LAVAL, Quebec -- With a recent 65% increase in net earnings year over year, Alimentation Couche-Tard is firing on all cylinders, at the pump, inside its convenience stores and in foodservice, according to company executives.
"We once again achieved great performance on all fronts," president and CEO Brian Hannasch said during the company's third-quarter earnings conference call this week. "I can assure that this performance is not only just through our high fuel margins."
In fact in the United States, the operator of the Circle K convenience-store chain reported:
- Same-store merchandise revenues up 4.5%.
- Merchandise and service gross margin at 32.8%.
- Same-store fuel volume up 2.8%.
- And fuel gross margin at 24.93 cents per gallon.
"In North America, we continue to post solid results with improved sales and steady merchandise and service margins," Hannasch said. "On the fuel side, I’m particularly pleased with our performance on the fuel volume in the U.S., where we believe we’re outperforming the market. This performance in North America is even more impressive taking into consideration that our teams have managed to once again grow the business in another quarter, while keeping our costs under control."
These elements of success come as a result of one major victory for the chain: growing store traffic.
"Our performance in North America is attributable to our dynamic merchandising strategies, our competitive offers, as well as our expanded fresh food offered, which increased the traffic in our stores," said Raymond Pare, vice president and CFO.
Added Hannasch, "The U.S. continues to strengthen both in sales, customer count and basket, and then also on fuel gallons. So we’re very optimistic."
One happy result for the company is less need to discount products to move volume, thus driving full margins.
"We’re feeling less pressured to promote to drive people into stores," Hannasch said. "Although some of the press out there would say that [with lower gasoline prices], the consumer is saving the money, not spending it, we think there’s clear signs of that business improving for us in the States."
This varies greatly with issues the company faces in its native Canada.
"The challenge for traffic is more intense [in Canada]," Hannasch said, "so we will see continued investment in driving traffic and providing the appropriate level of value, particularly in the tobacco category, which has a great basket around it but does lower overall gross profit percentage if the mix of tobacco increases versus the overall sales."
Couche-Tard operates a network of more than 6,300 convenience stores throughout North America. Its North American network consists of 13 business units, including nine in the United States (under the Circle K brand) in 40 states and four business units in Canada (under the Mac's and Couche-Tard brands) covering all 10 provinces.
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