Casey's Heightens Its Store-Growth Trajectory
ANKENY, Iowa — Despite a challenging year for the convenience channel, Casey's General Stores Inc. saw growth in its footprint, as well as its services.
Through fiscal year 2017, the Ankeny-based retailer completed 103 major remodels, and converted 89 locations to a 24-hour format and 161 stores to its pizza delivery format, Terry Handley, president and CEO, reported Tuesday during the company's fourth-quarter fiscal 2017 earnings call.
The growth brings Casey's operations to almost 1,000 24-hour stores, 580 pizza delivery stores, and 464 major remodeled stores.
During the year, Casey's also opened 24 new store constructions, completed two replacement stores, and acquired eight stores.
And it's not stopping there. Currently, the convenience store chain has five stores under contract for acquisition, as well as 27 new stores and 21 replacement stores under construction.
"We believe we are well positioned for future growth," the chief executive said.
Heading into fiscal year 2018, Casey's is gearing up for more new store construction. The company currently has 116 sites "under agreement" for new store construction. The retailer considers a site under agreement to be one with either a written contract or verbal agreement to purchase, Handley explained. The vast majority are written contracts; however, all agreements have contingencies that may trigger a site to fall off the list.
"We will be adding additional resources to store development this coming year to sustain our future new store construction pace at a higher level," Handley said. "And we will be further augmented by acquisition opportunities."
Casey's store count at the end of fiscal year 2017 was 1,978. "I am encouraged by the progress we have made over the past several quarters in this area," the CEO stated.
Looking toward fiscal year 2018, the retailer's guidance is to:
- Build or acquire 80 to 120 stores;
- Replace 30 existing locations;
- Complete 75 major remodels;
- Convert an additional 75 stores to a 24-hour format; and
- Add 100 additional stores to pizza delivery.
Another key area moving into the new fiscal year will be operating expenses. Casey's has already taken several steps, including suspension of its 25-cent automatic raise after 90 days. It's also implemented revised compensation guidelines establishing a tighter wage and merit budget, and placed a more strategic focus on advertising that has resulted in a reduction in advertising dollars spent.
"Operating expenses will be an area of focus as we head into fiscal 2018. With this in mind, we have created a task force dedicated to reviewing improvement opportunities," Handley said.
The retailer is also reviewing overtime and store-level budget hours, looking for ways to be more efficient, he said, noting that the company believes the combination of these factors could have the potential of eight-digit decreases in operating expenses next year.
"We recognize that fiscal 2017 was a challenging year, but we are excited about our long-term growth opportunities," Handley said. "We've taken steps to position ourselves for a higher store-growth trajectory and are beginning the early stages of several programs that we feel will sustain our positive same-store results history."