Susser Sees Good Acquisition Opportunities

CORPUS CHRISTI, Texas -- Susser Holdings Corp. has indentified excellent acquisition opportunities and could go that route in the near future, President and CEO Sam L. Susser said during today's 2013 fiscal second-quarter earnings call.

"We are seeing a lot of opportunities we think will fit in well nicely with Susser. ... We remain positive we can identify great assets and teams we can bring in [to the fold] in the next year or two," he said. 

The Corpus Christi, Texas-based operator of 567 Stripes convenience stores as of June 30 did not name any specific opportunities the company was looking at. However, the comments were eerily similar to Dennis G. Hatchell, CEO of Cary, N.C.-based The Pantry Inc., who said yesterday, "More stores [in the Southeastern region] have become suddenly available and we didn't want to pass up the opportunity."

In addition to acquisitions, Susser has and will continue to grow organically via building new large-format stores. Susser Holdings opened six large-format stores in its second quarter ended June 30. Sixteen more stores are currently under construction, Susser added.

Susser Holdings expects to open 28 to 30 stores for its 2013 fiscal year, compared to 25 stores that opened in 2012.

"We remain aggressive looking for future sites for stores," Susser noted. "We are looking to have a 5- to 6-percent increase in net new stores per year. These new large-format stores offer two to 2.5 times more cash flow than our [traditional] legacy stores."

As for its latest quarter, same-store merchandise at Stripes locations increased 2.2 percent, compared to an 8-percent rise during last year's second quarter. Cooler-than-normal temperatures were the primary reason for reduced same-store merchandise growth, Susser acknowledged.

Despite weaker merchandise sales growth, foodservice was a shining star that "led the way," Steve DeSutter, president of Susser Holdings' retail division, said during the earnings call, who added that its Laredo Taco Co. quick-service restaurant -- available in 362 of its Stripes locations -- has been performing especially well.

On the fuel side, margins per gallon before credit card expense averaged 18.2 cents vs. a record 32.4 cents in 2012's second quarter. But retail fuel volumes increased 9.7 percent vs. the same period a year ago to 236.1 million gallons.

Shifting to tobacco, cigarette price increases continue to affect all retailers, said Susser. Fortunately, the company can "withstand the pain" because only 7 percent of its merchandise gross profits come from tobacco.

Stripes stores have also begun a shift toward smokeless products and have seen sales growth from the two electronic cigarette brands it offers.

Looking forward, labor costs continue to be a challenge, the company stated. "Competition for workers remains brisk, especially in oil field markets," said Susser.