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Susser Q1 Same-store Sales Up Over '09

CORPUS CHRISTI, Texas -- Susser Holdings Corp., the parent company to the Stripes chain of convenience stores, saw a mixed first quarter 2010 as revenues and same-store sales were higher than the comparable quarter, yet adjusted earnings and net income fell.

"After a very challenging fourth quarter, it appears we have turned the corner, based on the steady rebound we've seen in merchandise sales and margins as the first quarter has progressed," Sam L. Susser, president and CEO, said in a statement. "Preliminary results in the second quarter also suggest the worst of the recession is behind us."

Susser's first quarter revenue increased 37.8 percent from a year ago to $938.1 million, reflecting the significantly higher price of fuel, along with a 5.0 percent increase in total merchandise sales, the company stated.

However, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) dropped to $13.9 million in the first quarter 2010, from $19.3 million a year ago, primarily due to the impact of lower retail fuel margins and higher credit card fees, according to the company. Companywide gross profit was slightly up year-over-year at $97.6 million.

First quarter net loss reached $5.0 million, vs. a net loss of $931,000 for the first quarter of last year.

More positive was same-store figures. Susser's same-store merchandise sales for the first quarter 2010 increased 2.5 percent over the figures for the first quarter 2010. This compares with a 1.2 percent decline in same-store merchandise sales for the fourth quarter 2009 and growth of 6.0 percent during the first quarter of 2009. Retail merchandise margin was flat vs. the fourth quarter at 32.7 percent, and down from 34.3 percent for the first quarter of 2009.

"The Texas economy in general is showing signs of recovery in several areas: Existing home sales and home prices increased in March both sequentially and year-over year, the drilling rig count is climbing, and the index of leading economic indicators is rising," said Susser. "Same store sales growth was highest in West Texas, which is being spurred primarily by growing oilfield activity."

Merchandise gross profit totaled $62.4 million and was flat vs. the first quarter of 2009. Net merchandise margin was 32.7 percent, down from the 34.3 percent a year ago, which the company attributed to higher cigarette prices and continued margin pressure across other categories such as packaged beverages. Total merchandise sales were $191.0 million, an 5.0-percent increase from a year ago.

Retail store fuel volumes increased 2.0 percent over a year ago to 183.1 million gallons for the first quarter 2010. Average gallons sold per store declined 0.2 percent to 355,200, while fuel revenues totaled $478.6 million, up 48.6 percent, due to an increase in retail motor fuel prices.

Retail fuel gross margins in the first quarter were 11.1 cents per gallon, or 7.0 cents after deducting credit card expenses, down from the 11.8 cents per gallon a year ago, and 9.1 cents after credit card expenses, according to the company.

In addition, the ongoing rebranding of Town & Country stores to the Stripes brand in West Texas also had a positive effect on the performance of the company's West Texas locations during the quarter, Susser said.

And although Susser sees the South Texas market rebounding more slowly, he hopes to see a pickup in economic activity later this year, signaling improvement in food and beverage sales at the company's stores in that region.

Fuel costs continued on their upward trend seen throughout 2009, typically compressing Susser's fuel margins, the executive stated.

"We remain very focused on cost control, and saw our efforts reflected in better store labor utilization and reduced G&A expenses this quarter," he said.

The company added two retail stores during the first quarter of 2010, bringing the total number of stores in operation to 527, while three more are currently under construction.
In its wholesale operations, Susser added three new dealer sites, for a total of 393 in operation at the end of the first quarter.

In addition, Susser completed sale/leaseback transactions for properties totaling $5.8 million during the first quarter and executed build-to-suit contracts for two new convenience stores, the company stated.

Also during the quarter, Susser entered into an agreement to sell its seven Village Market grocery stores, and expects the closing to occur during the second quarter. This transaction allows the company to bring more focus to its core convenience store and Laredo Taco Company operations, it stated.

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