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FINDLAY, Ohio — Seven months after adding the Hess retail network to its portfolio, Marathon Petroleum Corp. (MPC) subsidiary Speedway LLC has converted about one-third of the stores to its own banner.
"Speedway continues to make excellent progress transitioning its new retail locations to the Speedway brand. As of today, we have converted more than 400 stores, including 260 completed during the first quarter," Gary Heminger, president and CEO of MPC, said during the company's first-quarter 2015 earnings call Thursday morning.
The comprehensive transition for each Hess store not only includes the changing of signs and canopies, but also a complete changeover of the back-office, point-of-sale and inventory control systems, as well as integration of the Speedy Rewards loyalty program, Heminger explained.
"With the majority of the Florida stores now converted, crews have been focused on conversions in the Northeast for the past month. This rapid pace of store conversions contributes to our confidence that we will achieve the synergies and market enhancements that we expect as we integrate this business," he said.
According to Heminger, first and foremost is getting "Speedway East" fully transitioned and converted over to the type of operations that Speedway President Tony Kenney runs.
"We are pleased with the progress we are making on the conversions to the Speedway brand. Along with that includes the implementation of our merchandise programs inside the stores, which is a real source of synergies down the road," Kenney said during Thursday's earnings call.
Speedway is going through the best practices of both companies. That is, in and of itself, a good source of the synergies the retailer is experiencing — primarily on the expense side of the business right now.
"As we continue to go forward, we're going to start to realize some marketing efficiencies as well," Kenney said. "On a full-year basis in 2015, we're right on plan with where we expect to be on the synergy capture in 2015."
Speedway is also banking on its Speedy Rewards loyalty program to draw customers into the newly converted convenience stores.
"The benefit we have with the conversion is our loyalty program. These markets, Florida in particular and as we move into the Northeast, they really haven't had a strong presence of a retail loyalty program, said Kenney. "We are getting a lot of good interest of customers signing up for our loyalty program, which is probably the best benchmark we have right now in terms of how we are attracting new customers."