Casey's Reports Mixed Results

Casey's General Stores Inc. yesterday reported mixed results for the fourth quarter where sales jumped 3.6 percent to $462.1 million, but gross profit dropped 2.3 percent to $78.8 million.

Overall for the year, the chain said sales were up 16.7 percent to a record $1.9 billion. However, gross profit was up 11.5 percent to $362.9 million.

"To understand the effects of the third and fourth quarters on year-end results, shareholders should look at what impeded progress toward our annual goals," said Casey's Chairman Donald Lamberti.

The performance goals were to increase gasoline gallons sold 10 to 12 percent with an average margin of 10.5 cents per gallon, increase inside sales 15 percent and the average margin on those sales 100 basis points, and keep operating expenses under 14 percent of sales.

Casey's President and CEO Ronald Lamb said fuel margins fueled the drop in gross profits. "In the second quarter, we began experiencing the impact of high gasoline prices on sales overall. In the third quarter high prices were accompanied by an unusually severe winter across our entire operating territory that lowered sales at the pumps and inside our stores," he said.

Fourth-quarter gallons sold at an average margin of 7.8 cents were up less than 1 percent. For the year, they were up only 2.1 percent at an average margin of 11.1 cents. "On a positive note," Lamb said, "gas volume rebounded the last two weeks of April and reached record levels during the first five weeks of fiscal 2002."

Reduced traffic at the pumps affected inside sales, which rose a less-than-expected 5.6 percent. "Imagine what inside sales could have done absent bad weather and reduced demand for gasoline," Lamb said. "We expect to see significant growth by the end of September when we've rolled out merchandise resets to all our stores."

On a high note, retention of managers, a key component in improving store results and containing
expenses, has improved, Lamb said. "Turnover was down 8 percentage points for the year," he said. "We'll continue improving our retention numbers for store managers and employees in 2002."
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