Casey's Goes All In on Pizza Delivery
ANKENY, Iowa -- Pizza delivery has been so successful for Casey's General Stores Inc. that the convenience store chain will dramatically ramp up the program, Chief Financial Officer Bill Walljasper said during the company's 2013 fiscal third-quarter earnings call this morning.
The Midwest chain added pizza delivery to 50 stores in its latest quarter, which ended Jan. 31, and will add the option to 50 more in the fourth quarter, ending April 30. At the end of April, Casey's is expected to offer pizza delivery in a total of 225 stores. And that's just the beginning.
"We haven't made our projections for our  fiscal year yet. But we want to double the number of stores adding pizza delivery," Walljasper relayed.
Casey's will also consider offering more menu options through its pizza delivery service, aside from just pizza and two-liter sodas.
In addition to expanding its pizza delivery, the retailer is expanding its store count, too. Store openings and acquisitions was another aspect Walljasper highlighted during today’s call. The chain opened 10 new stores in its third quarter and acquired 18 more. Casey's operated a total of 1,731 corporate c-stores as of Jan. 31.
Looking ahead, Casey's currently has 21 new stores under construction and is remodeling another 12 locations, according to the CFO.
Companywide, Casey's latest quarterly earnings declined to $15.46 million vs. a $16.69-million net profit during the same timeframe in 2012. Walljasper attributed the earnings shortfall exclusively to a challenging cigarette environment.
However, he noted that most every other aspect of Casey's business is running on all cylinders. Especially strong in this latest quarter were prepared food and fountain sales. The Ankeny, Iowa-based company achieved an 11.6-percent same-store sales increase in this category, with an average margin of 60.6 percent. Both numbers approached or surpassed company projections.
Fuel margins were also solid in Casey's third quarter. They rose to 13.8 cents per gallon, compared to 13.6 cents in 2012's fiscal third quarter.
During today's conference call, Walljasper was also asked to address the possibility of Casey's spinning off assets into a master limited partnership (MLP) or converting into a real estate investment trust (REIT). He responded to both questions by stating that Casey's board of directors "looks at all strategic alternatives" for the company.
Regarding an MLP, he did note that Casey's is different than Susser Holdings Corp., a fellow convenience store chain that recently spun off assets -- including its logistics and wholesale fuels operations -- into an MLP named Susser Petroleum Partners LP, because Casey’s is not a wholesaler fuel provider. But he did not rule out an MLP structure as a future possibility.
As for becoming a REIT, Walljasper acknowledged that it would be difficult to do so because of the configuration of Casey's debt position.