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    Casey's General Stores Moving Into Arkansas

    C-store chain also is doing due diligence in the states of Tennessee and Michigan.

    By Linda Lisanti, Convenience Store News

    ANKENY, Iowa -- Casey's General Stores is expanding its Midwestern footprint to include the state of Arkansas. The convenience store chain currently has five properties under contract in the state, and expects to open new stores there toward the later end of fiscal 2011, Casey's Chief Financial Officer Bill Walljasper reported yesterday during the company's fourth quarter fiscal 2010 conference call.

    These stores will be just the beginning as Walljasper said Casey's plans to "penetrate" the state through new store construction, as well as potential acquisitions. He said the Arkansas towns that Casey's is looking at are rural, northern communities that fit the company's model. The state as a whole has a level of competition and c-store saturation that makes it attractive to the retailer, according to Walljasper.

    Casey's also is doing "due diligence" now in Tennessee and Michigan, with plans to further expand its operating footprint and penetrate those states as well.

    "We intend on accelerating new store construction activity going forward," Walljasper said, noting the pipeline for store growth is more robust than it was a year ago.

    However, the CFO pointed out that it will take time to ramp up. At this point, Casey's is working with outside realtors to assist in bringing forth properties, so the chain can start accumulating real estate and go through the local approval processes.

    During yesterday's conference call, the company also reported record performance in fiscal year 2010, and said it has a strong growth outlook for the 2011 fiscal year.

    Casey's reported $0.43 in basic earnings per share for the fourth quarter of fiscal 2010, which ended April 30, 2010, compared to $0.31 from the same quarter a year ago. These results include approximately $6.9 million in legal and advisory fees pertaining to the evaluation of the unsolicited offer and related actions by Alimentation Couche-Tard.

    Without the effect of those fees, basic earnings per share would have been approximately $0.51 for the quarter, compared to the Reuters consensus estimate of $0.40. For the year, basic earnings per share finished at $2.30, an increase of more than 36 percent compared to the prior year's $1.69, according to the Ankeny, Iowa-based company.

    "Fiscal 2010 was a monumental year for Casey's General Stores," President and CEO Robert J. Myers stated. "Not only did we surpass 1,500 stores, but we also beat our previous best year by $0.61 per share. We are very pleased with our overall performance, as we turned in record results in the midst of the challenging economic environment during the 12-month period. Furthermore, we expect our strong performance to continue in fiscal 2011."

    Casey's provided the following breakdown of its fiscal 2010 performance:

    Gasoline
    For the fiscal year, same-store gallons sold were unchanged from the prior year, with an average margin of 13.9 cents per gallon. "Gasoline margins were strong throughout the year," Myers stated. "In fact, we have been significantly above our gasoline margin goals for the past three fiscal years. We believe there has been a shift in the competitive landscape throughout our marketing territory and expect this positive environment to continue."

    Casey's annual goal was to increase same-store gasoline gallons sold 2 percent, with an average margin of 11 cents per gallon. For the fourth quarter, same-store gallons sold were up 0.2 percent with an average margin of 13.1 cents per gallon. For the year, total gallons sold rose 3.3 percent to nearly 1.3 billion gallons.

    Grocery and Other Merchandise
    For the fiscal year, same-store sales rose 3.3 percent with an average margin of 33.6 percent. "Throughout the fiscal year, our sales were impacted by the broader macroeconomic conditions, with customers trading down to less expensive products, as well as adverse weather," Myers said. "Despite these challenges, we were still able to grow gross profit by almost 6 percent."

    The goal for fiscal 2010 was to increase same-store sales 8.9 percent with an average margin of 33.9 percent. Total sales for the year increased 6.2 percent to $1.1 billion. For the fourth quarter, same-store sales were up 3.1 percent with an average margin of 33.1 percent.

    Prepared Food and Fountain
    Same-store sales increased 4.2 percent during fiscal 2010, with an average margin of 63.8 percent. "The retail price increases made on select items in March are having the positive impact we expected, and the company continues to enjoy a favorable cheese cost environment," according to Myers.

    The company's annual goal was to increase same-store sales 7.5 percent with an average margin of 62 percent. Fourth quarter same-store sales increased 5.3 percent with an average margin of 64.1 percent. Total category sales increased 9 percent to $365.8 million.

    Operating Expenses
    For the fiscal year, operating expenses rose 4.3 percent to $526.3 million. For the fourth quarter, operating expenses were up 7.7 percent to $135 million. "When you eliminate the impact of the expenses related to the unsolicited offer and other actions by Couche-Tard, as well as the impact from the $9.1 million legal settlement a year ago, operating expenses were up 4.9 percent for the year," Myers stated. "We are pleased with our expense control given our increase in the number of stores from the previous year."

    Expansion
    At the end of the fiscal year, Casey's had acquired 37 stores and completed 18 new-store constructions. "The stores we added this year are performing above our chainwide average, therefore the economic impact of these stores will exceed 4 percent," Myers said.

    The goal for fiscal 2010 was to increase the total number of stores by 4 percent. In addition to the stores opened during the fiscal year, the company also replaced 20 stores incorporating its new store design that includes a larger coffee and fountain offering, made-to-order sub sandwich program, and expanded cooler capacity.

    "Our pipeline of acquisitions and new store construction sites under review is almost double of what it was at this time last year," Myers said in a statement. "We could not be more optimistic about the growth potential of Casey's right now."

    Heading into fiscal 2011, Casey's said its corporate performance goals are to:

    -- Increase same-store gasoline gallons sold by 1 percent with an average margin of 13.5 cents per gallon.
    -- Increase same-store grocery and other merchandise sales by 6 percent with an average margin of 33.9 percent.
    -- Increase same-store prepared food and fountain sales by 8 percent with an average margin of 63.1 percent.
    -- Increase its total number of stores by 4 percent to 6 percent, while replacing 20 stores and performing 20 major remodels, all incorporating the features of its new store design.

    Walljasper said roughly 80 locations currently sport the chain's new store design in its entirety, while another 120 or so stores have features of the new store design.

    The company said it remains well positioned to increase its store capacity, and may revisit its expansion goals during the new fiscal year as opportunities arise.

    Related News:

    Casey's General Chairman Passes Away

    Casey's Accuses Couche-Tard of Market Manipulation

    By Linda Lisanti, Convenience Store News
    • About Linda Lisanti Linda Lisanti is editor-in-chief for EnsembleIQ's Convenience Store News and Convenience Store News for the Single Store Owner media brands. In this role, she is responsible for content development across all of CSNews' print and online properties, with a specialty in coverage of the foodservice category in convenience stores. Lisanti has more than 13 years of experience in the journalism field. After working as a reporter for several daily newspapers, she joined CSNews as a staff writer in August 2005 and held senior writer, senior editor and executive editor positions before becoming editor-in-chief in August 2014. Lisanti has a bachelor’s degree in communications/journalism from Rowan University.
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