Couche-Tard Back on the Acquisition Hunt

LAVAL, Quebec -- Alimentation Couche-Tard Inc. has gained financial flexibility every month since its acquisition last year of European convenience store chain Statoil Fuel & Retail ASA. Now, the retailer has the leverage to make more acquisitions, company leaders reported during its 2014 fiscal first-quarter earnings call.

"We are currently analyzing acquisitions. Some seem promising," said President and CEO Alain Bouchard.

The operator of 6,211 sites in North America and Canada is looking at acquisitions on both continents, but some opportunities are "too pricey" for the c-store retailer, the chief executive said, repeating during the call that Couche-Tard does not discuss any specifics regarding potential acquisitions.

The company’s quarterly earnings were heavily discussed, though. For the period ended July 21, Couche-Tard achieved a net profit of $255 million, a 147-percent increase vs. the same period a year ago. Some of the earnings boost came from the fact that Statoil contributed earnings for the entire quarter vs. only 10 days in the year-ago period.

Regarding U.S. stores, same-store merchandise revenues rose 2.7 percent year over year. Bouchard cited a tiered pricing model for the improvement. However, he noted this strategy would only be temporary because the merchandise revenue advancement came at the expense of margins.

"It did reduce our margins, but we believe [tiered pricing] was the right thing to do in the short term to support long-term growth," he stated.

Same-store fuel volumes were up 1.2 percent in the United States, with fuel margins coming in at 19.42 cents per gallon.

Companywide, Couche-Tard was helped in its latest quarter by significant cost savings resulting from the assimilation of Statoil into its business. In addition, promotions and sharing of best practices led to strong results at the company's Statoil European division, according to Bouchard.

In fact, the c-store retailer was so pleased with its latest results that it increased its quarterly dividend by 16.7 percent.

Laval, Quebec-based Alimentation Couche-Tard operates under the Circle K banner in the U.S. and the Mac's Convenience Stores banner in Canada. In addition to its 6,211 company-operated stores as of July 21, Couche-Tard controls the real estate and franchises its names to an additional 2,274 locations worldwide.

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