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12/02/2020

Couche-Tard Sees Same-Store Merchandise Sales Rise Across Its Network

Melissa Kress
Senior News Editor
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Logos for Alimentation Couche-Tard retail network

LAVAL, Quebec — Alimentation Couche-Tard Inc., the parent company of Circle K, turned in a solid performance during the second quarter of its 2021 fiscal year as the company continues to see an uptick in sales driven by the COVID-19 pandemic.

"New customers and associated share gains since the start of the pandemic have continued, as customers are taking advantage of the convenience and proximity of our channel. This led to solid same-store sales in all of our regions," President and CEO Brian Hannasch reported during the company's Q2 earnings call on Nov. 25.

Same-store merchandise revenues increased 4.4 percent in the United States, 8.6 percent in Europe, and 11.4 percent in Canada compared to the same quarter last year.

"This increase is primarily attributable to growth in basket, which more than offset continued softness in traffic due to the pandemic restrictions across the network," Hannasch explained.

Looking at in-store categories, nicotine, packaged and alcoholic beverages, and grocery performed well across all of Couche-Tard's business units. Fresh food categories turned in a slight year-over-year increase in Europe.

"We've also worked hard to drive more traffic into our locations through increased awareness for our loyalty programs, gamification and by ensuring that we remain focused on our core value propositions," Hannasch added.

The company's Fresh Food, Fast concept reached 1,500 U.S. locations this fall — which was the target number — and is now available in 11 of Couche-Tard's U.S. business units.

"Our focus remains on the quality and ease of our fresh food offer, both for our store team and our consumers. Stores with Fresh Food, Fast have been performing very well relative to test stores or control stores in the same markets, and we're also tailoring our offer to meet the tastes and preferences of our local communities," Hannasch said. "Based on these results to date, we plan to roll out the program to an additional 3,000 locations by the end of next fiscal year."

In age-restricted products, the alcoholic beverages category is benefiting from COVID-19 restaurant and bar restrictions, while nicotine sales continue to perform strongly vs. the prior year, particularly in Europe. In the U.S., Couche-Tard is expanding its backbar assortment to increase its selection of modern oral nicotine products.

Q2 FY2021 Results

For the second quarter of fiscal 2021, Couche-Tard reported net earnings attributable to shareholders of $757 million. Adjusted net earnings for the quarter were approximately $735 million — a 32-percent increase from the prior year, according to Claude Tessier, the company's chief financial officer.

Net earnings were $1.5 billion for the first half of fiscal 2021, compared to $1.1 billion for the first half of fiscal 2020, an increase of 37.3 percent.

"Our business continues to show a lot of flexibility and resilience, despite the disruption on shopping and commuting behaviors caused by the pandemic. Once again, we executed well during the second quarter on our cost optimization initiatives, including solid labor efficiencies, savings on goods-not-for-resale and strong control on discretionary expenses," Tessier noted. "This has allowed us to stay the course when it comes to investing in the health and safety of our employees and customers, as we strive to remain relevant in their time of need and a good steward of their trust."

Merchandise and service revenues in the second quarter totaled $3.8 billion, an increase of 6.3 percent. Merchandise and service gross margin increased by 0.1 percent in the U.S. to 34 percent, while it decreased by 1.1 percent to 40.2 percent in Europe, and remained steady in Canada at 32.6 percent.

Same-store road transportation fuel volume decreased by 15.5 percent in the U.S., 4.5 percent in Europe, and 11.8 percent in Canada.

"While fuel volumes remained negative across the network, we did see some sequential improvements in our three geographies, particularly in Europe with favorable weather, more consumer travel during the quarter, and a more stable B2B business," Hannasch said. "Overall, we continued to achieve healthy fuel margins, which have allowed us to offset the volume declines and grow our fuel gross profit dollars." 

As of Oct. 11, Laval-based Couche-Tard's network comprised 9,261 convenience stores throughout North America. Its North American network consists of 18 business units, including 14 in the United States covering 47 states and four in Canada covering all 10 provinces. In Europe, the company operates a broad retail network across Scandinavia, Ireland, Poland, the Baltics and Russia through 10 business units. As of Oct. 11, its European network comprised 2,722 stores.

In addition, under licensing agreements, more than 2,220 stores are operated under the Circle K banner in 15 other countries and territories, which brings its worldwide total network to more than 14,200 stores.

About the Author

Melissa Kress is Senior News Editor of Convenience Store News. Read More