EL DORADO, Ark.– New payment structures for tobacco manufacturers’ promotional dollars have apparently triggered new energy among Murphy USA employees, with executives saying a switch from merely participation to a results-based payment schedule motivated store-level staff.
On the El Dorado, Ark.-based Murphy USA’s latest quarterly earnings call, Andrew Clyde, president and CEO, said employees “crushed it” in the tobacco category, tying the results to manufacturers' change in how they dole out promotional dollars.
“When the stores and the associates deliver results, you get paid for it and that just allows us to give more value to customers,” Clyde said, “so we gain share even in some declining categories.”
While the tobacco category continues on its general rate of decline, price increases have helped with margins, he said. Traffic counts have also improved in recent months as well, giving a boost to multiple categories, including cigarettes, smokeless and other tobacco products.
Commenting about the U.S. Food and Drug Administration and its recent efforts to reduce teen use of flavored tobacco products, Clyde said the chain had an “exemplary record” regarding age verification. With regard to potential changes such as raising the legal purchasing age of tobacco products from 18 to 21 nationally, Clyde said he did not see any “material impact” on the company and saw no evidence that 21-and-older retailers such as tobacco stores and vape shops did any better at adhering to age-restriction policies than convenience stores.
Clyde also did not foresee any action on flavored vapor products having an effect on Murphy's business. He described such flavored items as representing a “small subset” of total vapor products that Murphy sells; however, “I expect the industry will fight pretty hard [against] any efforts to try to take products out of the convenience-store channel,” he said.