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Couche-Tard's Quarterly Profit Nearly Doubles to $51 Million

LAVAL, Quebec -- Boosted by its U.S. acquisitions, Alimentation Couche-Tard Inc.'s second quarter profit almost doubled from last year's $26.6 million to $51 million, the Montreal-based convenience store chain reported Tuesday. Revenues more than doubled to $2.4 billion, from $937.5 million.

"We are especially pleased with our second quarter growth considering that motor fuel gross margins declined during the period," said Alain Bouchard, chairman, president and CEO of Alimentation Couche-Tard. "They were down from the first quarter of fiscal year 2005 when margins were high, but also from the second quarter of the previous year, and the impact is more pronounced because of Circle K's large motor fuel volumes. The decline was felt in all our markets, and particularly in the United States. The motor fuel gross margin is subject to fluctuations, even though it turns out to be less volatile over a full 12-month period," added Bouchard.

Last year, Couche-Tard paid $1.12 billion for Circle K Corp., which operates 1,663 corporate stores and 350 franchise outlets, as well as gasoline stations in Arizona, Florida and other southern U.S. states. The Quebec firm has been snapping up more U.S. stores since then.

Bouchard added that the company is most satisfied with the progress of the Circle K integration. "Several aspects are involved, such as restructuring store operation support services including communications networks as well as debit and credit card systems," said Bouchard.

Furthermore, Bouchard said that a benchmarking process has now been implemented in all of the company's divisions. The comprehensive evaluation of the Circle K stores will continue over the next two to three years with the objective of determining each site's optimization potential.

"I would also mention that we are currently reviewing the Circle K stores' product mix, including foodservice, which is expected to improve merchandise and service gross margins," said Bouchard. "In this regard, further implementation of our differentiation strategy in our Canadian markets and the American Midwest helped improve our merchandise and service gross margins and offset the impact of the decline in motor fuel gross margins in the second quarter."
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