At 7-Eleven, Thank Heaven for Gasoline Revenue

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At 7-Eleven, Thank Heaven for Gasoline Revenue

DALLAS--7-Eleven Inc. reported that core earnings, which exclude non-operating items, grew 53.3 percent to $66.3 million, or 52 cents per diluted share, for the quarter ended Sept. 30, 2005. This compares to core earnings of $43.2 million, or 35 cents per diluted share, for the third quarter of 2004. Net earnings for the third quarter of 2005 were $68.3 million, or 53 cents per diluted share, compared to $44.2 million, or 36 cents per diluted share a year ago.

Total revenue for the third quarter was $3.8 billion, an increase of 17.2 percent. This increase was driven by a 37.5 percent increase in gasoline revenue and a 6.7 percent increase in merchandise sales. Total merchandise sales increased to $2.3 billion, driven by a 4.9 percent increase in U.S. same-store merchandise sales. Categories that contributed to the merchandise sales increase for the quarter included fresh food, hot and cold beverages, cigarettes and services.

"7-Eleven's ability to adapt to changing consumer needs has contributed to 36 consecutive quarters of increased U.S. same-store merchandise sales," said Jim Keyes, 7-Eleven, Inc.'s president and CEO. "This sustained merchandise sales record demonstrates the effectiveness of our Retailer Initiative merchandising strategy."

For the third quarter, merchandise gross profit grew 6.5 percent to $817.0 million. Merchandise gross profit margin decreased by 8 basis points to 36.15 percent compared to the prior-year quarter. This decrease was primarily due to changes in mix.

Total gasoline gallons sold for the third quarter rose to 582.0 million, with average gallons sold per store growing 0.9 percent. Gasoline gross profit was a record $120.8 million, an increase of 46.3 percent over the third quarter of 2004. Expressed as cents-per-gallon, the company earned a gasoline margin of 20.8 cents in the third quarter of 2005, versus 14.4 cents in the same quarter a year ago.

"During a period of extreme volatility in wholesale gasoline costs, we produced gallon growth as well as record gasoline gross profit and cent-per-gallon margins by proactively managing our retail prices throughout our system," Keyes said.

During the third quarter of 2005, 7-Eleven invested approximately $75.2 million in capital expenditures. The company anticipates that capital expenditures for 2005 will be in the range of $390 to $430 million, and expects to open around 90 to 95 stores during 2005. As of Sept. 30, 2005, the company and its franchisees operated 5,818 stores in the United States and Canada, with the global 7-Eleven store count reaching 28,993 stores.