DALLAS -- With the pending sales of substantially all its retail sites, Sunoco LP has begun shifting its focus away from retail and toward wholesale fuels distribution.
CEO Bob Owens, who will retire Dec. 31, said during a recent earnings call that the company is “on track to substantially exit the company-operated retail convenience-store space within the continental United States by the end of 2017.” He gave a status update of three transactions that will help Sunoco move toward this goal.
Owens expects the sale of about 1,100 company-operated c-stores, as well as the trademarks and intellectual property of the Laredo Taco Company, to Irving, Texas-based 7-Eleven to close by the end of fourth-quarter 2017. He said the deal is in typical and customary regulatory discussions with the Federal Trade Commission.
Owens also expects the sale of Sunoco’s West Texas assets, which includes approximately 180 c-stores, to close around the same time. He said Sunoco is in the process of completing advanced-stage discussions with final bidders.
As for the sale of about 100 of Sunoco’s retail assets through NRC Realty & Capital Advisors LLC, Chicago, Owens said NRC has sold or is under contract to sell approximately 35% to 40% of the initial 100 sites and is actively marketing roughly 20% more. About 30% of the original 100 sites migrated to 7-Eleven and another 10% migrated to the West Texas sales process.
Sunoco will not completely exit retailing, the company has said. It "will continue with a platform for the iconic Sunoco fuel brand and successful APlus [c-store retail] franchise." There are about 400 APlus stores, according to company reports. Also, Sunoco will maintain ownership of Aloha Petroleum, an integrated, stand-alone operation within Sunoco with 54 retail locations in Hawaii.
In earnings, Sunoco LP saw its revenue increase 13% to $2.4 billion in second-quarter 2017. Revenue was $2.1 billion in second-quarter 2016.
Dallas-based Sunoco said the increase was the result of the average wholesale selling price of fuel being 14 cents per gallon higher than last year, in addition to more wholesale gallons sold. Total wholesale gallons sold increased 4.4% from 1.316 billion in second-quarter 2016 to 1.374 billion in second-quarter 2017.
Strong fuel margins also contributed to an increase of $56 million to Sunoco’s EBITDA (earnings before interest, tax, depreciation and amortization), which totaled $220 million for the quarter.
That said, total gross profit declined to $165 million, compared with $227 million in second-quarter 2016. Sunoco said this was a result of lower wholesale motor-fuel gross profits.
As of June 30, Sunoco operated 1,353 convenience stores and retail fuel outlets along the East Coast, in the Southwest and in Hawaii. Third-party wholesale customers and sites totaled 7,937.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.