ANKENY, Iowa — Casey’s General Stores Inc. enjoyed an “excellent” quarter, reporting a 7.9% increase in inside same-store sales compared to the prior year, Darren Rebelez, Casey’s president and CEO, said during the company’s 2023 second-quarter earnings call Dec. 7.
In addition, total fuel gross profit increased 22.7% to $284.4 million compared to the prior year.
“Thanks to our entire team, Casey’s delivered another excellent quarter by growing inside sales while driving efficiency throughout the business,” Rebelez said. “Inside same-store sales were driven by prepared food and dispensed beverages, most notably pizza and fountain sales.”
- Casey’s is No. 3 on CSP’s 2022 Top 202 ranking of U.S. c-store chains by store count.
Also, gocery and general merchandise achieved impressive results in alcohol and non-alcohol beverages, he added.
“The fuel gross profit dollars remained strong as our fuel team executed at a high level again and struck the right balance between sales volume and gross profit margin,” Rebelez said. “The resiliency of our business model, along with the ability to effectively execute on our long-term strategic plan, continues to drive shareholder value.”
“On the heels of last year’s breakfast relaunch, our breakfast offerings pulled guests in with the fan-favorite, our loaded breakfast burrito, as well as our buzz-worthy LTO, the Ultimate Beer Cheese Breakfast Pizza, featuring Busch Light beer cheese sauce,” he said. “This generated store traffic, online pizza orders and a lot of conversation about Casey’s this fall.”
Rebelez attributed Casey’s solid numbers to a solid plan. “Our differentiated business model is resilient in these challenging economic conditions as we have strong execution of our strategic plan across grocery and general merchandise, prepared food and dispensed beverage and fuel, with excellent execution by store operations,” he said.
Talking about the 7.9% growth in same-store sales, Rebelez said, “Our team did a tremendous job with our vendor partners managing the product mix, in-stock levels and retail price-point adjustments. We saw strong performance in pizza, both slices and whole pies, as well as alcoholic and non-alcoholic beverages. We were able to partially offset some inside margin pressure in the prepared food and dispensed beverage category through select pricing adjustments and finding the right product mix within the grocery and general merchandise category.”
Same-store prepared food and dispensed-beverage sales rose 10.5%, with an average margin of 56.7% versus 60.6% a year ago. “We had better product availability in both cups and doughnuts, which led to improved performance within the bakery and dispensed-beverage categories,” he said.
Rebelez added that ingredient costs, particularly cheese, continued to affect profit margins. Cheese was $2.24 per pound in the quarter compared with $1.96 per pound last year, a 14% increase.
Same-store grocery and merchandise sales were up 6.9%, with an average margin of 33.3%, equal to the year-ago period. The second quarter also had excellent results in alcohol and non-alcohol beverages, “as we continue to see great results by leveraging from our approximately 1,500 stores with a liquor license and growing our private-label sales,” he said.
In fuel, “Our diesel business had a great quarter, with low double-digit volume growth,” he said. “We saw cost volatility throughout the quarter, and the fuel team navigated through it well and continues to appropriately balance profitability and volume as we optimize gross profit dollars.”
Other highlights:
- Casey’s generated $138 million in net income, a 42% increase, in the quarter, and $272 million in EBITDA (earnings before interest, taxes, depreciation and amortization), a 25% increase from the prior year.
- Second-quarter total revenue was $4 billion, an increase of $716 million, or 22% from the prior year.
- Inside same-store sales had a margin of 39.8%. Total inside sales for the quarter were $1.3 billion, a $129 million increase or 11% from the prior year.
- Total inside gross profit increased 8.9% to $504.5 million compared to the prior year.
- Grocery and general merchandise sales increased by $88 million to $917 million, a 10.6% increase. The grocery and general merchandise margin was 33.3%, flat with the prior year.
- Prepared food and dispensed-beverage sales rose by $42 million to $351 million, a 13.5% increase. This growth was helped by operating 3% more stores on a year-over-year basis, Steve Bramlage, Casey’s CFO, said during the call. “Our in-stock levels did improve during the quarter versus the prior year, which helped inside sales, especially in prepared food.”
- Same-store credit card fees rose due to higher retail fuel prices, and they accounted for about 1% of the operating expense increase in the quarter. Same-store operating expense excluding credit card fees were up 1.3%, helped by a 3% reduction in same-store labor hours.
- Total operating expenses were up 7.7%, or $39 million in the quarter. “Approximately 2% of the operating expense increase were due to unit growth as we operated 83 more stores than the prior-year period,” Bramlage said.
- Same-store fuel gallons were up 0.3% compared with the prior year, with a fuel margin of 40.5 cents per gallon (CPG). Total fuel gross profit increased 22.7% to $284.4 million compared to the prior year. Second-quarter retail fuel sales were up $587 million to $2.6 billion due to a 5% increase in gallons sold to 702 million and a 22.6% increase in the average retail price per gallon. The average price per gallon in that period was $3.75, compared to $3.06 a year ago.
- Casey’s had gross profit of $811 million in the quarter, a $93 million increase, or 13% from the prior year.
While Casey’s expects about new 80 stores in fiscal 2023, there are delays on openings due to construction setbacks and local licensing and inspection challenges, Bramlage said.
Ankeny, Iowa-based Casey’s operates more than 2,400 convenience stores in 16 states.