Company News

Casey's Targets More Construction

New prototype store, acquisition challenges drive strategy update

ANKENY, Iowa -- Casey's General Stores' unexpectedly slow growth year, as previously reported in CSP Daily News, has led the convenience store chain to reconsider how it plans for growth in its coming new fiscal year. "You're more than likely to see more new-store construction than we have previously done in prior years," said CFO Bill Walljasper during a recent conference call with investors. "So instead of doing 10 to 15 [new builds], that may escalate."

During the third-quarter 2008 conference call, Walljasper noted that the chain is unlikely to meet its previously set goal of new construction [image-nocss] and acquisitions by the end of the fiscal year at the end of April. "The goal coming into the year was to build 10 stores and to acquire another 50 locations," he said, noting that as of January 31, the company had acquired only six stores and built no new stores. "Currently, we have written agreements for nine additional stores," he added.

The reason for the shortcoming led back to that common scapegoat: gasoline prices.

"The acquisition environment has been slowed by higher than normal gasoline margins in the Midwest. We believe this robust environment has led to a disconnect between buyers' and sellers' expectations," he said. "As we started to see the gasoline environment become what it is right now, and it started in the late fourth quarter, we started to see the disconnect becoming increasingly more challenging because of the higher gasoline margins."

As a result, Casey's moved more manpower to the acquisition side, allowing the new-construction end to slide. "So we got behind the curve on the store growth," he said. "That will change as we head into the next fiscal year."

Further driving Casey's desire to increase its new-store construction is a new prototype store the chain is developing. "We do have a new store design that we've been working on that will be forthcoming that we believe could benefit us on a go-forward basis," Walljasper said. "We still think there are quite a few opportunities for new-store construction, as well as acquisitions."

Ankeny, Iowa-based Casey's operates 1,448 c-stores in nine Midwestern states. It also has 14 franchise stores.

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