Casey's Sees Fuel Category Rise on Price Optimization Moves

ANKENY, Iowa — Price optimization, both on the forecourt and inside the store, has been a key focus of Casey's General Stores Inc. since March 2018 when the convenience store chain set its value creation plan into motion.

The retailer anticipated its efforts would improve gross profit dollars across all categories and in its latest quarter, Casey's spotlighted positive results in the fuels category, crediting favorable fuel margins and its price optimization tool for lifting profits.  

For the second quarter of its 2020 fiscal year , the Ankeny-based retailer achieved an average fuel margin of nearly 23 cents per gallon, up from nearly 3 cents in the same period a year ago. As a result, gross profit dollars increased nearly 19 percent.

The average retail price of fuel during the period was $2.47 a gallon, compared to $2.73 a year ago. Same-store gallons sold were down 1.8 percent in the quarter, driven by Casey's efforts to optimize gross profit dollars in the category by striking the appropriate balance between gallon growth and fuel margin, according to President and CEO Darren Rebelez. 

"Despite the decline in the same-store gallons, total gallons sold for the quarter were up 3.4 percent to 614 million gallons due to the strong contribution from new stores opened in the last 12 months," the chief executive noted.   

Casey's completed the implementation of PriceAdvantage at all its convenience stores to assist in fuel price optimization in the 2019 calendar year. During its fiscal 2020 first quarter, the chain began integrating the tool directly with its point-of-sale system.​​​​​​

"Our effort in price optimization continues to have a positive effect on our fuel margin gains. By the end of this quarter, we anticipate to have all of our stores fully integrated at the point-of-sale with the PriceAdvantage tool," Rebelez said.

Casey's also currently has approximately 400 stores without a digital price sign. It expects to have those stores converted to a digital format by the end of this fiscal year.

"This integration and sign conversion will allow us to increase flexibility in adjusting retail prices to react more quickly to the changing fuel environment," the CEO said.

Rebelez also noted the company's progress in fuel procurement during the latest quarter.

"Currently, our contracted fuel volume represents about 37 percent of our total fuel volume. As we continue to build out this team, we expect to have approximately half of our overall fuel volume under contract by the end of the fiscal year," he explained.

Casey's continues to grow its fleet card business, another aspect of its value creation plan. In the second quarter, the retailer added more than 3,000 new cardholders to the program and now has 2,500 accounts and 15,500 cardholders.

"This, combined with our additional efforts in other types of fleet cards, has driven the universal fleet program up 8 percent in the second quarter," Rebelez shared. "We remain optimistic about the potential of all these initiatives going forward." 

Casey's General Stores operates more than 2,000 convenience stores in 16 states.