The Rain for Chains Fell Mainly on the Plains
Precipitation likely affected same-store merchandise sales, offset by strong foodservice
NEW YORK -- Rainy weather prevailed across key markets for Susser Holdings Corp., Casey's General Stores Inc. and The Pantry Inc. in third-quarter 2013, Wells Fargo Securities LLC analyst Bonnie Herzog said in her latest research report on the convenience store industry, which looked at weather in markets that represented at least 80% of each chain's store base.
All of the chains saw significantly more rain than last year and historical averages.
In the calendar quarter, markets for Casey's and The Pantry saw 215% more rain versus last year; Casey's markets had nearly 300% more rain and The Pantry's saw 50% more, she reported.
However, "for Casey's, we believe rain is beneficial to pizza delivery; thus, Casey's should post strong prepared food and grocery same-store sales," said Herzog.
Ankeny, Iow-based Casey's same-store sales trends have been "very favorable" so far in its reported second-quarter, with grocery and other same-store sales up 9.2% and prepared food and fountain up 11% in September.
Herzog believes that wet weather was a net negative contributing factor to Corpus Christi, Texas-based Susser's already reported same-store sales and average per-store fuel gallon sales, up a "softer-than-usual" 3.4% (versus 5.8% last year) and 5.6% (versus 6.6% last year), respectively. But she said she is expecting 120 basis points of merchandise margin expansion "due to continued strength in the Texas market and consumer preferences for higher-margin single-serve packaged beverages."
Temperatures were slightly cooler than last year in The Pantry's key markets, but a 50% increase in precipitation likely had a bigger impact on traffic trends, the report said. While some markets had slightly less precipitation, a large area from western North Carolina down to the Florida Panhandle had significantly more rain in July through September.
Cary, N.C.-based The Pantry's same-store sales trends "could be pressured" in the fourth-quarter, said Herzog; she is projecting a 1% same-store sales increase, but "remain[ed] optimistic that The Pantry's merchandising initiatives should help drive improved … same-store sales long term."