiscal 2015, mainly attributable to a lower road transportation fuel average selling price, to the negative net impact from the translation of revenues of its Canadian and European operations into U.S. dollars, to the disposal of the company’s aviation fuel business during the third quarter of fiscal 2015 and to the disposal of its lubricants business during the second quarter of fiscal 2016.
The growth in merchandise and service revenues for the second quarter of fiscal 2016 was $454.9 million. Excluding the negative net impact from the translation of European and Canadian operations into U.S. dollars, consolidated merchandise and service revenues increased by $581.9 million or 30.0%. This increase is attributable to the contribution from acquisitions which amounted to approximately $484.0 million, as well as to strong organic growth. Same-store merchandise revenues increased by 5.2% in the United States, including The Pantry stores, by 3.1% in Europe and by 3.6% in Canada. Overall, the company said, “our performance is attributable to our dynamic merchandising strategies, to our competitive offer, as well as to our expanded fresh food assortment, which is attracting more customers into our stores.”
In the United States, Couche-Tard saw same-store merchandise revenues grow 5.2%, and same-store fuel volume grow 7.4%. Gasoline gross margin in the United States averaged 25.66 cents per gallon (CPG).
During the quarter, the company recorded several c-store acquisition and growth developments, including:
- On Sept. 24, 2015, the company acquired from Kocolene Marketing LLC 13 company-operated stores in Indiana and Kentucky.
- During the second quarter of fiscal 2016, the company acquired five individual company-operated stores through distinct transactions.
- The company completed the construction, relocation or reconstruction of 11 stores during the second quarter of fiscal 2016.
- Subsequent to the end of the second quarter, on Oct. 14, 2015, the company signed an agreement to acquire from Texas Star Investments and their affiliates 18 company-operated stores and two stand-alone quick-service restaurants in Texas, in addition to a dealer fuel supply network.
"Our teams continue to make customer service a top priority. Our customers, in turn, reward that focus, as demonstrated by our strong same-store merchandise revenues and solid fuel volumes,” Hannasch said. “Strong organic growth combined with higher road transportation fuel margins and a significant contribution from The Pantry stores in the quarter all contributed to a 20% increase in adjusted net earnings per share.”
Laval, Quebec-based Couche-Tard is the leader in the Canadian convenience store industry. In the United States, it is the largest independent convenience-store operator in terms of number of company-operated stores.
As of Oct. 11, 2015, Couche-Tard’s network comprised 8,006 convenience stores throughout North America, including 6,579 stores offering road transportation fuel. Its North American network consists of 15 business units, including 11 in the United States covering 41 states and four in Canada covering all 10 provinces.
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