Couche-Tard’s Fresh-Food Strategy Achieves Double-Digit Growth

LAVAL, Quebec -- Circle K convenience stores in the United States, revealed that its fresh-food strategy has paid off to the tune of double-digit same-store growth in its 2012 fiscal second quarter.

Raymond Paré, Couche-Tard's vice president and CFO, said the company is very impressed by sales of its fresh-food products. "It's a growth catalyst for next year and will be a growth catalyst for the next few years," he said during this afternoon's earnings call.

Company CEO Alain Bouchard added that the fresh-food program, along with store acquisitions, have led the way for Couche-Tard's margins and growth. "We are very pleased with the same-store fresh-food growth," he said. "The margins stayed the same when comparing our second quarter to our first quarter… We earned an 18-percent margin on fresh food."

Although margins did not increase during the latest quarter that ended on Oct. 9, Bouchard said the fresh-food program will "lead the way" regarding margin growth. However, he did admit that food waste has had some impact on the bottom line.

Regarding sales margins, packaged beverages, beer and energy drinks struggled the most in the latest quarter, according to Bouchard. "Consumers continue to be very price sensitive, forcing us to maintain promotions on certain products to protect traffic, which we have successfully done since the beginning of the year," he said. "Of course, that puts pressure on our margin percentage."

As a whole, the c-store owner and operator saw its net profit rise by 4.9 percent to $113.5 million, compared to $108.2 million during 2011's second quarter. Revenues also increased to $331.2 million, compared to $324.9 million during 2011's fiscal second quarter.

Same-store merchandise sales rose 2.5 percent in the United States. Same-store U.S. motor fuel volume ticked up by 0.2 percent, and U.S. motor fuel margins also increased.

Bouchard noted that Couche-Tard will be aggressive in regards to its c-store acquisition strategy. Since the beginning of its 2012 fiscal year, Couche-Tard has signed agreements to acquire 201 company-operated stores, 261 stores operated by independent operators and 63 motor fuel supply agreements.