Thanks to several transactions, convenience-store retail company EG Group said that it is on track to reduce its total debt, according to its second-quarter 2023 performance report.
The Blackburn, U.K.-based company disposed of 26 non-core Minit Mart sites in the United States in April and received net proceeds of $43 million from Casey's General Stores Inc., Ankeny, Iowa. In May, it also completed a sale-and-leaseback transaction of 415 Cumberland Farms sites in the United States with Realty Income Corp., a San Diego-based real estate investment trust (REIT), resulting in net proceeds of about $1.4 billion. And it remains on track to complete the sale of the majority of its U.K. and Ireland business to Asda, Leeds, U.K., for an market value of $2.8 billion in fourth-quarter 2023.
The company will use the cash proceeds from the U.S sale-leaseback and the sale of the EG U.K. and Ireland business to repay senior secured debt, which will result in a reduction in total debt of approximately 41%.
After Aug. 15, the end of the quarter, EG Group sold 63 convenience stores operating under the Minit Mart and Certified Oil banners, also to Casey’s. The stores are located in Kentucky and Tennessee.
EG Group’s grocery and merchandise segments had a gross profit increase of 4.2% to $362 million in the second quarter.
Foodservice gross profit increased by 18.4% to $211 million, driven by strong sales growth and investment in new site openings, according to the company. The continued effect of inflationary cost pressures on wholesale food restricted foodservice gross margin growth to 1.3%, though new site openings drove an 18% increase in foodservice gross profit, with sales up 16%.
Fuel saw a strong performance across the majority of regions, offset by competitive conditions in the United States and adverse stock revaluations, against a backdrop of market volatility in the second quarter last year driven by the war in Ukraine.
The evolution to alternative fuels presents an opportunity for EG Group and it continues to roll out its EV charging network, currently operating about 500 chargers across approximately 160 sites in all its markets.
“There are multiple opportunities to grow the business organically in all our operating regions, and the continued rollout of our proven convenience retail, foodservice and fuel offering—alongside our geographic diversification and scale and the evolution to alternative fuels—provides an unrivalled platform for further success,” said Zuber Issa, co-CEO of EG Group. “I am confident that our strategy will continue to deliver for all our stakeholders, and I would like to reiterate my thanks to all EG colleagues for their hard work and dedication.”
EG Group established itself in the United States in 2018 as EG America by acquiring Kroger’s 762-site c-store network. It acquired TravelCenters of America’s Minit Mart c-store business for approximately $330.8 million in 2018. The portfolio included 225 c-stores. And in 2019, among other acquisitions, EG Group acquired Cumberland Farms and its nearly 660 c-stores in the Northeast and Florida, and EG America now has its headquarters in Westborough, Mass. With more than 1,750 sites across 33 states, U.S. c-store brands include Cumberland Farms, Certified Oil, Fastrac, Kwik Shop, Loaf N’ Jug, Minit Mart, Quik Stop, Sprint Food Stores, Tom Thumb and Turkey Hill.
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