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Couche-Tard Invests in Food and Fuel Programs

Net earnings decline 7.9% during fiscal 3rd-quarter 2021
Photograph: Shutterstock

LAVAL, Quebec — Alimentation Couche-Tard is leaning on two key proprietary programs to drive sales and growth in the next year. Company leaders announced during a March 18 earnings call that it will expand its Fresh Food, Fast initiative to 3,000 of its Circle K convenience stores in the next few months after seeing success from an initial rollout in the second half of 2020.

“In our strategic ambitions, we are making notable strides as we evolve our model to become a more innovative and differentiated retailer,” said President and CEO Brian Hannasch. “In our Fresh Food, Fast priority, we are starting our second wave of implementation and will be expanding the program to an additional 3,000 stores in the coming months. Our focus on ease, safety and the quality of the offer are clearly resonating with our customers, and I am pleased that we are meeting our food development goals despite the challenges of the pandemic.”

Specifically, Hannasch said Circle K stores with the Fresh Food, Fast initiative in place “have been performing well relative to control stores within the same markets. Based on these results, we plan to leverage the learnings, and we look forward to expanding throughout North America during our fiscal 2022.”

Meanwhile, declines in gasoline volume continued to plague the company—and the c-store channel in general—with Couche-Tard's same-store fuel volume down 15.7% in the United States. That loss was offset somewhat by a nearly 5-cent increase in gasoline margins, which averaged 31.86 cents per gallon during the quarter, which ended Jan. 31.

“Fuel volume results were highly variable with areas of renewed lockdowns showing very soft demand, while other areas strengthened.” Hannasch said.

One beneficial factor is the continued rollout of Couche-Tard’s own Circle K fuel branding.

“During the quarter, we converted more locations to our Circle K fuel brand, bringing the total now to over 2,700 sites in North America, and results continue to be encouraging,” Hannasch said. “It's exceeding our projections. In over 850 sites, we're currently piloting various strategies to build Circle K fuel brand awareness and grow premium sales, and we're pleased with the initial results of these pilots as we invest in the Circle K brand."

He added, “We are also advancing our innovation journey with the opening of our first frictionless store, as well as the expansion of our license-plate recognition initiative and EV (electric vehicle) home charging solutions.”

During the quarter, Couche-Tard saw total revenue of $13.2 billion, a decrease of 20.8% from the previous fiscal year. Merchandise and services revenue totaled $3.3 billion in the United States, an increase of 5.6%, while fuel sales dropped 30.5% to $5.6 billion compared to the previous year. Total net earnings were $607.5 million for the quarter, compared to $659.9 million the previous year, a decline of 7.9%.

Laval, Quebec-based Couche-Tard's network includes 9,261 c-stores in North America, with more than 7,100 in the United States under the Circle K and Holiday Stationstores banners and approximately 2,100 in Canada under the Circle K, Mac's and Couche-Tard banners. In Europe, under the Circle K and other banners, Couche-Tard operates a retail network in Scandinavia, Ireland, Poland, the Baltics and Russia including 2,722 stores and unmanned automated fuel stations. And under licensing agreements, more than 2,220 stores operate under the Circle K banner in 15 other countries and territories (Cambodia, Egypt, Guam, Guatemala, Honduras, Hong Kong, Indonesia, Jamaica, Macau, Mexico, Mongolia, New Zealand, Saudi Arabia, the United Arab Emirates and Vietnam), which brings Couche-Tard’s worldwide total network of approximately 14,200 mostly Circle K-branded c-stores.

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