CORPUS CHRISTI, Texas -- Susser Holdings Corp. had lots to celebrate as executives shared financial and operating results for the first quarter of 2012 during a conference call on Wednesday: same-store merchandise sales were up 6.7%, their retail net merchandise margin is at 33.5% and their average retail fuel gallons per store increased by 5.8%.
"We delivered a pretty solid quarter in Q1," said president and CEO, Sam L. Susser. "Inside our Stripes convenience stores, we realized growth in same-store merchandise sales, higher sales in all of our key categories and increased store traffic."
Cigarette margins proved to be Susser's biggest challenge inside the stores, with a decline in margin of almost 300 basis points compared to last year. But Susser fought through these increases.
"Cigarette sales represented about 20% of merchandise sales and about 8% of merchandise gross profit last quarter--which means cigarettes, same-store sales and gross profit dollars increased by almost 8%," said Susser's retail division president and CEO Steve DeSutter. "Although the manufacturer pricing programs negatively impacted cigarette margins, we were able to respond to the changing market conditions and grow overall cigarette volume and revenue."
It's no surprise that Susser's greatest obstacle outside the stores was falling retail fuel margins, which were at 13.3 cents per gallon, down both year to year and when compared to 2011's fourth quarter.
"Our results were impacted by a fairly significant decline in retail fuel margins as wholesale gasoline costs increased by about 65 cents a gallon between the beginning and the end of the first quarter," said Mary Sullivan, Susser's CFO.
But the news outside wasn't all bad: a fuel margin of 13.3 cents per gallon is still almost a penny higher than the previous five-year average of 12.4 cents a gallon for the first quarter, and while Susser doesn't expect to repeat last year's impressive margin of 23.4 cents per gallon, they're optimistic they'll meet the 16 to 19 cents per gallon margin projected for 2012. And there was more good news on the wholesale side.
"In our wholesale business, which is less subject to the effects of fluctuations and fuel cost movements, we delivered strong year over year volume growth of 17% in gallons," Susser said. "This largely reflects the impact of the 121 new wholesale dealer sites we added in the fourth quarter of last year. The robust Texas economy continues to be a big tailwind in our favor."
The company intends to ride that tailwind, having opened four new big-box stores in the first quarter with 11 more Stripes sites currently under construction--four of which they expect to open within the second quarter.
"The aggressive organic expansion program is on track," Susser said. "We still plan to build between 25 and 30 new Stripes stores in 2012 and we don't plan to slow down in 2013. Our new store development team is working on more new sites right now than at any other time in our history."
With solid numbers inside and outside the stores and the promise of further growth in a booming market, DeSutter commented that Susser has started 2012 off right: "I couldn't be more pleased with our start to this year."