Other tobacco products (OTP) continue to drive favorable outcomes for convenience-store retailers.
That’s according to third-quarter 2025 earnings results from Richmond, Virginia-based Arko Corp., the parent company of convenience-store retailer GPM Investments; Murphy USA, El Dorado, Arkansas; and CrossAmerica Partners, Allentown, Pennsylvania.
Arie Kotler, chairman, president and CEO of Arko, reported on Nov. 5 that the retailer’s OTP basket grew by approximately 16% compared to the same quarter last year.
“OTP same-store sales were up 6.6% as compared to the same quarter of last year, along with a margin rate increase of more than 300 basis points,” Kotler told investors on the earnings call, according to a transcript from financial services site AlphaSense. “Our redesigned back bars deliver better product visibility, a more modern presentation and stronger promotions.”
Kotler said this initiative is a key highlight in the retailer’s merchandising strategy.
“It is driving incremental traffic, higher margins and improved category mix while allowing us to compete more effectively in a value-conscious environment,” he said.
Charles Nifong, president and CEO of CrossAmerica, told investors on the retailer’s Nov. 5 earnings call that the company’s merchandise gross margin percentage was up strongly over the prior year, approximately 100 basis points.
This was primarily due to “strong” growth in certain higher margin categories like OTP, Nifong said, according to a transcript from AlphaSense.
- Murphy USA is No. 4 on CSP’s 2025 Top 202 ranking of U.S. convenience-store chains by store count. GPM Investments is No. 7 and CrossAmerica is No. 24.
Strong promotional activity in traditional smokeless products also drove double-digit margin growth in Murphy USA’s third-quarter 2025 financial results, the convenience-store retailer reported Oct. 30.
“Total merchandise margin contribution dollars were up 11.3% as same-store inside sales and margin comparisons turned positive, driven by exceptional performance in the nicotine space,” Murphy USA’s CEO Andrew Clyde said in a statement.
During the question-and-answer session of the call, current COO Mindy West, who will replace Clyde as CEO on Jan. 1, said that nicotine pouch volumes were growing around 45% through promotion.
“In October, we have seen that jump to 120% of prior year volumes, and we will likely see that halo effect continue on into November,” West said.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.