Susser CEO: Population Boom Will Drive Company’s Growth for Years

NEW YORK -- Massive projected population growth should drive Susser Holding Corp.'s earnings for at least the next 25 years, President and CEO Sam L. Susser said during a presentation at today’s Bank of America Merrill Lynch Consumer & Retail Conference.

According to U.S. Census data, Texas -- where the majority of Susser Holdings' Stripes convenience stores are located -- will see population growth of 69 percent from 2010 to 2040. If the government data holds true, the state will sport a population of 41.1 million people 28 years from now.

The leading factor behind that growth will be the Hispanic population, according to Susser. "Hispanic customers are heavy c-store users. In some of our markets, Hispanic customers make up 80 percent of our customer base."

Foodservice will be the top way to keep drawing Hispanics, as well as all other customers, to Stripes convenience stores.

"Many people think people visit a convenience store only to buy gas or cigarettes. That's not the case. Only 19 percent of our sales come from cigarettes," said Susser.

Leading its foodservice effort is Laredo Taco Co., offered in about 330 of Susser Holdings' 541 Stripes c-stores.

"Laredo Taco is what makes us unique," he said. "We love Taco Bell, but our food is made to order fresh in front of the customer. And 72 percent of customers who make a purchase at Laredo Taco buy other stuff with it; mostly high-margin items like beverages and salty snacks."

Susser joked that he likes Laredo Taco so much that he eats it too often, as event attendees could "clearly see."

He's not the only one who apparently enjoys the product. "Laredo customers are very loyal," he said. "They visit 4.3 times per week."

However, remaining a successful company over the next several years will require a lot of hard work, Susser admitted. "We're in a very competitive environment in Texas. "Walmart is everywhere and it sells gas. And in the supermarket space, H-E-B is a really fabulous company."

To help counteract such staunch competition, Susser Holdings will continue to pursue acquisitions. According to Susser, that market is "attractive" and "valuations are lower" than they have been in previous years.

Another approach Susser Holdings is taking to remain strong in the tough marketplace is the wholesale business. "We love this business," Susser explained. "It's very stable; 80 percent of our wholesale fuel margins are fixed. That compares to our convenience store business, where zero percent is fixed."

Susser, who has served the company for 24 years, concluded that Susser Holdings has and will continue to take market share from competitors. But he acknowledged that despite a having a strong balance sheet, Susser Holdings' stock price has not risen in tune with the market in the past few years.

"We're frustrated at how cheap our stock has been since we went public [in 2006]," Susser remarked. "We are constantly taking steps to alleviate concerns investors have about our business. One comment we often get is that we are a 'complicated business. Help me understand it.'"