Couche-Tard Slows U.S. Expansion

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Couche-Tard Slows U.S. Expansion

LAVAL, Quebec -- At Alimentation Couche-Tard’s annual shareholder’s meeting held here yesterday, executives announced the company, which operates more than 5,600 c-stores in North America, will slow its expansion in the United States in fiscal 2008 by acquiring only 200 to 300 stores, with annual revenue expected to exceed $14 billion, the Montreal Gazette reported.

"We'll ease up from last year's torrid pace, but fill gaps in our regional coverage, continue to raise efficiency and add higher-value products along with 400 store makeovers," CEO Alain Bouchard said at a press conference after meeting.

While the fragmented U.S. convenience store industry’s environment for consolidation is increasing, and big acquisition targets are getting harder to find, Bouchard insisted there is still plenty of room for growth, such as big oil divestures, the report stated.

"We're always looking and talking to people and we've the financial muscle to handle a major deal costing $1 billion or so," he said earlier this week. "If a consumer recession does develop in the U.S., that might well give us the chance to buy at more reasonable prices."

In addition, Couche-Tard's U.S. division can handle future competition from retailers such as Britain's Tesco Plc, the Japanese-owned 7-Eleven group and Wal-Mart stores, Bouchard said.

Meanwhile, Canadian growth will mainly be organic, as the c-store industry there is already heavily concentrated, he said. The company will focus on the booming Alberta province, where staff shortages are being overcome with non-cash incentives such as apartments and shared cars to tempt job-hunters from other areas, the report stated.
Areas where the company will recruit include Ontario and the Maritimes area, according to a report in The Canadian Press. Couche-Tard will also offer regular flights home to its employees from other regions that work in Alberta, the report stated.

For all of fiscal 2007, the company earned $196.4 million, little difference from fiscal 2006, on $12.1 billion in revenue, a 19 percent increase, the report stated. Fiscal 2007 was the 15th consecutive year of uninterrupted growth, and saw the purchase of more than 420 stores, and the creation or modernization of an additional 100 locations, according to the report.

"The latest quarter, despite slimmer overall margins, showed Couche-Tard is heading in the right direction and can grow earnings in the double digits even amid less appealing market fundamentals, especially in the Southern U.S.," TD Newcrest analyst Michael Van Aelst told the paper.