Couche-Tard Highlights Foodservice & Loyalty Programs in Challenging Q4 FY24
LAVAL, Quebec — Alimentation Couche-Tard Inc. reported some bright spots in the fourth quarter of its fiscal year 2024, including growth in loyalty and success in foodservice.
"No doubt this was another challenging quarter with persistent inflation and continued pressure on consumers who are carefully watching their spending. However, we believe this is transitory and we remain very optimistic about our business," said Couche-Tard President and CEO Brian Hannasch during the company's earnings call on June 26.
"Even with recent softness in same-store sales, overall they've been steadily growing globally over the last two years, particularly in the U.S., which saw a 2.8% growth on a two-year stack for the quarter," he added.
His remarks came after he announced that he was retiring from Couche-Tard after 25 years with the Laval-based convenience company. Effective Sept. 6, he will hand the leadership role to Alex Miller, currently chief operating officer. Hannasch will remain as special advisor to the board of directors for the next couple of years, with a focus on mergers and acquisitions.
Loyalty
In the face of continued pressures on consumers, Couche-Tard delivered value to its customers and saw its Inner Circle loyalty program reach more than 6.3 million fully enrolled customers as it ended fiscal year 2024.
"Across the 30 states with the membership program, we're seeing visit frequency and spends per member growing consistently month over month," Hannasch pointed out. "Florida, which is our first business unit on the program, finished its inaugural year with about 20% of customer transactions linked to our Inner Circle program."
In Europe, the updated Extra loyalty program ended the year with strong key metrics across the board. "Nearly half of all fuel volume is coming through extra, and merchandise penetration is also seeing year-over-year growth with close to 30% of our merchandise sales attributed to Extra members," the chief executive said.
"The program has just launched in Ireland and we're exploring ways to expand it into our new European countries. Both programs enable us to offer personalized value to our most important customers," Hannasch added.
Food & Drink
Couche-Tard is also growing its Fresh Food, Fast program — in both reach and offerings. The foodservice platform is now available in nearly 5,800 Couche-Tard locations globally, and according to Hannasch, the company's operations teams continue to focus on improving profitability and reducing spoilage. To that end, the company implemented a new production planning tool that improves the accuracy of forecasting, allowing our store teams to better identify what products are needed and at what times of the day.
"We're seeing strong sales and satisfaction with our freshly prepared cookie program, and we've introduced some great [limited-time offers], including our Kong Breakfast Slamwich with triple meat and double cheese this quarter," he said. "We've also completed the rollout of our global digital food safety program, which earned a Foodservice Innovator of the Year industry award recently."
Convenience Store News named Couche-Tard the Silver Medal for executing the convergence of technology and foodservice operations goes to Alimentation Couche-Tard/Circle K. The retailer is a multiple Foodservice Innovators Award recipient, having won the top prize in 2020, as well as honors for hot beverages in 2016, 2021 and 2023, and cold and frozen beverages in 2018.
Additionally, the company launched several summer campaigns to drive traffic and deliver value. At participating locations in the U.S., customers can purchase any size Polar Pop and Froster for 79 cents. For Inner Circle members, the offer is 69 cents.
[Read more: Circle K Puts Dispensed Beverages in Summer Spotlight]
The parent of the Circle K banner also added exclusive Gatorade flavors called Lightning Blast, which has contributed to overall growth in sports drinks.
Forecourt
Even with some wins inside the store, Couche-Tard faced some struggles on the forecourt. As Hannasch reported, same-store road transportation fuel volumes decreased 1.6% in the U.S., 1.7% in Europe and 3.5% in Canada.
"In our fuel business, we have a strong leadership position across most of our markets and our margins remain healthy. We also continue to build value for our customers and businesses through the optimization of our supply chain globally," Hannasch said. "In this quarter, low market volatility persisted, which is not optimal for our results, but our supply trading logistics teams are working to find new opportunities to improve supply optionality and increase arbitrage capture."
Notable Q4 FY24 Numbers
For the fourth quarter of its fiscal year 2024, Couche-Tard Total reported merchandise and service revenues of $4.1 billion, a decrease of 1.7%. Same-store merchandise revenues decreased by 0.5% in the United States, by 2.0% in Europe and other regions, and by 3.4% in Canada, all impacted by constraints on discretionary spending due to challenging economic conditions for low-income consumers.
Merchandise and service gross margin remained stable in the U.S. at 34.1%, decreased by 1.7% in Europe and other regions to 39.2%, mainly due to the integration of certain European retail assets from TotalEnergies SE, which have a different product mix than the operations in Europe and other regions. Merchandise and service gross margin increased by 0.8% in Canada to 34.9%.
Couche-Tard is a global leader in convenience and mobility, operating in 31 countries and territories, with more than 16,700 stores, of which approximately 13,100 offer road transportation fuel. With its well-known Couche-Tard and Circle K banners, it is one of the largest independent convenience store operators in the United States, and it is a leader in the convenience store industry and road transportation fuel retail in Canada, Scandinavia, the Baltics, Belgium, as well as in Ireland. It also has an important presence in Luxembourg, Germany, the Netherlands, Poland, as well as in Hong Kong Special Administrative Region of the People's Republic of China.
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