Casey’s General Stores Readies to Enter Ohio
ANKENY, Iowa — Casey’s General Stores Inc. will soon open its first store in Ohio, which would mark the convenience store retailer’s entry into its 15th state, Terry Handley, president and CEO, stated Tuesday during prepared remarks following the release of its 2017 fiscal first-quarter earnings.
“Our second distribution center in Terre Haute, Ind., which became operational in February of 2016, opens new territory for future expansion,” the executive said. “The state of Ohio will mark the company’s 15th state of operation. We are excited about our future growth opportunities in both existing and new markets.”
Regarding earnings, prepared food and fountain sales, as well as same-store fuel gallons sold, helped drive Casey’s to a net profit of $67.4 million in its 2017 fiscal first quarter, an increase of more than $5 million year over year.
Prepared food and fountain sales were definitely a positive outlier for the quarter ended July 31. Same-store sales in this category increased by 5.1 percent with an average margin of 62.8 percent. Conversely, Casey’s set a goal of same-store sales increasing in this category by 10.2 percent for its entire fiscal year.
Overall, prepared food and fountain sales increased by 9.1 percent year over year to $243.7 million, while total gross profit dollars were up 9.6 percent to $153.1 million.
“Although many retailers in the foodservice industry have reported a recent softening in traffic, we continue to see strong sales lifts from stores that recently implemented one or more of our growth programs,” said Handley. “The first-quarter margin was above goal primarily due to lower commodity costs driven by the favorable cheese price locked in through December 2016.”
Fuel gallons sold were also a strong point. Same-store gallons sold were up 3.1 percent in Casey’s 2017 first quarter, with an average margin of 19.5 cents per gallon. Both figures surpassed company expectations.
Total gallons for sold for the quarter increased 6.9 percent to 536 million gallons.
“Same-store gallons sold continue to benefit from lower retail fuel prices and increased miles driven throughout the country,” Handley noted.
On the flip side, same-store grocery and other merchandise sales were up 4.7 percent with an average margin of 31.6 percent, both falling shy of company expectations.
Total grocery and other merchandise sales were up 7.5 percent in Casey’s 2017 first quarter to $566.2 million, while gross total gross profit dollars rose 4.4 percent to $179.1 million.
“Same-store sales for the grocery and other merchandise category fell below goal due in part to a deceleration of cigarette sales from [the] prior year,” said Handley.
One factor weighing on every convenience store retailer’s balance sheet is rising operating expenses. Casey’s was not immune, with operating expenses rising 10.8 percent in its latest quarter to $292.1 million. However, Handley stressed this rising expense was expected.
“The increase was in line with our expectations, and primarily driven by operating more stores this year compared to the same period one year ago, as well as the continued rollout the various growth programs,” he relayed.
For fiscal 2017, Ankeny-based Casey’s goal is to build or acquire 77 to 116 c-stores, replace 35 existing locations and complete 100 major remodels. Six major remodels were completed in its first quarter, three stores were acquired and 39 new stores are currently under construction.