MONTREAL – The owner of Mac’s, Couche-Tard and Circle K convenience stores says U.S. operations remained on a roll in its fiscal first quarter as lower fuel prices drove higher gasoline volumes and merchandise sales.
Alimentation Couche-Tard (TSX:ATD.B) said same-store U.S. fuel sales surged 9.4 per cent, marking the highest growth in almost a decade. Growth in merchandise sales for stores open at least a year remained above five per cent for the second consecutive quarter, the best performance in about seven years.
“Certainly globally we’re benefiting from lower fuel prices and it’s effectively a tax refund for our customers and, more in the U.S. than other markets, we’re seeing them be willing to spend it,” CEO Brian Hannasch said Tuesday in a conference call.
He said the company’s moves to develop its fresh food offering and private label products is reducing pressure to offer deep promotions to drive traffic into stores.
The company is expanding the availability of its own Polar Pop soft drink brand to hundreds of stores, adding locations that sell its gourmet coffee and working with a third-party supplier to fill shelves with fresh food in some markets. In Europe, the company introduced gourmet hot dogs in May to 650 locations in four countries.
Same-store sales in Canada and Europe lagged considerably.
Overall revenues decreased 2.2 per cent to US$8.98 billion from US$9.19 billion, due in part to the negative impact from the translation of Canadian and European sales into U.S. dollars. The decrease also reflected the sale of its European aviation fuel business.
Still, the Quebec-based company beat analyst expectations as net income was up almost 13 per cent to US$304 million from a year earlier despite lower fuel margins.
Couche-Tard earned 53 cents per diluted share for the 12 weeks ended July 19. That compared with 47 cents per share or US$269.5 million in the comparable prior-year period.
It benefited from a US$6.8-million currency gain in the quarter, compared with an US$8.7-million loss and US$500,000 goodwill impairment last year.
Excluding these fluctuations, Couche-Tard earned US$299 million or 53 cents per diluted share in adjusted profits, up from US$276 million or 48 cents per share in the first quarter of fiscal 2015.
Couche-Tard was expected to earn 46 cents per share in adjusted profits on US$8.81 billion of revenues, according to analysts polled by Thomson Reuters.
The company attributed the improved results to last March’s acquisition of The Pantry chain in the United States, strong merchandise and fuel volume growth in its existing network and cost controls. That was partially offset by lower fuel margins in the United States and the negative impact on revenues from a weaker loonie and European currencies.
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