Casey's Pursuing Growth on Three Fronts

12/8/2016

ANKENY, Iowa — Casey's General Stores Inc. is up at bat and swinging for the bleachers on three major growth initiatives: store count growth, 24-hour formats, and pizza delivery.

In its second quarter of fiscal year 2017, Casey's opened 11 new store constructions, completed nine replacement stores, and acquired three stores, according to Bill Walljasper, chief financial officer. The convenience store chain also completed 15 major remodels during the quarter.

The Ankeny-based retailer has an additional 15 stores under contract for acquisition, and Walljasper expects these purchases to be completed and the stores reopened as Casey's in the back half of this fiscal year. 

"We are encouraged by the increased dialogue we are having with potential sellers; however, we will remain patient and disciplined in our evaluation of opportunities," the CFO said during the company's Q2 earnings call Thursday morning.

In addition to all this activity, Casey's currently has 39 new stores, 22 replacement stores, and 37 major remodels under construction. It is on track to complete an additional 76 major remodels during the remainder of the current fiscal year, bringing the total to 100.

Helping this growth along, Casey's second distribution center, which opened in February, is "performing extremely well," Walljasper noted. One of the benefits of having this second distribution center is that it opens up new geographies for Casey's to expand its operating footprint. 

"This, along with increased resources in our store development department, has put us in a better position to accelerate our unit growth," he explained. 

The chain currently has 84 sites under contract for future new store construction — the majority of which will be completed in fiscal year 2018. 

"Our store count at the end of this quarter was 1,941. We believe, given our strong balance sheet and expanded geography, we are positioned very well for future growth," Walljasper said.

EXTENDED HOURS & DELIVERY

Along with unit growth, Casey's continues to convert more of its c-stores to 24-hour operations and pizza-delivery locations. Through the first six months of this fiscal year, 89 locations converted to the 24-hour format and 70 stores converted to the pizza delivery format. 

Due to the strong performance of the pizza delivery format, plus additional opportunities in smaller communities, Casey's will accelerate the rollout of the program. Specifically, the retailer plans to convert roughly 90 more stores to the pizza delivery format over the remainder of the fiscal year, according to Walljasper. This will bring the chain's total stores converted for pizza delivery this fiscal year to 160. 

"Currently, we have approximately 1,022 stores that are in the 24-hour format, 552 stores that are in the pizza delivery format, and have completed 388 major remodels," he added. 

The convenience retailer's online ordering system continues to gain traction as well. The system made its debut at the beginning of the calendar year. 

"Subsequent to the rollout in January, total downloads for [our] mobile app have exceeded 616,000 and continues to grow," said Walljasper. "The number of pizza orders done online has climbed to over 10 percent, and the basket ring of the online orders has increased and is now over 20 percent higher compared to a telephonic order. We believe the contribution will continue to grow as the number of downloads of our mobile app increases."

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