LAVAL, Quebec -- North American convenience store and gas bar operator Alimentation Couche-Tard Inc. said its desire to expand further into the U.S. market could involve making a play for some of the 2,000 stations Shell plans to dispose in the coming years.
"We are always interested in any asset that can become available in the U.S. that can fit with our existing network," CFO Richard Fortin said in an interview with the Canadian Press. "So if Shell really intends to sell some other assets and they are offered to us, we might be interested."
Fortin said several trade publications have recently reported that the third-largest operator of gas stations and c-stores in the United States was planning to sell some locations in core markets.
Click here to read last Thursday's CSP Daily News Special Report that featured industry analyst speculation that Couche-Tard could acquire Sanford, N.C.-based The Pantry or the aforementioned Shell sites.
In a recent internal update to an initiative started a couple of years ago, Shell said it planned to nearly double the number of "direct-supplied and company-operated" sites it planned to dispose, analyst Jessy Hayem of Desjardins Securities wrote in a research note.
Shell has been transforming its retail operations by selling non-core locations.
The new markets to be "transitioned" are in Washington, D.C., southeast Florida, Boston, New York, San Francisco, Chicago, Seattle and Los Angeles, Hayem said. This is in addition to markets remaining from the first go-round in Philadelphia, New Jersey, Houston, Dallas, New Orleans, Portland, Alaska, Sacramento and Hawaii.
Shell intends to complete the selloff by third-quarter 2009, according to CP.
Hayem said Couche-Tard, which has built a solid relationship with Shell, could look to increase its penetration in several markets where it has a strong presence. "We believe that Couche-Tard would most likely bid for some sites in markets of interest," she wrote, pointing to Houston, Dallas, Portland, California and Florida.
Fortin said the company has not heard from Shell about the expanded sale and could not say if Couche-Tard has bid on the first round of opportunities. He said Couche-Tard's strategy has been to add stores near clusters of outlets it already operates. "We would not buy say 50 stores that would be lost in a market where we have no presence whatsoever, he told CP.
Entering new markets would require the chain to develop a critical mass of locations, he added.
The Laval, Quebec-based retailer has purchased 286 locations from Shell and $1.15 billion of revenue from three separate transactions in 2004 and 2006, Hayem wrote.
Couche-Tard plans to acquire 250 stores in fiscal 2008, well below the 413 stores acquired in fiscal 2007, as it focuses more on the integration of the 200-plus stores acquired from Shell last December. "This is the target we have in mind. Whether it comes from Shell or any other party, it doesn't make any difference to us, Fortin said.
He said the company has the ability to make the purchases using excess cash and credit lines.
The acquisition of Shell stores has demonstrated the opportunities that exist to put Couche-Tard's stamp on the outlets by boosting merchandise sales, Fortin added.
Merchandise sales account for 15% of Shell store sales, while Couche-Tard aims for 65%, according to Hayem.
Couche-Tard launched its entry into the U.S. by purchasing 225-store Johnson Oil, which had half its fuel supplied by Shell.
"We continue the good relationship, and I think we build on this relationship and today it's even better," Fortin told CP.
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