Susser to 'Pursue Dialogue' Regarding Acquisitions
CORPUS CHRISTI, Texas -- Susser Holdings Corp. is interested in "pursuing dialogue" regarding mergers and acquisitions for its Stripes convenience store division, Chairman and CEO Sam L. Susser stated during the company's 2013 fiscal third-quarter earnings call this morning.
Any acquisition would have to involve larger locations on a square footage basis because Susser Holdings wants to incorporate its successful Laredo Taco Co. quick-service restaurant concept into any acquired site, the chief executive noted.
As for the location of such acquisitions, Susser Holdings is very impressed by the "demographics" in its home state of Texas. The company, though, will consider acquisitions beyond its three current operating states of Texas, New Mexico and Oklahoma, according to Sam Susser.
Currently, no retail acquisitions are on the horizon, the CEO acknowledged. "Most dialogue we are having today is wholesale centered," he reported. Still, a wholesale acquisition could come with sites to be converted to Stripes locations.
In the meantime, Susser Holdings is focusing on organic growth. The company opened 10 new large-format Stripes c-stores in its third quarter ended Sept. 30, and closed one store. Seven to nine more new-build stores will open by the end of this year, Stripes President Steve DeSutter added.
Approximately 30 new Stripes stores are expected to open in 2014. However, that number could change if an acquisition is made, said Sam Susser. "We plan to be aggressive regarding new store openings in 2014," he said. "We are pleased with sales at these new sites."
Looking at Susser Holdings' latest earnings, third-quarter net profits grew to $12.89 million, compared to $6.84 million during the same period in 2012. Same-store merchandise sales increased 3.4 percent in the quarter, while average retail gallons sold per store increased 5.6 percent vs. the prior year-ago period.
"Same-store merchandise sales grew as we shifted to a more favorable mix, including a bigger emphasis on foodservice," Sam Susser said. "Laredo Taco Co. continues to do very well."
On the negative side of the ledger, margins for cigarettes, soda and beer have all taken a hit recently as competition has ramped up in Texas, where the economy is very strong.
"We will do whatever it takes to hold on to our core customers," Sam Susser pledged. "There are very competitive conditions in Texas, but competition is good."
Rising personnel costs -- especially at just opened stores -- are also having an effect on the c-store retailer. The company is employing new labor management software tools to help counteract this problem.
Looking forward, Sam Susser acknowledged that it is difficult to tell what effect the Affordable Care Act will have on the company's bottom line. He predicted it will add "low seven figures to its operating costs."
Corpus Christi, Texas-based Susser Holdings Corp. operated 576 Stripes locations as of Sept. 30.