CORPUS CHRISTI, Texas -- Driven by robust performance in both merchandise and fuel--as well as the improving Texas economy--Susser Holdings Corp. reported strong financial and operating results for the third quarter ended October 2, 2011. Overall, net income for the quarter more than doubled to $18.5 million, or $1.06 per diluted share, versus $9 million, or 52 cents per diluted share, in the same quarter last year.
Same-store merchandise sales in the company's Stripes convenience stores increased by 7.4%, compared with an increase of 3.4% in third-quarter 2010. Packaged drinks, foodservice, beer, snacks and cigarettes led the company's strong third-quarter merchandise sales performance. Average retail gallons per store per week increased 5.6% year-over-year, versus growth of 3.9% a year ago.
Retail net merchandise margin was 33.6% in the latest quarter, versus 33.8% in the same quarter last year. Retail fuel margins before credit card expense averaged 27.7 cents per gallon, versus 22.8 cents a year ago and 31.2 cents a gallon in the second quarter of this year.
Wholesale fuel volumes sold to approximately 440 contracted dealers and other third-party customers during the third quarter increased 6.4% from a year ago to 130 million gallons. Wholesale fuel revenues were 52.7% higher than a year ago, at $397.2 million, which reflects a 93-cent-per-gallon increase in average wholesale selling prices as well as the increase in volumes sold.
Click here to read the company's full third-quarter 2011 earnings release.
"We delivered one of our strongest quarters ever in same-store merchandise sales growth during the latest quarter, and despite higher gasoline prices versus a year ago, we achieved strong growth in gallons sold," said Sam L. Susser, president and CEO in a statement. "Our net merchandise margin was slightly lower than a year ago, which reflects small and very manageable increases in certain commodity costs, along with the impact of selective promotions that have enabled us to maintain and grow market share and drive customer traffic."
During the company's earnings call, he said, "The Texas economy continues to outperform the rest of the nation, so we feel fortunate to have a great geographic market position. ... West Texas has lead our performance gains due to the extremely strong oil and gas drilling activity ... but during the third quarter, we saw accelerated growth in same-store customer count moving through our South Texas stores. So that's a very encouraging sign that commercial activity across the state is gaining momentum."
He added, "We're continuing to see signs of economic improvement across most of our markets, and that is evident in the performance of our stores."
Susser also touted the continued pace of new-store construction. It opened five new stores in the quarter, as well as two so far in the fourth quarter. The company expect to open as many as 20 stores for the full year, and more than that in 2012. "These new 'big-box' stores are twice as large as our legacy model, and they deliver two to three times the cash flow of the older stores."
Steve DeSutter, president and CEO of Stripes,said during the call that since the company went public in 2006, its average merchandise sales per store has grown by more than 40%. ... Even our oldest, smallest stores on average are consistently producing same-store sales growth, in addition to the large, shiny new ones."
He told CSPDaily News, "I am extremely proud of our team. We continue to leverage our technology platform and business systems and move quickly to capture value and service improvements for our customers. We are also very pleased with the performance of our new stores; their impact on our growth is evident in our results. We think we have gotten pretty good at refreshing our foodservice offering, keeping it interesting for our customers, and that keeps them coming back. There is always more to do."
Click here to read DeSutter's "Competing With Yourself," featuring one of Susser's newest stores, in the October issue of CSP magazine.
Corpus Christi, Texas-based Susser Holdings is a third-generation, family-led business with approximately 1,100 company-operated or contracted locations. The company operates more than 535 convenience stores in Texas, New Mexico and Oklahoma under the Stripes banner. Restaurant service is available in more than 320 of its stores, primarily under the proprietary Laredo Taco Co. brand. The company also supplies branded motor fuel to approximately 560 independent dealers through its wholesale fuel division.