Higher Inside Sales Drive Casey's to a Strong Q1 FY24

ANKENY, Iowa — Casey's General Stores Inc. kicked off the next leg of its strategic plan with a strong first quarter, marked by an uptick in inside sales.

For the first quarter of its 2024 fiscal year, Casey's saw inside sales drive inside gross profit dollars up more than 10 percent to $556 million. The company generated $169 million in net income, an increase of 11 percent, and $316 million in EBITDA, an increase of 8 percent from the prior year. 

Chairman, President and CEO Darren Rebelez reported during the company's earnings call on Sept. 12 that the Ankeny-based convenience retailer saw notably strong performances in whole pizza pies and bakery, as well as alcoholic and nonalcoholic beverages.

"Our team, with support from our supplier partners, continues to find the right product mix and promotional activity to drive sales and profitable results, he said.

Additionally, same-store prepared food and dispensed beverage sales were up 5.9 percent, or 14.8 percent on a two-year stack basis, with an average margin of 58.2 percent. Helping fuel those numbers was the introduction of thin crust pizza in June. Well-known for its pizza program, Casey's is the fifth largest pizza chain in the United States.

"This addition to the lineup has been a great success and demonstrates the blueprint for innovation at Casey's. Our guest insights team identified a gap in our menu. Our culinary team created a delicious product. Our marketing team worked with our advertising partner to create a great marketing campaign and, ultimately, our operations team brought [it] to life in our stores and communities across our footprint," Rebelez said. "I think the results speak for themselves. This type of strategic innovation and teamwork is something that will help us achieve our goals for the three-year strategic plan."

[Read more: Casey's Focuses on Food as It Maps Out Future Growth]

Same-store grocery and general merchandise sales also ticked up, recording a 5.2 percent increase for the quarter, or a 11 percent increase on a two-year stack basis, with an average margin of 34.1 percent.

In beverages, Casey's saw "fantastic results" in the energy drink segment, and alcoholic beverages performed well as the retailer continues to leverage its competitive advantage of having approximately 1,500 stores with liquor licenses, the chief executive said.

On the forecourt, same-store gallons sold increased 0.4 percent with a fuel margin of $0.416 per gallon. "Our fuel team is striking the right balance between margin and gallon volume and the results speak for themselves," Rebelez added. "This quarter marks the ninth quarter in a row with fuel margins above $0.345 per gallon and four of the last five quarters have been over $0.40 per gallon."

Overall, total revenue for the quarter was $3.8 billion, a decrease of $585 million or 13 percent from the prior year due to the lower retail price in fuel, according to Chief Financial Officer Steve Bramlage. Total inside sales for the quarter were $1.4 billion, an increase of $103 million or 8 percent from the prior year.

Notable Highlights

Beyond the Q1 numbers, Rebelez called out notable highlights from the past few months:

• An agreement to acquire 62 c-stores from EG America, a subsidiary of EG Group;
• The unveiling of Casey's refreshed app; and
• The growth of Casey's private label lineup. 

"We're off to an extremely strong start to our fiscal year in our three-year strategic plan. Our M&A [merger and acquisition] and real estate teams have been hard at work as we're very excited about the pending acquisition with EG Group and their 63 stores in Kentucky and Tennessee," Rebelez said. "These stores are located in rural and suburban markets, and we look forward to bringing more of our delicious pizza to Kentucky and Tennessee. It is complementary to our existing footprint and within our distribution center's radii, further leveraging our scale and infrastructure."

In August, Casey's reached a deal to acquire the 63 stores, which currently operate under the Minit Mart and Certified Oil banners, from EG America. The two retailers expect the transaction to close later this year subject to customary regulatory approvals.

In late spring, Casey's launched an enhanced mobile app experience for its loyalty program, which includes a refreshed design that makes it easier for Casey's Rewards members to track their points, redeem rewards and see how much money they've saved by shopping with the program.

"The program is nearing 7 million members, and we're excited to see the way our value proposition is resonating across the Midwest," Rebelez said. "Our guests have also gravitated to our private label products and we exited the quarter approaching 350 items in the assortment with over 40 new items in the pipeline for the remainder of the calendar year."

According to the chief executive, the retailer's private label lineup achieved nearly 10 percent unit share and more than 10 percent gross profit share in the first quarter, with same-store sales up 26 percent.

Casey's closed out Q1 FY24 with 2,536 convenience stores in its network. It sits in the No. 3 spot on the 2023 Convenience Store News Top 100 ranking.