The retailer reported that same-store merchandise sales for the fourth quarter of 2010 increased by 7.3%, compared with growth of 3.4% in the third quarter and a decline of 1.2% in the fourth quarter of 2009.
Retail net merchandise margin for the three months ended January 2, 2011, was 33.8%, which was unchanged from the prior quarter [image-nocss] but up from 32.7% a year earlier. Average retail gallons per store per week increased 4.3% from a year ago. Retail fuel margins for the fourth quarter were 15.0 cents per gallon, versus 22.8 cents in the third quarter and 11.9 cents in the fourth quarter of 2009.
Adjusted EBITDA in the fourth quarter totaled $24.1 million, compared with $15.0 million a year ago, an increase of 61.3%, which is the result of increased same-store merchandise sales and higher fuel and merchandise margins versus a year ago, combined with targeted expense reductions. (Note that the fourth quarter of 2009 included one additional week of operations, which we estimate contributed approximately $1.7 million to $1.8 million of additional Adjusted EBITDA for the prior year.) Companywide gross profit totaled $112.2 million, up 9.4% compared to last year's fourth quarter.
Total revenues increased 9.4% versus the fourth quarter of last year to $1.0 billion, which reflects a 12.2% increase in combined retail and wholesale fuel revenues, partly offset by a 0.7% decrease in total merchandise sales. The lower merchandise sales in 2010 are primarily due to the impact of the 14th week of sales in the fourth quarter of 2009, which increased prior-year merchandise sales and operating expenses by approximately $14.0 million and $4.5 million, respectively.
"Following a challenging 2009, we set a new all-time record for adjusted EBITDA in fiscal 2010, driven by unusually strong fuel margins, steady same-store growth in merchandise sales and careful expense control," said Sam L. Susser, president and CEO.
"For the fourth quarter, we continued to improve both same-store merchandise sales and fuel volumes, which reflect the strengthening economy in the markets directly impacted by oil and gas drilling activity and strong agricultural commodity prices, as well as the success of rebranding the legacy Town & Country stores to the Stripes banner.
"We also benefitted from the positive contribution of 26 new retail sites and 93 new wholesale sites added in 2009 and 2010, along with effective merchandising and operational execution." (See related story in this issue of CSP Daily News.)
"We continued to see improving trends in both customer counts and average transaction size during the fourth quarter. As the recovery gains momentum in 2011, we expect to see additional growth in both merchandise and fuel volumes, although we do not expect to match the unusually strong fuel margins of 2010. Our effective cost control and technology investments continued to benefit our bottom line during the fourth quarter, despite the impact of the extra week that was included in 2009 comparative results.
"We are extremely well positioned for growth geographically. Several of our market areas enjoy some of the best demographics for growth of anywhere in the United States. We feel better about the local economies today than we did a year ago, and we remain confident of our long-term positive outlook for investment in this region."
The company added seven large format retail stores during the fourth quarter, converted three retail stores to dealer operations and closed three smaller underperforming stores, bringing the total number of retail stores in operation at year-end to 526. For the full year, the company built 12 new stores and acquired two others. The company has six stores under construction, two of which are expected to open during the first quarter of 2011.
In its wholesale operations, Susser added 51 new dealer sites during the fourth quarter, including 39 acquired in October, and discontinued supplying three sites. For the full year, the Company added 59 dealer sites and discontinued supplying 18 sites, for a total of 431 in operation at the end of 2010.
During the fourth quarter, the company generated $15.3 million in proceeds from sale-leaseback transactions for five recently constructed stores. For the full year, Susser completed sale-leaseback transactions totaling $32.3 million.
For the quarter, total company merchandise sales were $199.9 million, an increase of 9.7% from a year ago, excluding the impact of the extra week of sales in 2009 and the seven Village Market grocery stores divested in May 2010. Merchandise sales decreased by 0.7% from a year ago on a reported basis. Same-store merchandise sales increased by 7.3%, versus a decrease of 1.2% in the fourth quarter of 2009.
Excluding the impact of the 2009 extra week and the Village Market divestiture, 2010 fourth-quarter merchandise gross profit, net of shortages, increased 12.5% to $67.6 million and was up 2.6% on a reported basis. Net merchandise margin was 33.8%, compared with 32.7% a year ago. The increase in merchandise gross profit is primarily due to increased contributions from food service, packaged drinks, snacks and candy.
Retail fuel volumes increased 4.8% from a year ago to 182.4 million gallons for the fourth quarter, excluding the impact of gallons sold in the extra week in 2009 and the divested Village Market units. Average gallons sold per store per week increased 4.3% from a year ago to 26,900 gallons. Retail fuel revenues totaled $507.7 million, up 9.6% primarily as a result of a 30-cent-per-gallon increase in motor fuel prices at the pump.
Retail fuel gross margin in the fourth quarter averaged 15 cents per gallon, or 10.4 cents per gallon after deducting credit card expense, compared to 11.9 cents a gallon, or 8.2 cents after credit card expense, a year ago. Retail fuel gross profit increased 23.0% year-over-year to $27.3 million.
Wholesale fuel volumes sold to Susser's approximately 430 dealers and other third-party customers during the fourth quarter rose 1.6% from a year ago to 123.3 million gallons. Wholesale fuel revenues increased by 17.1% to $288.5 million as a result of a 31-cent-a-gallon increase in selling prices year-over-year. Wholesale gross margin was 5.1 cents per gallon, compared with 3.7 cents per gallon a year ago. This increased wholesale fuel gross profit by 37.5% to $6.2 million.
For the full-year 2010 ended January 2, 2011, Susser reported same-store merchandise sales growth of 4% and total merchandise sales of $806.3 million, up 6.5% from fiscal 2009, excluding the impact of the 53rd week of merchandise sales in 2009 and the divested Village Market sales. On a reported basis, total merchandise sales increased by 2.8%. Merchandise margin was 33.6% for the full year, versus 33.3% for fiscal 2009.
Adjusted EBITDA reached a record $120.0 million, up 30.1% from 2009. Gross profit increased 10.7% to $473.1 million, driven primarily by the 29% increase in gross profit on both retail and wholesale fuel as well as slightly higher merchandise gross profit. Total revenues were $3.9 billion, up 18.8%, primarily as a result of higher fuel selling prices as well as increased merchandise sales.
Net income for the year was reported at $786,000 or $0.05 per diluted share.
Corpus Christi, Texas-based Susser Holdings is a third-generation. family-led business that operates more than 525 convenience stores in Texas, New Mexico and Oklahoma primarily under the Stripes banner. Restaurant service is available in more than 310 of its stores, primarily under the proprietary Laredo Taco Co. brand. The company also supplies branded motor fuel to more than 430 independent dealers through its wholesale fuel division.
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