LAVAL, Quebec — Circle K parent Alimentation Couche-Tard Inc. is taking steps to optimize its portfolio, and that includes divestures, acquisitions and organic growth.
The company reviewed its asset base in the fall of 2020 and identified convenience stores that are no longer a strategic fit for the network, according to Chief Financial Officer Claude Tessier. As a result, Couche-Tard hung for-sale signs on 300-plus sites, and reached an agreement to sell 49 Circle K sites in Oklahoma to Casey's General Stores Inc.
The transaction with Ankeny, Iowa-based Casey's closed in late June. Located mostly in the Oklahoma City market, the stores acquired by Casey's offer Conoco, Phillips 66, Shell, Valero and Circle K branded fuels.
The other 300-plus stores are currently being evaluated by potential buyers, Tessier reported during Couche-Tard's fourth-quarter fiscal year 2021 earnings call, held June 30.
"We were optimistic on some of our high-value urban sites that were worth more to a buyer than [they] would have been for our operations, so we elected to divest some of those," he explained. "However, it's an ongoing process, and we are always looking for ways to optimize our network and to ensure that our stores are strategically relevant. And strategically relevant means we are focusing on sites that are able to represent our brand well and also can accommodate our commercial programs within the store."
Couche-Tard will continue to divest locations that are no longer a strategic fit and maintain a nimble network, Tessier added.
Committed to Growth
Growth is a key component of Couche-Tard's five-year plan, which calls for an even mix of organic growth and merger-and-acquisition (M&A) growth.
Uncertainties around the COVID-19 pandemic aside, Couche-Tard President and CEO Brian Hannasch said the company is on "the right on track to deliver the organic growth rates we planned for three years ago."
That organic growth includes rolling out the company's Fresh Food, Fast offer, implementing localized pricing, implementing fuel initiatives, and launching revamped and enhanced loyalty programs, he noted during the Q4 earnings call.
As for M&A growth, the chief executive said "the appetite is there."
"We have talked a lot about it in past quarters. The appetite is absolutely there. We have taken some big swings at acquisitions, big and small, over the past couple of years, but we have been concerned about valuation levels," Hannasch shared. "We are not going to do a deal for the sake of hitting this target. But at the same time, we remain optimistic that M&A can and will be a part of our growth story. It's part of our DNA. We are good at it."
Part of its M&A strategy included the late-2020 acquisition of Convenience Retail Asia Limited (Circle K HK). This $360-million deal marked Couche-Tard's entrance into Asia, as Convenience Store News previously reported.
"We've been very pleased to bring Hong Kong into the family — a lot of innovation, a lot of energy, a lot of culture there," Hannasch said. "Despite not being able to meet them in person since the acquisition, we've had some great conversations and they have added value back to us already.
"That said, we didn't buy that company to have 400 stores in Asia. It's part of a long-term commitment to try to grow in that part of the region and I think this is a platform for that," he continued.
Having a team in Asia gives Couche-Tard credibility as it looks at other opportunities in the region, according to the CEO.
"I'd say our focus right now would be in Southeast Asia. Countries like a Vietnam would be an example where we've got an emerging class with disposable income, which leads to modern retail meets the convenience," Hannasch noted.
Laval-based Couche-Tard currently operates in 26 countries and territories, with more than 14,200 stores globally.