Western Refining Touts Its Growing Retail Division

EL PASO, Texas — Retail operations are "very important" for Western Refining Inc. (WNR) as the company continues to grow this segment of its business, President and CEO Jeff Stevens noted Thursday during its 2014 fiscal fourth-quarter earnings call.

Stevens specifically pointed to WNR's January purchase of 31 convenience stores in southern Arizona that were previously owned by Reay's Ranch Investors LLC as a sign of its retail growth.

"We now have 261 convenience store locations," he said. "We have added more than 100 stores since the beginning of 2011."

WNR's retail division — consisting of GIANT, Mustang, Sundial and Howdy's convenience stores in Arizona, Colorado, New Mexico and Texas — is excellent as a stabilization factor for overall business earnings, Stevens noted. 

Western Refining Inc. owns the general partner and approximately 66 percent of the limited partnership interest of Western Refining Logistics LP, as well as the general partner and approximately 39 percent of the limited partnership interest in Northern Tier Energy LP, parent of SuperAmerica convenience stores.

When questioned by an analyst during Thursday's call, Stevens said he continues to look at the possibility of merging assets between WNR and Northern Tier. He did not specifically discuss a merger of their retail assets. However, he did say Northern Tier's logistic assets could be a good fit to be placed into Western Refining Logistics, its publicly traded master limited partnership.


WNR's retail division saw earnings quadruple in its fourth quarter ended Dec. 31. Retail assets achieved a net profit of $8 million, compared to $1.8 million in the same period in 2013.

"It was one of our strongest quarters ever [at our retail division]," said Stevens. "Fuel margins and merchandise sales were especially strong."

WNR sold 77.6 million gallons of fuel in the fourth quarter, a year-over-year rise of more than 2 million gallons. Retail fuel margins per gallon rose by 6 cents year over year to 24 cents per gallon.

Merchandise sales improved by more than $5 million to $67 million in the quarter. Overall, same-store sales increased by approximately 1 percent year over year, Stevens revealed. However, he noted that same-store sales have been even stronger thus far in 2015, rising between 3 percent and 4 percent.

"Clearly, consumers have more money to spend this year," he said.

Companywide, El Paso-based WNR saw its net profits more than double. The company reported fourth-quarter net income of $116.8 million, vs. a profit of $57.3 million in the year-ago period.

"2014 was a very successful year for Western [Refining]," the CEO concluded.

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