Couche-Tard Net Income Falls on Fuel Margins

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Couche-Tard Net Income Falls on Fuel Margins

LAVAL, Quebec -- Alimentation Couche-Tard, operator of more than 5,600 convenience stores in North America, saw a strong second quarter for fiscal 2008, as revenues topped $3.5 billion for the quarter, a 26.8 percent increase or $740.1 million, which was attributable to the acquisitions carried out over the past 12 months, the company stated.

The company's U.S. growth continued, as its U.S. business accounted for 79.9 percent of its revenue, compared with 78 percent for the same period in 2006.

In addition, Couche-Tard's net earnings for the 12-week period ended Oct. 14, declined to $54.2 million, from $74.7 million seen in the second quarter of fiscal 2007, due to lower fuel margins compared to the year ago, the company stated.

"Last year's second quarter is a tough comparable because of the U.S. gas margin," Alain Bouchard, chairman, president and CEO, said in a statement. "I'm happy with our performance. Our in-store merchandise same store revenue growth and recovery in certain markets shows that our pricing and strategies are on target."

During the second quarter of fiscal 2008, the company implemented the IMPACT program in 147 company-operated stores. To date, 56.2 percent of its company-operated stores have been converted to the IMPACT program, according to the company.

Merchandise and service revenues grew 17.2 percent to $185.1 million, approximately half of which was generated by stores acquired during the past fiscal year, according to the company. Same-store merchandise revenues increased 4.2 percent in the U.S, primarily due to aggressive promotions in customized categories, and its continued implementation of the IMPACT program, the company stated.

Meanwhile, same-store merchandise revenues grew 6.6 percent in Canada, the company stated. There, the company benefits from an ongoing economic boom in western Canada, while eastern and central regions saw very mild weather during the quarter, which led to increased purchases of energy drinks and water, the company stated.

Motor fuel revenues increased $550 million or 33 percent, with $71.4 million coming from higher average retail prices in the company's North American company-operated stores, the company stated. On a same-store basis, motor fuel volume rose 1.3 percent in the U.S. after falling for two consecutive quarters and rose 6.5 percent in Canada.

For the remainder of fiscal 2008, the company will continue to deploy its IMPACT program in approximately 400 stores, while building or acquiring 60 stores on an individual basis. Couche-Tard also stated it is still confident it can carry out approximately 250 store acquisitions.

Read more about Couche-Tard and its CEO, Alain Bouchard, this year's Convenience Store News Hall of Fame inductee and the focus of the Dec. 10, 2007, cover story in Convenience Store News.