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BRENTWOOD, Tenn. – MAPCO Express, a wholly-owned subsidiary of Delek US Holdings Inc., will open its first "mega" store in Sherwood, Ark., at the end of this month, Delek's President and CEO Uzi Yemin said during the company's third-quarter earnings conference call this morning.
Yemin added that this location will be followed by many more mega stores in the near future. The company plans to open 10 to 12 mega stores per year, with the majority being built in Arkansas. He said mega stores will having fueling options, but did not expand upon their square footage or what services would be offered inside the new convenience stores.
As CSNews Online previously reported, in August during Delek's second-quarter conference call, Mark Cox, the company's executive vice president and CFO, said MAPCO intended to have five to 10 "new format" locations under construction by the end of the year. However, he added construction slowed due to delays in the development process.
Regarding Delek's latest earnings, the company saw third-quarter net income at its retail properties decrease to $15.6 million, from $18.7 million during the same quarter in 2010. Delek cited declines in its retail fuel and merchandise margins, as well as increased credit card expenses resulting from higher retail fuel prices, as the reasons for its c-stores taking in less money compared to last year.
Merchandise margins dipped to 29.0 percent during Delek's latest quarter, compared to 30.1 percent in 2010's third quarter.
On a positive note, same-store merchandise sales at Delek's retail locations increased 2.4 percent compared to last year -- the company's ninth consecutive increase. Same-store foodservice sales improved by 18.8 percent, which the company attributed to its enhanced concentration on fresh food quick-service restaurant concepts in about 20 percent of its store base.
Also improving during Delek's latest quarter was same-store sales of private label products, which increased by 30 percent compared to 2010's third quarter. According to Delek, private label products now account for 4 percent of the company's total merchandise sales.
Delek's c-stores sold 106.5 million gallons of fuel during its latest quarter, compared to 108.2 million gallons last year. Fuel margins were 18.8 cents per gallon, compared to 19.6 cents per gallon during the third quarter of 2010. "We implemented a more aggressive approach to selling fuel gallons," Cox said during this morning's conference call.
Delek trimmed its store count compared to a year ago. During last year's third quarter, the energy company operated 420 stores. It now operates 384 locations.
As a whole, Delek US' earnings increased dramatically compared to last year. The company earned a record $92.5 million for its latest quarter ending Sept. 30, compared to a loss of $9.9 million during last year's third quarter. According to Noel Ryan, director of investor relations, the company's refining segment can be thanked for 90 percent of that earnings increase.
"Our performance this year has been outstanding," Yemin said during the conference call. "We feel our balance sheet is very strong."