ANKENY, Iowa — The launch of a new selection of private-label products and a reset of nearly all its locations set Casey's General Stores up for a strong third quarter of its fiscal 2021.
“The company advanced several initiatives in our grocery and other merchandise category that contributed to positive inside sales volume in the quarter and investment in our fuel capabilities yielded favorable results," said President and CEO Darren Rebelez.
During the quarter, which ran November through January, inside same-store sales increased 2.1% compared to prior year with a margin of 39.6%. Fuel gross profit increased 37% with a fuel margin of 32.9 cents per gallon. Fuel same-store gallons sold, however, decreased 12.1% compared to the same period last year. The convenience-store chain chalked up the decline in fuel volume to lower customer traffic driven by the COVID-19 pandemic.
Inside same-store sales, however, were driven by strong performance in alcohol, packaged beverages and whole pizza pies, offset by weakened demand in the bakery and dispensed-beverage categories.
Planning for just such issues, the chain launched a store reset program that opened up sight lines and increased shelf space, Rebelez said during an earnings conference call on March 9.
"During the first half of the quarter, the company performed a significant store reset at over 2,200 locations," he said. "The reset involved moving interior shelving to improve traffic flow, as well as adding shelf space vertically to expand selling space."
Rebelez said the reset raised the height of gondolas by about 12 inches. "And what that did, essentially, was allow us to add about another 250 items to the assortment, so roughly 10% increase in SKUs. And at the same time, we refreshed the entire assortments, so we were able to get more new products into the assortment and get rid of some of those stale items."
"Not only will this enable us to more effectively roll out our private-label program, we believe this will optimize category flow and adjacencies with existing SKUs, and has allowed us to add more variety within existing categories."
In January, the chain announced the launch of a new collection of Casey's-branded products, including CSDs, jerky, packaged bakery items and more.
The result so far has been positive, Rebelez said.
"The level of adoption that we've received from the guest on our products has really exceeded our expectations," he said. "When we introduce packaged bakery or meat snacks or nuts and seeds, there's an expectation of high-quality products at a reasonable price from us in our brand. And so people immediately gravitate to those."
He added that the chain has "a great pipeline of new products that will be coming over the next several months" to further build on that growth.
During the third quarter, Casey’s net income increased 14% to $38.6 million, while total revenue was down $240 million to $2.0 billion. During the quarter, the company operated 36 more stores than the prior year period.
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