Susser Eyeing Growth in Dallas-Fort Worth After Latest Deal

CORPUS CHRISTI, Texas -- Fresh off a deal between its wholesale division Susser Petroleum Co. LLC and Dallas/Fort Worth-based Community Fuels of Texas LP, Susser Holdings Corp. is looking to grow its presence in that metropolitan area.

Speaking at the Imperial Capital Fifth Global Opportunities Conference in New York City this afternoon, Susser CFO Mary Sullivan told attendees that prior to Monday's deal, the company's holdings mostly centered around the Houston area. But the locally headquartered company hopes to use its latest acquisition in the Dallas-Fort Worth metro area as "a springboard for additional growth in that area."

Sullivan explained that while Susser is still heavily involved in fuel distribution, the publicly traded company has concentrated on growing its Stripes convenience store portfolio over the past 20 years. That portfolio now includes 535 stores in Texas, Oklahoma and New Mexico, and all totaled, fuel produces roughly one-third of retail gross profit, with the remaining two-thirds coming from inside sales, she noted.

Susser is turning to several key factors to drive future growth, including increasing same-store merchandise sales -- which it is on track to do for the 22nd consecutive year -- and building big-box stores. The big boxes, Sullivan said, measure around 5,000 square feet compared to the traditional Stripes c-store at 2,000 square feet.

Performance data from Susser's newer big-box stores confirm the company's focus on development. "Our new stores are generating significantly more cash flow than our legacy stores," Sullivan said, adding that the big-box stores are situated on bigger lots that allow for more parking spaces and gas pumps.

With new stores, she said, "a 1-percent increase in store count is really more than a 1-percent increase in cash flow."

To date in 2011, Susser has opened 13 new stores and has seven more under construction -- which fits with the company's 2011 guidance to open about 19 stores. And while Susser has yet to release its official guidance for 2012, "I can tell you it will be more," Sullivan said.

Location also plays a role in Susser's growth plans. "Part of our success is that our operations are primarily in Texas, she added. The Lone Star State enjoys a continually growing population count and the second highest birth rate in the country. In addition, 38 percent of the population is Hispanic and 60 percent of the male population is under 35 years old. "Those are great demographics for convenience stores," she said.