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Circle K's Global Brand Relaunch Well Underway

LAVAL, Quebec — Despite only announcing two months ago that it would launch a new worldwide Circle K brand, the transformation is already well underway.

Sites sporting the new look are open in Illinois, Brian Hannasch, president and CEO of Circle K parent company Alimentation Couche-Tard Inc., revealed Tuesday during its 2016 fiscal second-quarter earnings call.

The chief executive added that a total of 60 sites will convert to the new Circle K brand by the end of this calendar year.

Then in January, conversion of the approximately 1,500 convenience stores Couche-Tard acquired from The Pantry Inc. in the Southeastern United States will begin. These stores currently carry the Kangaroo Express banner.

In regards to the newly rebranded Illinois sites, Couche-Tard’s top exec said it is too early to gauge customer feedback, but the company did a massive amount of research to make sure Circle K would be a strong global brand.

“From talking with people at our stores and support offices in North America and Europe, I can see our global family of merchants already beginning to embrace our new identity and the three pillars of change it builds on. They are on the way to becoming a mantra: fast and friendly service, easy visits, and products for people on the go.”


No matter what brand Couche-Tard uses at its U.S. retail stores, the registers continue to ring at breakneck pace. In its 2016 fiscal second quarter, all pertinent metrics regarding both merchandise and fuel sales at its U.S. convenience stores were better than the same period a year ago.

Same-store U.S. merchandise sales rose by 5.2 percent year over year, led by Laval-based Couche-Tard’s strong fresh-food offer. The Pantry division provided excellent contributions to U.S. merchandise sales, Hannasch reported.

Total U.S. merchandise and service revenues reached $1.748 billion for the 2016 fiscal second quarter ended Oct. 11, compared to $1.19 billion in the prior-year period. U.S. merchandise and service gross profits totaled $578 million, a significant increase vs. $390 million during the same period in 2014. U.S. merchandise and service gross margin percentage increased slightly to 33.1 percent.

On the fuel side, U.S. same-store fuel volumes were even better, rising 7.4 percent year over year. U.S. fuel revenues increased by more than $260 million to $3.985 billion, while fuel profits enjoyed a banner quarter, advancing by $163 million to $432.8 million. U.S. fuel gross margins also saw a strong rise, improving by nearly 1.5 cents per gallon to 25.66 cents per gallon.

“The U.S. continues to perform better than most of the rest of our geography with miles traveled very strong,” relayed Hannasch. “Premium fuel [sales] have been a surprise for us. They have been robust across all markets.”

Excluding non-recurring items, Couche-Tard reported a net profit of $375 million for its 2016 fiscal second quarter, compared to a profit of $313 million in the prior-year period.


Also during Tuesday's call, Hannasch stressed that the integration of the The Pantry c-stores has been positive, and the company has a strong balance sheet that allows it to seek further acquisitions.

“The integration of The Pantry has gone well and is no barrier to M&A [mergers and acquisitions],” he said.

Hannasch also noted Couche-Tard continues to search for a new chief financial officer on both an internal and external basis to replace Raymond Paré, who recently left the company.

The c-store retailer, which had 7,794 company-operated convenience stores worldwide as of Oct. 11, expects to name a new CFO by early January.

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