Hannasch Era Begins Strong at Couche-Tard

LAVAL, Quebec — Brian Hannasch had strong quarterly results to share Tuesday, his first earnings report as president and CEO of Alimentation Couche-Tard Inc.

The parent of Circle K Stores Inc. in the United States earned $286.4 million in its 2015 fiscal second quarter, ended Oct. 12, an increase of 25.7 percent year over year.

"We are very pleased with the results of our second quarter, which are consistent with our previous quarters' excellent performance," said Hannasch. "We continue to innovate in our stores, improving our offer."

The Laval-based retailer achieved strong results in its U.S. retail division. Same-store merchandise sales rose 2.8 percent year over year, while merchandise and service gross margin stood at 32.7 percent.

Fresh food sales were the main driver of U.S. in-store performance. "U.S. fresh food sales were up double digit [percent] year over year," noted Hannasch, who officially replaced Alain Bouchard as president and CEO on Sept. 24.

Fresh food sales were more than enough to counteract declining tobacco sales in the U.S. However, Circle K has "absolutely seen a positive increase" in tobacco sales since CVS Health Corp. exited this market segment, the chief executive noted.

Same-store fuel sales also increased by 2.1 percent in the U.S., with gross margin reaching 24.17 cents per gallon. The retailer has not yet fully enjoyed the impact of lower gas prices, but Hannasch sees the current changes in the oil market as overwhelming positive for the entire company.

"It's like a massive tax cut for the consumer," he said. "It will absolutely be positive in the coming months."

ACQUISITION TRAIL

Couche-Tard acquired 62 U.S. convenience stores in its fiscal 2015 second quarter and remains on the hunt for more acquisitions. In fact, the company is looking at various opportunities around the world, confirmed Hannasch.

Now leading the acquisition effort is Bouchard, who became Couche-Tard's executive chairman when Hannasch became president and CEO.

"Believe me, we are keeping our executive chairman busy," Hannasch stated during Tuesday's earnings call. "But we will maintain a disciplined approach."

The CEO said he could not reveal any particular convenience store chains Couche-Tard is targeting.

Alimentation Couche-Tard Inc. operated 6,290 company-operated stores in the United States, Canada and Europe as of Oct. 12. When factoring in franchised, affiliated and other locations, the company had 8,542 convenience stores.