Casey's Reports Drop in Profit

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Casey's Reports Drop in Profit

ANKENY, Iowa -- Due to a difficult gasoline market for the first quarter of 2007, Casey's General Stores saw a 19 percent decrease in first quarter profit for 2007 versus the first quarter of last year. Quarterly net earnings fell to $16.9 million, from the first quarter of 2006 net earnings of $20.8 million.

"The gasoline market was a challenge for the entire convenience industry … For us, higher retail prices constrained gallons sold and raised bank charges related to credit card use 46.9 percent while record wholesale prices dampened the margin," said Casey's president and CEO Robert J. Myers.

But Myers assured that the losses will not last. "Our recent agreement to acquire up to 33 HandiMart stores will raise our earnings potential over time," he said. In addition, for the first quarter of 2007, "our same-store customer count grew and total sales were up in all three of our business categories."

In the gasoline category, same-store gasoline sales were down 2.9 percent, versus an increase of 7.7 percent for the same period last year. The average margin also decreased to 9.8 cents, versus last year's 11.8 cents. Gross profit from gasoline totaled $28.5 million, a decrease from the first quarter of 2006 gross profit of $33.9 million. "We were up against difficult quarter-to-quarter comparisons, and high retail prices affected customer demand," Myers said. "We'll continue to mitigate market pressures by pricing with the local competition and taking advantage of purchasing and delivery efficiencies."

Prepared food and fountain drinks showed positive trends in this quarter, with same-store sales up 9.5 percent from a 7.2 percent increase for the same period last year. Total sales also increased 14.5 percent to $65.8 million and gross profit increased 12.5 percent to $41.4 million. The positive growth for the category is contributed to an expanded fountain program. "The $4.6 million gross profit increase is a sure sign we matched customer preferences and gained from it," Myers said.

Grocery and other merchandise also grew this fiscal quarter, with total sales of $226.1 million and a gross profit of $72.9 million. Same-store sales for the category increased 2.3 percent and total inside gross profit increased nearly 10 percent. These increases are attributed to effective use of POS data and operational decisions that drive gross profit, according to Myer.

Goals for fiscal 2007 include a 2 percent growth of same-store gasoline sales with an average margin of 10.8 cents per gallon. Prepared food and fountain goals for 2007 are an increase of same-store sales of 7.9 percent with an average margin of 63.4 percent. Goals in the grocery and other merchandise categories include an increase same-store sales by 3.9 percent with an average margin of 32.2 percent.

Casey's also has plans to acquire 50 more stores for the fiscal 2007 year in addition to 10 new-builds.