LAVAL, Quebec — Alimentation Couche-Tard Inc. will convert the Kangaroo Express stores it acquired from The Pantry Inc. to its Circle K brand, President and CEO Brian Hannasch revealed during the company’s 2016 fiscal first-quarter earnings call Tuesday afternoon.
“We have decided to go with the Circle K brand,” he said.
Hannasch shared that the rebranding from Kangaroo Express to the Circle K banner should commence in January.
Circle K’s popular Polar Pop fountain beverage program has been, and will continue to be, a major new component in these stores. Couche-Tard will add the offer to 900 sites this year even before an official rebranding takes place.
The rebranding has nothing to do with any weakness at The Pantry division. In fact, Hannasch said he “is very pleased” with the convenience stores it acquired in the Southeast and reported that this division was “accretive to the overall network” for the company’s 2016 first quarter, which ended July 19.
“The integration of The Pantry stores is well underway with a lot of activity on all fronts,” he said. “We are already seeing solid results, and I am excited to see how this network will perform with the implementation of key programs and harmonization of the brands.”
OVERALL Q1 RESULTS
Couche-Tard’s overall U.S. retail division, which combined results of both Circle K and Kangaroo Express for the entire three-month period, enjoyed a banner quarter.
The best results were found in same-store road transportation fuel volume, which grew by an impressive 9.4 percent year over year in the United States. Road transportation fuel gross profit rose by $67 million year over year to $317.4 million.
Merchandise sales were also quite strong, with same-store merchandise revenues up 5.1 percent in the U.S. Merchandise and service gross profits increased by $181 million to $583.4 million.
The Pantry was a major contributor to all of these results, but Couche-Tard stated that it does not break down earnings by division.
“The U.S. continues to show nice strength,” said Hannasch. “The U.S. will be strong for the coming quarters.”
Fresh food offerings, private-label products and improvement at the forecourt are specific areas of strength Hannasch has seen and expects to continue to see in the U.S.
“We added prepared-on-site [fresh food] recently at three Houston stores,” he shared. “We will expand that to more stores.”
Despite the ongoing process of integrating the Kangaroo Express locations, Hannasch and Chief Financial Officer Raymond Paré stressed that Couche-Tard has the financial wherewithal to make additional acquisitions. No specifics were provided regarding any potential acquisition targets.
“We can take advantage of any attractive opportunities,” stated Paré. “The pipeline is interesting.”
“We are working on several promising projects,” added Hannasch.
On an organic growth basis, Couche-Tard completed the construction, relocation or reconstruction of 17 stores during its 2016 first quarter. An additional 31 stores were under construction as of July 19.
Overall, Couche-Tard earned a net profit of $299 million for its 2016 fiscal first quarter when excluding non-recurring items. This compares to a profit of $276 million during the comparable prior-year period.
Laval-based Alimentation Couche-Tard Inc. had 7,794 company-operated sites as of July 19.