EL DORADO, Ark. -- In a strategy shift, Murphy USA Inc. said it is changing its relationship with longtime partner Wal-Mart Stores Inc. on opening gas stations and convenience stores on Walmart lots.
Murphy USA will continue to work closely with Walmart on existing locations and said it anticipates further collaboration opportunities in the future.
But the shift provides Murphy USA greater flexibility to develop sites independently, it said.
Murphy USA will continue to build Murphy Express branded stores at locations acquired from third parties. And, as reported in a McLane Co./CSP Daily News Flash, the company has developed a large-store format that will allow for higher-impact growth from new locations going forward.
According to Murphy USA, Wal-Mart is free to move ahead with a proprietary gasoline program on Supercenter locations that are not currently supplied or committed to be supplied by Murphy USA.
Wal-Mart already has such a proprietary strategy, with fuel sites branded simply as “Walmart.”
“We’ve had a program in place around that for several years,” Randy Hargrove, spokesperson for Bentonville, Ark.-based Wal-Mart, told CSP Daily News. "We’re just moving forward with that program. We still have some locations that we are working with Murphy on that have been in the pipeline. Over the past few years, they’ve been opening some, and we’ve been opening our own, and that’s how we’ll continue.”
He added, “We’ve had a good relationship with Murphy, and we’re going to continue to work with them on the stations that they already operate. Fuel is something that’s important to us, and we’re going to continue with our own program.”
With this shift, the Murphy board of directors has authorized a strategic allocation of capital for the company to pursue new additional independent growth opportunities and to undertake a share repurchase program of the company’s common stock.
The board has authorized up to $500 million in total for the two capital programs through Dec. 31, 2017.
Murphy USA said it expects to use its balance sheet flexibility, operating cash flow and proceeds from the sale of non-core assets to fund the repurchase program.
Murphy Express locations achieve similar operational performance metrics as Murphy USA branded locations and represent more than 50% of the company’s store growth in the last five years, it said. To support this ongoing expansion within its core marketing areas and into new marketing areas, the company will continue to invest in and grow its Midstream positions.
"Since our spin, we have strategically positioned Murphy USA to be a strong, independent company that can achieve a high level of organic growth and shareholder returns with or without another large acquisition of store locations from Walmart," said Andrew Clyde, president and CEO. "Through our existing store pipeline, growing third-party land bank, our business improvement initiatives that enhance our core fuels business and differentiated retail capabilities, and the strength of our balance sheet, Murphy USA will continue to grow our base of value-seeking customers independently in both new and existing target markets with great clarity and confidence."
At its discretion, Murphy USA management will determine the timing and number of shares repurchased under the program based on several factors, including compliance with the terms of the company’s outstanding indebtedness, general market and business conditions, applicable legal requirements and other growth opportunities available to the Company.
El Dorado, Ark.-based Murphy USA is a leading retailer of gasoline and convenience-store merchandise with more than 1,300 locations primarily in the Southwest, Southeast and Midwest. Approximately 1,100 of Murphy USA’s stations are located with Walmart stores. The company also markets gasoline and other products at standalone stations under the Murphy Express brand.
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