Couche-Tard to Continue Robust Acquisition Pace
LAVAL, Quebec -- Alimentation Couche-Tard Inc. will continue to look at all acquisition possibilities, President and CEO Alain Bouchard stated during the company's 2013 fiscal third-quarter earnings call.
"Growth through acquisitions is an interesting part of our strategy," Bouchard relayed during today’s call, noting that Laval, Quebec-based Couche-Tard, owner and operator of 6,216 convenience stores, is likely to close on smaller U.S. acquisitions -- which he defined as 10 to 50 stores -- throughout the remainder of the 2013 calendar year. No further details were provided.
As for completed acquisitions, the parent of Circle K stores in the United States purchased 52 stores in its fiscal third quarter ended Feb. 3, and constructed 15 new stores. Since Feb. 3, Couche-Tard acquired an additional 29 stores, including 25 locations from Dickerson Petroleum Inc..
Acquisitions helped Couche-Tard earn a net profit of $142.5 million in its latest quarter, an increase of $55.7 million compared to the same time period in 2012. Strong foodservice sales and acquisitions were the primary reasons cited by Raymond Parè, Couche-Tard's vice president and chief financial officer. "Foodservice more than offset lower cigarette margins [in our latest quarter]," he said. "Same-store merchandise sales increased 2.6 percent in the U.S. and we had a 33.2-percent merchandise and service gross margin."
Citing the strength in foodservice sales, the c-store operator will expand its fresh food offer and introduce new food-related products in the near future, Bouchard added.
Meanwhile, although in-store traffic was down at U.S. stores in its latest quarter, the chief executive was pleased to reveal that the average basket ring was higher. "We're positive about the next few months in the U.S. as consumer sentiment improves," he stated.
Fuel profits were another source of strength. Couche-Tard reported $227 million in U.S. fuel gross profits in its latest quarter vs. $171.4 million in its 2012 third quarter. U.S. fuel margins reached 17.8 cents per gallon in the company's most recent quarter.
Regarding the one negative on Couche-Tard's balance sheet – cigarettes -- Bouchard said he does not see any near-term solution to boost cigarette margins throughout all of its stores in North America and the European locations it acquired last year from Statoil Fuel & Retail ASA. However, the c-store chain's Crown private-label tobacco brand is performing extremely well thus far in the United States and will remain an "integral part" of Couche-Tard's strategy, he explained.