LAVAL, Quebec -- Following its third biggest fiscal year of store growth, Alimentation Couche-Tard Inc. plans to slow down its acquisition pace a little, but it's not shutting the door on a major acquisition should the opportunity arise.
In its fourth-quarter 2007 report released Tuesday, the Canadian company said it anticipates buying between 200 and 300 stores in the next year; however, CEO Alain Bouchard said he will pull the trigger on a bigger dealor several smaller dealsif they become available.
The 200-300-store estimate [image-nocss] is a number we can beat if the opportunities are there, Bouchard said Tuesday on a company conference call with investors. Our management is certainly ready for more stores in the majority of our divisions, excluding Florida. I think we can exceed that number if opportunity should occur.
The projected slow down of growth, however, led some stock analysts to predict the company may fall off investors' radar screens in the short term. We like the stock long-term, one analyst who asked not to be identified told the Financial Post. But it could become a ho-hum' story for the next while. In the absence of acquisitions, we believe the growth will slow significantly.
The stock closed up 3.7% Tuesday after the firm reported a fourth-quarter profit of $33.4 million on $3 billion in revenue, but the stock is down 20% over the past nine months.
Couche-Tard has faced some challenges in that period, according to the Financial Post. Those include rising minimum wages, high gasoline prices and associated higher credit-card fees as well as a huge tobacco tax hike in one of its largest markets, Arizona.
But the bigger-picture issue is that Couche-Tard has become a victim of its success and faces high expectations from investors to keep delivering the kind of growth that made the stock a top performer in the first half of this decade, according to the newspaper. Much of that expansion was due to large acquisitions that it successfully integrated, allowing Couche-Tard to expand profit margins on in-store merchandise.
For the full year 2007, we have invested close to a $1 billion, adding a total of 506 company-operated stores to the network, Bouchard said. This has been our strongest year for network expansion in two years, and the third biggest ever.
During the year, Couche-Tard acquired the Groovin Noovin, All-Star, Spectrum, Stop-n-Save, Holland Oil and Sparky's stores. The company also acquired more than 200 stores in Florida from Shell Oil.
In fiscal 2008, Couche-Tard intends to build about 60 news sites from scratch.
Also during 2007, the company converted 413 stores to its IMPACT image program. IMPACT (Innovation-Marketing-People-Alimentation-Couche-Tard) designs the product and service mix to create a more attractive ambience that appeals to consumers and boosts high-margin product sales.
Each site chosen for the program is adapted to the socio-economic and cultural uniqueness of the local community with the assistance of a multidisciplinary team of specialists in the fields of marketing, merchandising, real estate services, interior design and operations, according to the company's website.
These stores become models of efficiency and attractiveness and are really setting the standards in the convenience stores business, said Bouchard. Thus, the company intends to convert another 400 stores to the program in fiscal 2008.
Couche-Tard, Laval, Quebec, operates a network of 5,513 c-stores, 3,413 of which include motor fuel dispensing, located in nine large geographic markets, including six in the U.S. covering 29 states and three in Canada covering six provinces.
Click here to view Couche-Tard's full fourth-quarter and 12-month financial release.
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