<i>CSNews</i> Acquisition Update: Alon USA and Skinny's

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<i>CSNews</i> Acquisition Update: Alon USA and Skinny's

DALLAS -- Changes are underway at the 102 Skinny's convenience stores bought by Alon USA earlier this month. Their conversion to the 7-Eleven brand began almost immediately after the acquisition was completed on July 2, Jeff Morris, president and CEO of Alon, told CSNews Online.

"We started the conversion almost immediately and are doing that over the next few months," he said, noting that the conversions will be complete in three to four months. "Right now, we have a lot of work at Skinny's bringing the Slurpee and Big Gulp (brands) into the stores."

Foremost, according to Morris, is integrating the Skinny's stores into the company's core 200 stores. "The first step is to focus on the people," he said. "The integration is very important, changing the brand is a significant undertaking. We don't want to take on more initially that we can execute."

After the Skinny's stores are integrated as part of the company's 7-Eleven portfolio, Alon will focus on introducing its foodservice concept in those locations. The concept is currently being rolled out in the company's original set of 200 stores, Morris said.

"It started two months ago, and we're quite encouraged by results so far. We're still in the early stages of the rollout, but the results are still encouraging," he said.

The company's foodservice offering is made up of sandwiches, provided by the company's suppliers, which can be heated at the store, Morris explained.

Pizza Pro foodservice programs also are featured in a few of the Skinny's stores. While there is no indication that the concepts will be grown outside of that number, Morris said that Alon is honoring the agreements in place with the programs.

"We will honor the agreements we have and learn about those alternatives. We have no decision one way or the other, in keeping them, growing them, or not."

As for remodeling, that will come in time, as well.

"We will ultimately remodel," said Morris. "We remodel our base stores as part of this foodservice program. Once we complete them, we will continue that in [to the Skinny’s stores]. Over the next two years, our intent is to remodel most, if not all, of the stores and put foodservice in stores where it makes sense."

The Skinny's acquisition brought the number of stores Alon operates to 308. The company paid approximately $70 million to purchase the chain.

Meanwhile, the company is expected to release its second quarter fiscal results in early August. While Morris said he could not disclose any financial information, he did provide comment on the overall industry: "The c-store side continues to be strong. I have been very satisfied with what we've been doing with Alon, and very satisfied with the results."

As for the refining environment, Morris said: "The second part of this year is the best quarter this industry has ever seen. Margins overall in the industry have been much better than expected."