Tesoro’s Plans to Grow Fuel and Retail Brands

Rolls out new ARCO image, will add 550 convenience stores by 2020

Steve Holtz, Editor in Chief, CSP Daily News

arco tesoro

SAN ANTONIO -- Tesoro Corp. will aim to nearly double the EBITDA of its retail and gasoline-marketing business to more than $1 billion in the next three years through convenience-store improvements and acquisitions.

With an estimated 2015 EBITDA (earnings before interest, taxes, depreciation and amortization) of $650 million, the oil company expects "to grow marketing into a $1 billion EBITDA business by 2018," CJ Warner, Tesoro's executive vice president of strategy and business development, said during a review of strategic initiatives and growth strategies during the company's Analyst and Investor Day. "We will achieve this by delivering $150 million to $200 million of organic growth and business improvements, and through acquisitions, which should contribute an additional $200 million to $300 million of EBITDA."

With a current base of about 2,300 dealer retail sites—up from 880 in 2010—Tesoro aims to add another 350 retail locations by 2018 and 550 by 2020, creating more than 42,000 barrels per day of branded-fuel volume growth.

The strategy will include a three-year brand-building program to boost and improve the image and consumer experience of Tesoro's ARCO gasoline brand, which it purchased from BP in 2013.

Tesoro will invest $60 million to $75 million per year for branded growth and retention, including support for ARCO Top Tier "gasoline for less" and roll out of the new ARCO Luminate 2020 station-image upgrade program (see photo).

With a current bank of 600 sites that have a "strong c-store offering" with the ampm brand, Tesoro will "aim to build a convenience-store offer across [its] system with regional diversity" to grow nonfuel gross profit on top of an already strong fuel offer.

Ownership of the retail/convenience offer will enable Tesoro to respond rapidly to consumer trends and preferences and to innovate through leadership.

Tesoro Corp., a Fortune 100 company, is an independent refiner and marketer of petroleum products. Tesoro's retail-marketing system includes 2,300 retail stations under the ARCO, Shell, Exxon, Mobil, USA Gasoline and Tesoro brands.

Part of CSP's 2015 Convenience Top 101 retailers
Steve Holtz, CSP/Winsight By Steve Holtz, Editor in Chief, CSP Daily News
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