Murphy CEO Highlights Fuel Sales, Consumer Resilience and Hiring Strategy

EL DORADO, Ark. — Murphy USA Inc. President and CEO Andrew Clyde highlighted the El Dorado, Ark.-based chains fuel sales, consumer resilience and hiring and retention strategies as key elements to its second-quarter 2022 performance.  

• Murphy USA is No. 5 on CSP’s 2022 Top 202 ranking of U.S. c-store chains by store count.

“In short, our affordable model, delivered responsibly by our engaged staff, is winning and enabling us to meet our broader commitment to the communities we serve while staying in line with our investors,” Clyde said during the company’s July 28 earnings call.  

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Murphy USA gained market share in its fuel business over the past six months, despite a rising price environment, Clyde said.

“Due to the structural change in industry break-even costs that is driving marginal retailers to preserve margins, rising wholesale prices more rapidly translated to higher prices at the pump,” he said. “In this environment our retail tactics and pricing precision are far more impactful with greater ability to create separate with lower prices, and that is leading to share market gains.”

Total retail gallons of fuel increased 7.8% to 1.2 billion gallons in the quarter, compared to 1.1 billion gallons in second-quarter 2021, while volumes on a same-store sales basis increased 4.8%

Murphy USA’s low-price strategy is effective across a wide range of different price and margin environments, but it is most economically effective when industry margins are more robust, all else being equal, Clyde said. When fuel prices are high, consumers will go out of their way to find different prices.

“These tactics and strategies have allowed us to capture new customers and grow volumes,” he said.

A panel of almost 100,000 Murphy Drive rewards members shows they are buying a gallon or two less a month, “yet the fact that we are growing overall volume means we are adding new customers and taking share,” Clyde said.

Murphy USA is also seeing improvement in categories attached to fuel inside the store, Clyde said.  

“We understand high fuel prices may just be one of many problems lower-income consumers face in an inflationary environment,” he said. “It is important to understand that our customers consider the products we sell—especially fuel and tobacco—as non-discretionary purchases. They’re likely cutting back on other area of their monthly spend versus their spend at Murphy USA, which is increasing.”

The company is seeing strong growth in packaged beverages as well as better performances from other center store categories. Product innovation is also driving results as evidenced by the proprietary made-to-order iced and frozen energy drinks at QuickChek.  

Food and beverage contribution margin increased 5% in the quarter over the prior-year period and sales dollars improved 10.5%.

New tobacco customers seeking grater value are shifting retailer brands and coming to Murphy USA.

Murphy USA’s model could only work with an engaged staff, who provides friendly customer service to create loyal customers, Clyde said. That’s why it’s implemented new strategies to hire and retain employees—and it’s paying off.

The company invested in an appreciation bonus for its staff, which is payable over the 100 days of summer, Clyde said. The intention of the program was to engage Murphy’s employees to maintain sales momentum; increase retention and employee well-being; attract new applicants; and increase store hours of operation and reduce overtime hours, he said.

“We are clearly seeing the benefits of this investment in our results and in our staff surveys, which, when coupled with our very strong employee value proposition, has resulted in applicant flow returning to near pre-COVID levels,” Clyde said.

The investment supports the business without permanently eroding the low-cost operating model that underpins Murphy USA’s low-price position and ensures the long-term sustainability of the business, he said.

“We’re still not out of the woods yet, we’re still feeling some of the pressures from the labor market, but it is getting better,” Clyde said.