Casey's Hits Value Creation Plan Targets in Third Quarter
ANKENY, Iowa — One year ago, Casey's General Stores Inc. put its value creation plan into action and, according to President and CEO Terry Handley, the convenience store retailer is on schedule in the execution of its long-term strategic blueprint.
The multi-year, long-term value creation plan is comprised of several key programs and value drivers, including a new fleet card program, retail price optimization, a new suite of digital platforms for its customers, as well as a continued focus on controlling operating expenses and capital allocations.
"We are confident these key areas of focus will drive accelerated growth and profitability, and deliver increased returns for shareholders. We have completed several key milestones over the course of the last quarter," Handley explained March 12 during the company's earnings call for its third quarter of fiscal year 2019.
In late October, Casey's launched a new fleet card program. Early results show the retailer is on target for adding new accounts and cardholders. Currently, the program has approximately 960 accounts, with more than 5,700 cards issued.
However, Handley acknowledged that utilization of these cards is ramping up slower than expected, partially due to the timing of the launch toward the end of the 2018 calendar year.
"Our fleet card partner continues to leverage their expertise by utilizing additional marketing campaigns for new members, as well as an ongoing buildup of their staff team. In conjunction with this new rollout, we continue to engage universal card providers as part of the overall approach to our fleet card strategy," he said, adding that Casey's remains optimistic about the potential of the fleet card program.
At the same time, Casey's is moving forward with its digital engagement program, reaching several key milestones over the past quarter. One milestone is the development of an e-commerce platform, which is in the middle of systems integration testing.
Upon successful completion of user acceptance testing, Casey's is targeting a new site launch during the fourth quarter of the current fiscal year, according to Handley.
Work also continues on a new mobile app and loyalty program. The company plans to pilot these platforms in the first quarter of fiscal 2020.
Pending the outcome of these pilots, Casey's will expand these platforms to customers in the second quarter of fiscal 2020.
"The integration of the new suite of digital platforms, including e-commerce, will create a seamless customer experience — both online and in-store — that enhances our digital capabilities and facilitates personalized marketing and rewards," Handley said.
"This digital platform will allow us to gain a better understanding of our customers and better serve them by providing value and targeting effective promotions that will drive additional customer visits," he added.
Looking at its capital allocation strategy, Casey's is prioritizing investments with attractive return profiles. This includes its value creation initiatives, as well as disciplined store growth through new construction and strategic acquisition opportunities.
At the beginning of the 2019 fiscal year, Casey's store growth target was 60 new-store builds and at least 20 acquisitions. At the nine-month mark, it has opened 41 new stores, acquired 13 stores and has 17 additional stores under agreement for purchase.
"We remain well-positioned for future growth. Currently, we have 133 stores in our pipeline, including 48 under construction," Handley said. "We are on track to achieve our overall unit growth target; however, due to the recent inclement weather, we may have a handful of new-store constructions roll over into May."