'Mega' Making a Difference for Delek US

MAPCO seeing success with larger-format, larger-volume stores

Angel Abcede, Senior Editor/Tobacco, CSP

BRENTWOOD, Tenn. -- Saying how the planned building of so-called "mega" stores under the MAPCO convenience store brand was "coming along nicely," officials with the chain said the concept is essentially replacing stores that average one million gallons a year and $1 million in stores sales with stores that sell four million to five million gallons and $2 million to $3 million inside.

"We have a renewed interest in megastores," Uzi Yemin, president and CEO of Delek US Holdings Inc., said during the company's second-quarter 2012 earnings call.

Asked if Delek had any plans to spin off its retail from its refinery business as San Antonio, Texas-based Valero recently said it was considering, Yemin said, "Not at this point, no sir."

Yemin and other Delek US officials reported retail segment "contribution margins" increased to $18.2 million in the second-quarter 2012 vs. $14.6 million in second-quarter 2011. Second-quarter 2012 results were buoyed by same-store merchandise sales growth of 4.3% which was supported by same-store foodservice sales growth of 9.3%.

In addition, same-store fuel gallons sold increased 2.2% as declining fuel prices coincided with the peak driving season. The merchandise margin was 29.7% and the fuel margin was 18.2 cents per gallon for second-quarter 2012.

At the conclusion of second-quarter 2012, the retail segment operated 374 locations, versus 390 locations at the end of second-quarter 2011.

Last fall, Delek US officials said the company was initiating the megastore endeavor in core markets, with the intention to build 10 to 12 new stores every year. About half were set for Arkansas, where last year's acquisition of Lion Oil would allow for a distribution advantage, officials said.

Brentwood, Tenn.-based Delek US is an integrated downstream energy business focused on petroleum refining, the wholesale distribution of refined products and c-store retailing. The refining segment consists of refineries operated in Tyler, Texas, and El Dorado, Ark., with a combined production capacity of 140,000 barrels per day. The marketing and supply segment markets refined products through a series of owned and third-party product terminals and pipelines. The retail segment supplies fuels and merchandise through a network of 374 company-operated c-store locations operated under the MAPCO Express, MAPCO Mart, East Coast, Fast Food & Fuel, Favorite Markets, Delta Express and Discount Food Mart brand names.

Angel Abcede, CSP/Winsight By Angel Abcede, Senior Editor/Tobacco, CSP
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