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    Casey's Hits Paydirt in New States

    Expansion into Arkansas, Tennessee and Kentucky provides a boost.

    By Brian Berk, Convenience Store News

    ANKENY, Iowa — The three new states Casey's General Stores Inc. recently entered — Arkansas, Tennessee and Kentucky — are outperforming the rest of the retailer's operating footprint in terms of both fuel sales and in-store merchandise sales, Bill Walljasper, the company's chief financial officer, remarked during Tuesday's 2015 fiscal first-quarter earnings call. 

    These three states helped Casey's report a particularly strong quarter regarding fuel sales, grocery and other merchandise sales, and prepared food and fountain sales. 

    "Volumes in these three states are significantly outpacing our other core states on both a fuel and in-store basis," noted Walljasper. "[Of course], that means we are taking market share from others. So, the competitive landscape is now ramping up."

    Arkansas, Tennessee and Kentucky — as well as others markets far away from Casey's Ankeny headquarters — will soon be better served when the convenience store chain opens a second distribution center in Terra Haute, Ind. Walljasper on Tuesday confirmed previous news reports that Casey's broke ground on the new site last week. He expects the new center to open in early 2016.


    Overall, earnings for Casey's 2015 fiscal first quarter, ended July 31, were robust in all areas with one exception: operating expenses.

    Prepared food and fountain was the biggest winner of the quarter. Same-store sales rose 11.1 percent year over year, with an impressive 59.9-percent average margin. Solid initiatives and strategic price increases were the reasons for the strong growth, according to Walljasper.

    Grocery and other merchandise also had a strong quarter, with same-store sales rising 7.7 percent with an average margin of 32.5 percent, beating company expectations.

    Also well ahead of company expectations were fuel sales. Same-store gallons sold increased 3 percent with a strong average margin of 19.6 cents per gallon. Casey's successful Fuel Saver Program in cooperation with Hy-Vee Inc. was cited as a main driver behind these results.

    "We are looking to expand the Fuel Saver Program," Walljasper noted.

    On the negative side were operating expenses, which jumped 13.1 percent to $244.3 million in Casey's latest quarter. Rising wages and operating expenses related to new store openings were the main culprits, the CFO stated.

    Companywide, Casey's reported total revenues of $2.3 billion, an 8.3-percent increase vs. one year ago. However, net income dropped $3.5 million year over year to $52.3 million. The earnings decline had nothing to do with c-store operations, he stressed. The earnings decrease was due solely to a drop in the price of renewable identification numbers (RINs) that Casey's sells. RINs are serial numbers used to track renewable transportation fuels.


    Discussing the acquisition environment, Casey's has the financial acumen to make deals both small and large, relayed Walljasper. He did add, though, that some larger deals — ones involving 12 or more stores — are carrying higher price multiples than the company would like.

    Casey's completed its acquisition of Stop-N-Go in May. In addition, the c-store chain opened seven new stores and replaced four locations during its most recent quarter. The company currently has 35 new sites and 35 replacement sites under contract.

    In addition, Casey's continues to add pizza delivery to more locations. In its 2015 first quarter, Casey's added pizza delivery to 12 more stores, and now offers this option at approximately 365 locations. Walljasper also reported that Casey's will begin testing online ordering for pizza delivery in October. He did not state how many stores will participate in this test program.

    Casey's continues to convert more stores to 24-hour locations as well. One hundred stores were converted during the first quarter. The retailer now has approximately 825 locations that never close.

    In total, Casey's operated 1,837 convenience stores as of July 31.

    By Brian Berk, Convenience Store News
    • About Brian Berk Brian Berk is managing editor of Stagnito Business Information's Convenience Store News and Convenience Store News for the Single Store Owner, where he specializes in covering motor fuels, technology and financial news. He has served the magazine industry for 14 years and has also worked in the radio and newspaper fields. Berk holds a bachelor's degree in communications from the State University of New York at Cortland and a master's degree in journalism from Quinnipiac University in Hamden, Conn.

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