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CORPUS CHRISTI, Texas -- Susser Holdings reported strong third quarter results, with merchandise sales topping $96 million, a 10.9 percent increase from the $86.7 million recorded in the third quarter of 2005. The company attributed this increase to growth in its Laredo Taco Company restaurant sales and beer, packaged and fountain beverage sales. Merchandise margins were flat compared to the third quarter of 2005, as a result of stronger restaurant and beverage performance balanced by a decline in cigarette margins.
Total revenue equaled $605.1 million in the third quarter, an increase from the $528.1 million in 2005. Net income was impacted by higher utility expenses, credit card fees and higher rent, totaling $3.3 million, as a result from the December 2005 sale/leaseback of 74 locations.
"Our third-quarter results reflect strong year-over-year increases on the retail side in merchandise sales and margins and continuing traction from our Laredo Taco Company restaurant business," said Sam L. Susser, chief executive officer of Susser Holdings Corp.
Same-store sales for the nine months ended Oct. 1, increased 6 percent. Average fuel volume also showed healthy growth of 8.5 percent to 96.2 million, due to favorable fuel purchasing costs, which provided record fuel margins of 21 cents per gallon.
During the quarter, the company also released its initial public offering (IPO) which raised the company $113 million in net proceeds. "This offering will enable us to continue Susser's strong pace of growth, while strengthening our balance sheet and increasing our financial flexibility," Susser said.
Also in the third quarter, the company expanded and upgraded some of its locations. Four new locations were opened, while one was closed. Total store count at the end of the quarter was 323. Last month alone, the company opened three stores.
Earlier this year, the company signed a 12-year fuel supply agreement with Valero Marketing and Supply Co. to supply almost all of its locations with fuel that was formerly supplied by CITGO. As a part of the plan, the company began the rebranding of the stations to Valero or Shamrock banners in September. The rebranding effort is expected to be complete by the end of the first quarter of 2007.
Its convenience stores are also getting a makeover, from the Cicle K brand to the company's own Stripes brand. Stores are currently undergoing the makeover, and are expected to be completed by year end. At the end of the third quarter, 57 new and existing stores sported the Stripes brand. An additional 39 were switched during October.
Looking ahead, the company plans to open five to seven stores in the fourth quarter, making the stores opened in 2006 total 16 to 18 stores. In 2007, the company plans to open 18 to 22 stores, almost all of which will host a Laredo Taco Company restaurant.