Murphy USA Touts Success of Loyalty Program Launch
EL DORADO, Ark. — Murphy USA is having great success with its new loyalty program, Murphy Drive Rewards, company leaders reported during the retailer's first-quarter 2019 earnings call on April 30.
President and CEO Andrew Clyde said he is "most excited" about the initiative, which began a phased national rollout on March 1.
"The rollout was flawless from an execution standpoint," Clyde said. "Customer adoption lived up to our expectations from the pilot."
Since the program launched, Murphy USA has seen Drive Rewards members use their rewards points as fast as they earn them, indicating continuous engagement.
Participation rates are very favorable in comparison to other loyalty programs, with 6.4 million members to date. Still, the company has as many as five million more customers it can convince to join Drive Rewards, according to Clyde, who noted that the convenience store chain continues to be a destination for value-conscious consumers, especially tobacco users.
"We are making loyalty work for an everyday low price," he said.
GROWTH PLANS
Along with the loyalty program rollout, El Dorado-based Murphy USA remains focused on network growth and enhancement.
The chain opened one new-build store during the first quarter, bringing its store count to 1,473, which includes 1,160 Murphy USA sites and 313 Murphy Express sites. Sixteen sites are currently under construction, 12 of which are former kiosk locations that will be razed and rebuilt as 1,400-square-foot stores.
Looking ahead, Murphy USA is on track to open 15 new stores this year, which is on the lower end of its predicted range. However, its forecast for raze-and-rebuild openings is on the higher end of its range at a projected 25.
The company's reinvestment program, which is designed to enhance the quality of its existing network, completed 59 sites through the end of 2018.
Clyde noted that Murphy USA's newer stores are ramping up at better and faster rates, leaving the company excited about what's to come.
BY THE NUMBERS
Murphy USA's net income for Q1 2019 was $5.3 million compared to a net income of $39.3 million during the first quarter of 2018. The company pointed out that approximately $35.3 million from the settlement of damages related to the 2010 Deepwater Horizon oil spill were included in its Q1 2018 net income.
Total merchandise contribution dollars for the quarter rose 6.6 percent to $97.5 million due to a chainwide increase in sales and strong new store performance. Successful store-level initiatives and enhanced promotional activities supported improvements in both the tobacco and non-tobacco categories.
"The merchandise results speak for themselves," Clyde said.
Fuel contribution dollars rose 11.9 percent to $128.2 million during the quarter, compared to $114.6 million during Q1 2018. Total retail gallons increased 3.9 percent year over year. Clyde highlighted strong fuel category performance in the face of rapidly rising prices.
Overall, the chief exec expressed confidence that Murphy USA's growth strategy will continue to yield positive results in the future.
"2019 is off to a strong start as the business performed exceptionally well in the first quarter, despite sharply rising product prices, managing to showcase meaningful year-over-year adjusted EBITDA growth to $58.8 million. We continued to drive traffic to our stores, growing year-over-year same-store volumes for the third straight quarter, which helped generate strong merchandise results in both the tobacco and non-tobacco categories.
"We are proud to announce the successful completion of the national launch of our loyalty program, Murphy Drive Rewards, which has generated widespread customer enthusiasm with more than 6.4 million participants to date and continues to grow. We are excited about the opportunity this platform provides to attract and retain loyal customers, which when coupled with other ongoing improvement initiatives, will help materially transform our business in the years ahead," Clyde concluded.