LAVAL, Quebec -- Alimentation Couche-Tard Inc. plans to continue to open between 100 and 130 stores a year in Canada and the United States, CEO Alain Bouchard said Wednesday at the company's annual general meeting.
The company is turning up the heat on industry leader 7-Eleven Inc. as it pursues an ambitious acquisition strategy that could include another blockbuster deal in the $1 billion range, reported The Globe & Mail.
Couche-Tard, which in the past 25 years has become the second-largest independent c-store operator in [image-nocss] North America, has come off a banner year in excellent financial health, and it is eager to expand its role as a leading consolidator in the industry, shareholders were told. Three times already, Couche-Tard has doubled its size by acquisitions. The future is in our hands, Bouchard said.
Adding more stores should be very, very easy, Bouchard said. The company plans to increase its profit by 15% to 20% annually, he added, according to a Canadian Press report. He said the chain, which is growing in the United States by acquiring smaller, regional chains, has more potential U.S. acquisitions targeted, and he didn't rule out a major acquisition.
The deal that vaulted Couche-Tard, Laval, Quebec, into the big leagues was the $830 million purchase in late 2003 of about 2,000 corporate and affiliated Circle K stores in 16 U.S. states. The total number of Couche-Tard outlets in the U.S. and Canada soared to more than 4,600 from about 2,575. Since then, Couche-Tard has been busily snapping up smaller, regional chains as it moves to fill in the gaps at its eight regional divisions in North America.
At about 5,300 storescounting the latest acquisitions set to close later this yearCouche-Tard is chasing after 7-Eleven, The Globe & Mail said.
Dallas-based 7-Eleven has about 7,100 locations after its purchase of the 260-unit White Hen Pantry Inc. last month, its largest acquisition in 20 years.
New-store openings and yet more acquisitions could boost Couche-Tard's store total to more than 5,500 by the end of the current fiscal year, said the report.
Revenue in fiscal 2006 rang in at $10.1 billion, compared with about $2 billion just three years ago. And there are no signs of a slowdown. Bouchard told shareholders that attractive acquisition opportunities abound in the highly fragmented c-store sector as small independents struggle with poor productivity and an increasingly competitive climate.
So far this year, Couche-Tard has struck deals to acquire about 220 stores in the U.S. South and Northeast, blowing past the target the company initially set for about 200 store acquisitions in all of fiscal 2007.
Bouchard said in his presentation that the company is well positioned to make more small- and medium-sized purchases this year. After the meeting, he declined to provide details to the Canadian newspaper about potential deals and in what regions they are likeliest to occur. But he said Couche-Tard couldwithin the next five yearsdo another deal similar to the Circle K transaction.
He and the company's CFO Richard Fortin told The Globe & Mail that they are confident Couche-Tard can maintain the robust growth rate it has demonstrated in the past. There is no reason why we shouldn't achieve 15% to 20% earnings [per share] growth year after year, and acquisitions would boost that number, Fortin told reporters.
Couche-Tard boasts an industry-beating 67% compound annual earnings growth rate over the past five years, said the report. The share price has posted a 37% compound annual growth rate over five years, it added.
Couche-Tard also isn't ruling out opening up on another continent, but Bouchard said his company would prefer to partner with a large gasoline company. Mexico and Asia are possibilities for Couche-Tard, he added.
The company has started to offer some financial services in the United States, such as providing customers the opportunity to cash checks at ATMs in its stores without having bank accounts.
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