Company News

Couche-Tard Cuts Ties With 4 Fuel Suppliers

Convenience-store retailer will rebrand 1,000 sites in Southeast

LAVAL, Quebec -- Alimentation Couche-Tard Inc. is exiting its agreements with four fuel suppliers—Marathon, Valero, CITGO and Kangaroo (The Pantry-owned brand)—as part of a new fuel rebranding strategy.

Kangaroo Express

The company decided to change the fuel brands of more than 1,000 locations in the Southeastern region of the United States after conducting a review of its fuel branding supply and distribution strategy, said Brian Hannasch, president and CEO of Couche-Tard, while delivering the company’s third-quarter 2016 results.

“While these companies are great partners and their brands certainly are strong in some parts of the U.S., we don’t feel they are the right brands for this geography,” he said.

Couche-Tard conducted the review after it acquired The Pantry; the company completed the review toward the end of the third quarter ending Jan. 31, 2016.

Couche-Tard paid $9.2 million for the early termination of existing fuel-supply agreements and wrote off approximately $10.4 million for the replacement of fuel signage and equipment; however, CFO Claude Tessier said, “The anticipated synergy associated with our strategy will quickly repay for these one-time charges.”

Another charge of a little more than $3 million for the cancellation of another agreement will occur in the fourth quarter. 

Going forward, the fuel brands will largely be Circle K (Couche-Tard’s banner), BP, Shell and Exxon. Hannasch said these brands are consistently investing and differentiating either their product and payment methods, and are resonating more strongly with the consumers in the Southeast.

To date, Couche-Tard has soft-rebranded 360 of the 1,000 sites, which Hannasch described as covering a Kangaroo sign by putting a bag with a Shell emblem over it, for example.

“We’ll complete the soft-rebrand over the next four to five months,” he said. “Following that, really starting in June, will be the full rebrand, when we get in there and actually hang new hardware and signs and finish the image over the summertime.”

Laval, Quebec-based Couche-Tard's network comprises about 8,300 convenience stores throughout North America, including 6,579 stores offering fuel. Its North American network consists of 15 business units, including 11 in the United States covering 41 states and four in Canada covering all 10 provinces.

In Europe, Couche-Tard operates a broad retail network across Scandinavia (Norway, Sweden and Denmark), Poland, the Baltics (Estonia, Latvia and Lithuania) and Russia. As of Oct. 11, 2015, it comprised 2,217 stores, the majority of which offer fuel and convenience-store products, while the others are unmanned automated gas stations that offer fuel only.

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