Casey's General Stores 1Q Profit Surges

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Casey's General Stores 1Q Profit Surges

ANKNEY, Iowa -- Casey's General Stores Inc. unveiled record quarterly results as it benefited from strong gasoline margins and better profitability inside its stores.

The chain of approximately 1,475 corporate convenience stores earned $44.2 million in the three months ended July 31, 2009. A year earlier, Casey's earned $28.8 million.

For the most recent quarter, revenue fell 24 percent to $1.19 billion. The company brought in $1.57 billion a year earlier.

Casey's beat its annual goal of increasing same-store gasoline gallons sold 2 percent with an average margin of 11 cents per gallon. The quarter's same-store gallons sold were up 3.2 percent with an average margin of 15.7 cents per gallon. The average retail price per gallon was $2.35, down 38 percent from the same period a year ago.

"We believe lower retail prices were a factor in exceeding our same-store sales goal," said President and CEO Robert J. Myers. "Our gasoline margin continues to benefit from a more responsive pricing environment."

Total gallons sold rose to 335.8 million from 318.2 million; gross profit was $52.7 million compared with $49.6 million.

"Lower retail fuel prices also brought about significant relief in our operating expenses," he noted.

Inside, grocery and other merchandise same-store sales for the quarter were up 6.4 percent, with an average margin of 34.3 percent, compared to 34 percent last year. Gross profit rose 9.2 percent to $102 million.

"We are pleased with this category's performance despite experiencing one of the coldest summers on record, which particularly affected beverage and beer sales," Myers said. "The gain in gross profit was primarily due to higher cigarette revenue attributable to the federal excise tax increase, along with an improved pack vs. carton sales ratio." Total sales were up 8.4 percent to $297.4 million.

In the area of prepared food and fountain drinks, same-store sales for the quarter were up 6.6 percent and the average margin was 63.8 percent, up approximately 330 basis points from the prior year.

"Lower cheese costs, which we have locked in through October, helped increase total gross profit in this category more than 17 percent from the same period a year ago," Myers said. "We expanded our coffee and fountain offerings and continue to roll out our made-to-order sub sandwich program."

Total sales for the category increased 11.1 percent to $95.2 million.

For the quarter, operating expenses declined 0.3 percent to $132.4 million.

"Credit card fees and transportation costs combined were down nearly $5 million compared to the first quarter a year ago," Myers noted. "We are encouraged by the great start to fiscal 2010 and will remain diligent in our efforts to control expenses throughout the year."

As for store expansion, Casey's goal for fiscal 2010 is to increase the total number of units 4 percent. By the end of the first quarter, the company opened five newly constructed stores and replaced five stores. There were no acquired stores opened during the quarter.

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