Company News

Couche-Tard Still Challenged by Labor, Supply Chain

Retailer reports boosts to merchandise and fuel sales
Alimentation Couche-Tard, Circle K, Ingo

LAVAL, Quebec — Alimentation Couche-Tard Inc. saw total merchandise sales increase 5.8% and fuel volume up 3.3% during its fiscal second quarter 2022, although fortunes in both were mixed in its U.S., Canadian and European regions.

For the quarter ended Oct. 10, Couche-Tard Inc. reported total net earnings of $694.8 million, a substantial decline from the $757 million reported for the second quarter of the previous year. The total decline was affected by a pre-tax gain on disposal of $40.9 million related to the sale of a property in Toronto, a pre-tax net foreign exchange loss of $8.9 million and pre-tax acquisition costs of $1.2 million, the company said.

The retailer reported total merchandise and service revenue of $4 billion, an increase of 5.8%. Broken down by region, same-store merchandise revenues:

  • Increased 1.4% in the United States
  • Grew 3.9% in Europe and other regions
  • Decreased 2.1% in Canada

On a two-year basis—comparing Q2 2022 with the same period in fiscal 2020 (prepandemic)—same-store merchandise revenues increased at a compound annual growth rate of 2.9% in the United States, 6.3% in Europe and 4.5% in Canada.

Meanwhile, same-store road transportation fuel volume increased 3.3% in the United States and 2.8% in Canada, and decreased 0.3% in Europe and other regions. On a two-year basis, same-store road transportation fuel volume decreased at a compound annual rate of 6.5% in the United States, 2% in Europe and 4.9% in Canada, still challenged by work-from-home trends, the company said.

“I am pleased to report that across our global network, we had solid results during the second quarter in both convenience and fuel,” said Brian Hannasch, president and CEO. “Same-store sales were particularly notable in our U.S. and European markets as we continue to see growing momentum with our food program. Fuel volumes showed an upward trend in Europe, while other geographies remained impacted by COVID-19 traffic patterns.

“Across the board, we continue to achieve healthy fuel margins (averaging 36.39 cents in the United States). I am particularly proud of the work we did this quarter to improve the customer experience and drive traffic to our stores from enhancing Sip & Save, our beverage subscription offer, to introducing frictionless checkout in our Arizona stores and pioneering a global partnership bringing our stores to life in a leading augmented reality mobile game.”

Meanwhile, he said, the retailer continues to deal with hiring and supply chain issues.

“No doubt, this is the most difficult market in recent history, and we are working hard to mitigate the situation,” Hannasch said. “We have instituted hiring and retention initiatives, including bonuses and other offers, and increased recruitment capacity and pipeline visibility. We have also focused more intensely on training and engagement to be recognized as an employer of choice.

“After meeting our summer goal of hiring over 20,000 store team members, we are starting to see some stabilization. We are also working with our partners and finding new solutions to critical supply chain issues. As we faced these obstacles head-on, I am proud that we delivered a solid quarter and kept on track with our strategic goals.”

During the first half of the fiscal year:

  • Couche-Tard acquired 36 company-operated stores, including 35 stores operating under the Porters brand in the United States.
  • It also entered into a binding agreement in connection with the acquisition of Cape D’Or Holdings Ltd., Barrington Terminals Ltd. and other related holding entities, which operate an independent convenience store and fuel network in Atlantic Canada under the Esso, Go! Store and Wilsons Gas Stops brands. The Wilsons network comprises 79 company-operated convenience retail and fuel locations, 147 dealer locations and a fuel terminal in Halifax, Nova Scvotia.
  • The company entered into a binding agreement to acquire 10 company-operated stores operating under the Londis brand and located in Ireland.
  • In March, it announced plans to sell certain sites across 28 states in the United States and six provinces in Canada. The decision to dispose of these sites was based on the outcome of a strategic review of its network. As of Oct. 10, 261 sites in the United States and 36 sites in Canada met the criteria for classification as held for sale, including 210 sites already subject to multiple sales agreements with various buyers.
  • The retailer completed the construction of seven stores and the relocation or reconstruction of three stores, reaching a total of 40 stores since the beginning of fiscal 2022. As of Oct. 10, another 77 stores were under construction and should open in the upcoming quarters.

Circle K Stores is a wholly owned subsidiary of Laval, Quebec-based Couche-Tard, which operates in 26 countries and territories, with more than 14,200 stores, of which approximately 10,800 offer road transportation fuel. With its Couche-Tard and Circle K banners, it is one of the largest independent convenience store operators in the United States.

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