Couche-Tard On the Hunt for More Acquisitions
LAVAL, Quebec -- Despite adding more than 2,300 convenience stores in the past six months, Alimentation Couche-Tard Inc. continues to search for small- to mid-sized acquisitions in North America and Europe, CEO Alain Bouchard said today during the company's 2013 fiscal second-quarter earnings call.
Bouchard did expand on any possible deals that could be in the works.
Earlier this year, Couche-Tard acquired Statoil Fuel & Retail ASA, operator of 2,301 c-stores throughout Scandinavia, Poland, the Baltic countries and Russia. In its latest quarter, ended Oct. 14, the parent of Circle K in the United States purchased 29 Florida c-stores from Florida Oil Holdings LLC and added 13 stores in individual transactions, Bouchard noted.
Couche-Tard complemented these acquisitions by also opening 14 new stores in its 2013 fiscal second quarter. The company now has a total of 6,172 convenience stores throughout North America, including 4,590 stores with road transportation fuel dispensing.
As for its latest earnings report, Couche-Tard achieved net income of $167.6 million in its 2013 Q2, a 46.6 percent increase vs. the same timeframe last year. According to Bouchard, acquisitions significantly helped to improve its quarterly results.
More specifically, Bouchard said high-margin foodservice sales were the shining star during the quarter. "I'm very impressed with foodservice in all of our divisions," the chief executive relayed. "I think this [foodservice] trend will continue for a long time."
Meanwhile, tobacco continued to be the weakest in-store merchandise sales category for Couche-Tard. "Our private-label cigarette brand [Crowne] is doing really well; better than planned," noted Bouchard. "[But cigarette] manufacturers are at war. That's hurting retail."
Despite the weakness in tobacco sales and margins, Couche-Tard's Chief Financial Officer Raymond Paré said foodservice sales were so strong in Q2 that they easily compensated for the weakness in tobacco sales.
Overall, same-store merchandise sales were up 0.4 percent in the United States for Couche-Tard's latest quarter. Paré revealed that store traffic was actually down slightly in the latest quarter, but the basket (sales per customer) were up.
Looking forward, Bouchard said he is "very optimistic about the near future," and noted that the company is operating very well. He added that the purchase of Statoil has gone smoothly thus far, and Couche-Tard expects to save between $150 million to $200 million in cost synergies from the acquisition.