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    CST Stays Mum on Sale Talk

    Second-quarter profits rise as it focuses on expanding network, store size.

    By Angela Hanson, Convenience Store News

    SAN ANTONIO — Despite all the talk swirling around a possible sale of the company and suitors reportedly lining up for its assets, CST Brands Inc. stayed mum on the topic during its Aug. 5 second-quarter 2016 earnings call. Instead, CST Chairman and CEO Kim Lubel focused on the company's recent growth, which she called "continued and impressive."

    Solid performances inside its stores and at its fuel pumps contributed to the company's net income of $27 million for the quarter, up from $25 million for the same period in 2015.

    CST further broke out its profit growth in the United States and Canada at 27 percent and 10 percent respectively for merchandise and services, and 24 percent and 9 percent respectively for motor fuel.

    Along with growing sales and profit, CST is focused on expanding both its network and store size. During Q2 2016, the retailer sold its stores in California and Wyoming but purchased Florida- and Georgia-based Flash Foods, "effectively exchang[ing] 79 smaller, more fuel-focused stores in constrained markets for 165 bigger stores," Lubel explained.

    For comparison, company officials cited that the California/Wyoming stores had a total fuel gross profit of $7.2 million during the latest quarter along with merchandise and services sales of $17 million, while the acquired Flash Foods stores had a total fuel gross profit of $9.4 million along with merchandise and services sales of $68 million.

    At all its U.S. stores, CST reported its gross profit saw a particularly good quarter, with merchandise and services up 27 percent year over year to $160 million, and motor fuel up 24 percent to $73 million.

    Additionally, U.S. stores saw 5,224 fuel gallons sold per store per day, down slightly from 5,248 during Q2 2015, while merchandise and services sales were $4,152, down from $4,192. However, CST's U.S. core and new-to-industry stores saw an overall increase in merchandise sales and gross margins, the company reported.

    CST did not comment on the status of its ongoing strategic review, but did express confidence in future growth.

    "The integration of our Flash Foods network is on target and we have opened two new stores in Georgia and Florida. We have opened a total of 18 new stores in 2016, with 39 additional stores under construction," Lubel said. "I am pleased with our continued growth, reach and ability to delight more customers every day."

    CST opened a total of seven new-to-industry stores during the quarter.

    By Angela Hanson, Convenience Store News
    • About Angela Hanson Angela Hanson is associate editor for Stagnito Business Information's Convenience Store News and Convenience Store News for the Single Store Owner, where she is responsible for primary coverage of the candy, snacks and packaged beverages categories. Since joining CSNews as assistant editor in early 2011, she has played a key role in helping CSNews.com maintain its position as the No. 1 news source for the convenience store industry. Prior to joining CSNews, Hanson served as junior editor at Creative Homeowner book press and as managing editor of Anime Insider magazine. She has degrees in creative writing and visual communication technology from Bowling Green State University.

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