The increase in motor-fuel gross margin [image-nocss] was offset by the increase in electronic payment modes resulting from higher average motor-fuel retail prices. Net earnings were also negatively impacted by the higher income tax rate. The variance in the tax rate is however rather positive on an annual basis as the variance should be favorable throughout fiscal 2011 compared to fiscal 2010.
"During the third quarter, we continued on the momentum of the previous quarters," said president and CEO Alain Bouchard. "Our results continue to improve, primarily from the growing contribution of in-store sales and margin."
About future growth, he added, "As for acquisitions, we are looking at many interesting opportunities, but as we have mentioned many times in the past, we don't want to favor store count growth to the detriment of shareholders' return. Yet, when the right opportunity at the right price presents itself, we will be ready."
Raymond Pare, vice president and CFO said that absent of recent major acquisitions, the company has continued to create value for shareholders by improving sales and margins, and through initiatives that allow the company to increase its efficiency.
"We are also optimizing our capital structure, including the repurchase of our own shares, as well as the redemption of our debt bearing a higher interest rate," he said. "However, this optimization is done prudently, taking into consideration investment opportunities that could arise in the foreseeable future."
During the third quarter of fiscal 2011, Couche-Tard acquired nine company-operated stores through seven distinct transactions. In addition, the company built 10 new stores during the 16-week period ended Jan. 30, 2011, and 26 since the beginning of fiscal 2011.
During the quarter, to stimulate growth and create additional value, Couche-Tard subdivided its Eastern Canada business unit by creating two new units: the Quebec West unit and the Quebec East and Atlantic unit. This strategic reorganization is in line with the company's business philosophy, which is to operate networks of a maximum of approximately 500 to 600 company-operated stores per business unit, the company stated. Thus, from now on, the network is operated by 13 business units, including nine in the United States covering 42 states and the District of Columbia and four in Canada covering all ten provinces.
Operating Results
Revenues amounted to $5.6 billion in the third quarter of fiscal 2011, up $676.0 million, an increase of 13.7%, mainly attributable to an increase in motor-fuel sales due to higher average retail prices at the pump and the rise in motor-fuel volume sold in the United States and Canada, to the stronger Canadian dollar as well as to the growth of merchandise and service sales.
For the first three quarters of fiscal 2011, revenues grew by $1.7 billion, an increase of 13.6% compared to the first three quarters of fiscal 2010 for reasons similar to those mentioned for the quarter.
More specifically, the growth of merchandise and service revenues for the third quarter of fiscal 2011 was $81.0 million or 4.7%, of which approximately $25.0 million was generated by a stronger Canadian dollar. Internal growth, as measured by the growth in same-store merchandise revenues, was 3.9% in the United States while it stood at 0.4% in Canada. For the Canadian and U.S. markets, growth of same-store merchandise sales is attributable to Couche-Tard's merchandising strategies, to the economic condition in each of its market, as well as to the investments the company made to enhance service and the offering of products in its stores, according to the statement.
In the first three quarters of fiscal 2011, merchandise and service revenues rose by $288.0 million, a 6.4% increase compared to the same period last fiscal year for reasons similar to those of the third quarter, including an increase in same-store merchandise revenues of 4.4% in the United States and 2.8% in Canada.
Motor fuel revenues increased by $595.0 million or 18.5% in the third quarter of fiscal 2011, of which $101.0 million stems from additional volume due to a growing number of sites offering motor fuel and approximately $24.0 million were generated by the appreciation of the Canadian dollar against its U.S. counterpart. Same-store motor-fuel volume grew by 0.7% in the United States and 3.2% in Canada. The higher average retail price of motor fuel generated an increase in revenues of approximately $345.0 million.
Click hereto read an extended breakdown of Alimentation Couche-Tard's earnings report.
Laval, Quebec-based Alimentation Couche-Tard Inc. is a leader in the Canadian convenience-store industry. Couche-Tard currently operates a network of 5,874 convenience stores, 4,169 of which include motor-fuel dispensing. The stores are operated by 13 business units, including nine in the United States covering 42 states and the District of Columbia, and four in Canada covering all 10 provinces.
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