Murphy USA's Business Model Helps It Overcome Recent Challenges

EL DORADO, Ark. — Amid the COVID-19 pandemic, Murphy USA is finding success in the current environment thanks to its "ultra-low fixed cost model" that enables and supports the retailer's everyday low price position, according to President and CEO Andrew Clyde. 

Murphy USA's low price position "allows us to be even more competitive ... and attractive to customers during this period when they need additional value the most," Clyde said during the company's second-quarter 2020 earnings call, held July 21.

The chief executive pointed to the company's business model as one of three key trends driving Murphy USA's performance. The retailer turned in a record second quarter of 2020.

In addition, the company is seeing lower variable costs — primarily in the areas of maintenance, loss prevention and, to a lesser extent, utilities — reflecting the lower customer traffic and less use in wear and tear.

"Our people cost at the store level has increased slightly, and we would expect that given the higher merchandise sales and higher commissions that come with those sales, and we're always pleased to pay more commissions to our store managers and associates, because it means they are selling more merchandise and controlling costs, which is exactly what they are motivated to do," Clyde said.

"...Our low store-level operating expenses, which showed a 1.4 percent decrease over the prior-year quarter, coupled with stronger merchandise sales and contribution, further improves our fuel breakeven metric — which turned negative for the quarter, meaning we can sell fuel at a slightly negative margin and still break even excluding credit card fees and certain corporate costs," he added. 

El Dorado-based Murphy USA's network totals approximately 1,500 stores, consisting of Murphy USA sites and Murphy Express sites. 

Look for additional Convenience Store News articles on each of the key trends detailed by Murphy USA President and CEO Andrew Clyde.