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DALLAS -- Alon Brands Inc., the retail division of Alon USA Energy Inc., was without question the company’s brightest star in its 2013 third quarter ended Sept. 30. Sales were up across the board at the operator of 297 convenience stores and gas stations. Net sales increased $17 million to $251 million; net retail income improved dramatically to $7.25 million; and retail fuel sales reached a company record of 49 million gallons.
Merchandise sales at Alon Brands also increased by more than $1 million year over year, while merchandise margins improved by 0.2 percent. "These numbers are especially impressive because we operated two more stores in the 2012 third quarter," Alon USA President and CEO Paul Eisman said during the company’s earnings call today. "We are really pleased with the results from this division."
When questioned by an analyst about what specifically in the retail division is performing so well, Alon Brands CEO Kyle McKeen pointed to its Clean TEAM initiative, which provides measurable standards of excellence on a store level.
This year, Alon Brands took the program even further with a Clean 13 campaign, whereby it is giving away 13 brand-new cars by the end of 2013. Five store managers will win a free ride, plus Alon will award four cars to local nonprofit groups through "Cars 4 Cause," and another four cars will go to customers who use a special "Load the Code" card online to enter a drawing.
"Operational excellence and customer service under the Clean TEAM campaign have led to great success this year," McKeen said on today’s call.
Results at other Alon USA divisions were not as robust. Overall, the company lost $28.7 million in its third quarter vs. a profit of $43.2 million in the year-ago period. "Our third-quarter results were impacted by a volatile and deteriorating margin environment, resulting primarily from decreasing discounts for West Texas crude oil," Eisman relayed. "But the margin environment has improved thus far in the fourth quarter."
Given the retail division’s strong performance, Eisman revealed that the company is on the hunt for acquisitions. He did not provide any specifics regarding what convenience store and fuel assets it would acquire, nor did he say if Dallas-based Alon Brands would purchase assets beyond its Southwestern base.
He did say that Alon will aggressively open new stores until any such acquisition is made.
Alon USA Energy Inc. is the largest 7-Eleven Inc. licensee in the United States and operates 297 convenience stores in Texas and New Mexico.