Delek Focuses on the Southeast

Growth to come in Texas as prototype store development begins

BRENTWOOD, Tenn. -- Market dominance—that's one of Delek US Holdings' goals as it lays out its three-pronged retailing strategy for the coming few years.

"We want to be the market leader in every market that we're in, and that's what we're doing," Uzi Yemin, president and CEO of Delek US, said during the recent Credit Suisse 2008 Energy Summit in Vail, Colo. "We have 500 c-stores. In four out of the five markets that we're in, we are the market leader. And we intend to keep doing that."

Other pieces of the Delek puzzle include retaining its real estate and growing its store [image-nocss] count through acquisitions to complement its refinery ownership.

"We weren't aggressive in 2007 in growing via acquisitions," Yemin said. "[We feel] the right time for acquisition is coming.… 2008 will be a great year because it is going to create the path for 2009 and 2010."

He also noted that the Tennessee-based company has defined its marketplace as the Southeast, including Texas.

"We want to stay in that area," he said. "We will connect our c-stores to our refineries in the future."

Currently the company owns one refinery in Tyler, Texas, but has no stores in that state. "They are not connected today, but eventually there will be synergies between future refineries and future c-stores," he said, hinting at both future retail and refining purchases.

Finally, Yemin said, "The other initiative is that we want to own our own real estate. Unlike other companies in our sector that do a lot of sale-leaseback (deals), we feel that the right thing for us is to keep our own real estate. If we keep our own real estate, that will allow us long term to build on these locations and to enjoy future growth."

That growth will follow on the recent opening of a new prototype store that Yemin said has been in the works for two years.

"This store, for example, averages $20 million in sales—fuel and nonfuel—in one location. And this is a 5,000-square-foot building," he said. "We have touch-screen ordering outside. People can fuel and then place their order in the parking lot, and then just go in and get their order."

He added that the company will build several of these stores and reimage others over the next couple of years.

Brentwood, Tenn.-based Delek US Holdings owns and operates more than 500 retail fuel and convenience stores in Alabama, Arkansas, Georgia, Kentucky, Louisiana, Mississippi, Tennessee and Virginia, with approximately 93% of its stores concentrated in Tennessee, Alabama and Virginia.

The company operates these stores primarily under the MAPCO Express, MAPCO Mart, East Coast and Discount Food Mart brands, and markets gasoline and diesel under its own fuel brands, as well as the BP, Exxon, Shell and Chevron brands.

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