Top Performers: Bottom's Up

Lower quartile steps up game, closes gap between top, bottom performers

Angel Abcede, Senior Editor/Tobacco, CSP

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But Plumby also made a point of growing labor costs. “At $15.26 an hour [for top-decile companies], it’s something to pay strict attention to,” he said. “That is a very expensive employee to be working in our stores.”

Probably the most significant differences between top and bottom come in with capital productivity, said Plumby. “This is the money slide,” he said.

Top-quartile companies operate at a 6.4x gap over the bottom quartile, with those at the top taking in $26,593 per store per month vs. bottom companies at $4,174. Break-even cents per gallon (CPG) is significantly lower at 7.66 cents vs. 16.76 cents. Earnings before interest, taxes and depreciation is a dominant 6.1x.

The difference puts to question what the bottom quartile is doing to make inroads against those at the top, Plumby said. “For the bottom quartile, the sales gap shrunk, but the profitability and capital productivity gap grew,” he said. “So it wasn’t done as efficiently as the top quartile.”

He also cited that the return on capital investment on the bottom end was a negative 0.36%. “I think it’s the first time the bottom quartile is showing a negative number,” he said. “It’s something very concerning, especially when you’re looking at investing money into a chain to be able to keep up with the people across the street. … You have to be able to generate a level of return in order to put the capital in.”

Better, Best Have Wins, Setbacks

While the top-performing chains on a whole continued to do well, the top 10%, or top decile, of stores had a few setbacks. Though its sales numbers were, as expected, higher than the other quartiles and higher than last year, the top-decile numbers were actually down in terms of return on capital employed, going from 19.16% in 2012 to 16.90% in 2013, according to NACS officials.

Top Decile vs. Top Quartile    
2013 Top 10% Top 25%
Store operating profit $34,487 $26,593
Store operating profit per square foot $16.15 $10.74
Break-even CPG 7.78c 7.66c
EBITDA* $31,923 $25,406
Net profit margin (pretax/sales) 2.61% 2.48%
Return on capital employed 16.90% 16.49%

Source: Preliminary figures from NACS State of the Industry Survey of 2013 Data and CSX LLC

*Earnings before interest, taxes, depreciation and amortization

Quartile Breakdown The disparity between top and bottom performers continued to grow on some fronts, but in certain categories, such as cigarettes, NACS officials say the rift actually got smaller.

Capital Productivity      
2013 Top Quartile Bottom Quartile Difference, Top vs. Bottom
Store operating profit $26,593 $4,174 6.4x
Store operating profit per square foot $10.74 $1.67 6.4x
Break-even CPG 7.66c 16.76c 9.10
EBITDA* $25,406 $4,148 6.1x
Net profit margin (pretax/sales) 2.48% -0.9% 2.57 points
Return on capital employed 16.49% -0.36% 16.85 points
Store Operational Productivity      
Motor fuels gallons sold 170,268 107,281 1.6x
Merchandise sales $132,106 $76,102 1.7x
Foodservice sales $34,572 $9,712 3.6x
In-store gross margin % 32.7% 27.3% 5.4 points
Average square feet 2,477 2,494 Even
In-store sales per square foot $67.09 $33.99 2x
People Productivity      
Labor cost per hour $13.69 $12.32 1.1x
In-store gross profit dollar per labor hour $28.57 $20.66 1.4x

Source: Preliminary figures from NACS State of the Industry Survey of 2013 Data and CSX LLC

*Earnings before interest, taxes, depreciation and amortization


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