LAVAL, Quebec — Alimentation Couche-Tard Inc.'s foodservice platform is helping to boost the company's financials as consumers look for value during these inflationary times.
"We had strong performance in convenience with solid same-store sales, particularly in the U.S. market, which had very strong growth in food and solid growth in all of our categories with the exception of traditional combustible nicotine," President and CEO Brian Hannasch said during the company's earnings call for the second quarter of its 2023 fiscal year.
Same-store merchandise revenues increased by 5.6 percent in the United States and 2.9 percent in Europe, and decreased 1.5 percent in Canada compared to the same quarter last year.
Even though Canada saw revenues dip, the region is up single digits when tobacco is excluded, Hannasch pointed out.
"No doubt, the consumer continues to be pressured from rising prices, and we are focused on balancing providing good values to them while recovering the inflationary impacts on our business," he explained.
Across Couche-Tard's network, its Fresh Food, Fast program was up more than 20 percent in same-store sales, and continues to grow across the company's 4,200 stores globally.
During the second quarter, Couche-Tard launched $5 Pizza Fridays across many of its markets, whereby consumers can purchase both Hot to Go or Take-and-Bake pizzas for $5 on Fridays.
"This, as well as our focus on the sale of fresh-baked cookies, are becoming popular items to our customers seeking value, bringing new and returning customers to our stores more frequently and driving overall growth," Hannasch said.
In the dispensed beverages category, the retailer is seeing growth within both its cold and frozen beverage segments. One highlight in particular is its proprietary Dew Purple Thunder, which saw more than 8 million cups sold by the end of the second quarter.
The Circle K Sip & Save beverage subscription program is driving trips, enhancing basket size and attracting new users, according to Hannasch. Couche-Tard is the parent company of Circle K Stores Inc.
"With the ongoing inflationary pressures, more than 420,000 subscribers are seeking deals and see the good value offer in Sip & Save," he noted. "We have also continued to work to improve the online enrollment experience, and we are seeing a larger percentage of our customers automatically renewing and signing up online."
Couche-Tard also saw Q2 growth in the packaged beverages category, driven by strong dollar and unit growth across immediate consumption, carbonated soft drinks and energy drinks. In age-restricted beverages, beer sales continue to lead the category in the U.S. and Europe.
Q2 by the Numbers
Couche-Tard's net earnings were $810.4 million for the second quarter of fiscal 2023, compared to $694.8 million for the second quarter of fiscal 2022. Adjusted net earnings were approximately $838 million, compared to $693 million for the year-ago quarter.
The company reported total merchandise and service revenues of $4.1 billion, an increase of 2.3 percent. Merchandise and service gross margin increased by 0.2 percent in the United States to 34 percent, and by 0.9 percent in Canada to 33.2 percent. It decreased by 0.1 percent in Europe and other regions to 38.3 percent.
Laval-based Alimentation Couche-Tard operates in 24 countries and territories with more than 14,300 stores, of which approximately 10,900 offer road transportation fuel. With its well-known Couche-Tard and Circle K banners, it is one of the largest independent convenience store operators in the United States and is a leader in the convenience store industry and road transportation fuel retail in Canada, Scandinavia, the Baltics, as well as in Ireland.
The company also has an important presence in Poland and the Hong Kong Special Administrative Region of the People's Republic of China. Approximately 122,000 people are employed throughout its network.