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BRENTWOOD, Tenn. -- MAPCO Express Inc. is keeping its eye on the bigger prize as it continues to add more large-format stores to its retail portfolio.
During the first quarter of 2014, three new large-format stores opened for business and plans call for an additional seven to nine locations to open during the remainder of 2014, according to Danny Norris, vice president of finance for Delek US Holdings Inc., parent company of MAPCO.
Large-format locations now account for 56 locations out of a total store count of 361, he said during Delek US Holding's first-quarter earnings call Thursday morning.
Despite several moves by other companies to either spin off or sell their retail segments, Uzi Yemin, chairman, president and CEO of Delek US, said it is too early to talk those possibilities for MAPCO. With three new mega stores in the first quarter and several more under construction, the company is in the process of building its retail chain and needs to let the stores mature before it starts talking a spinoff or sale, he explained.
"We invested a lot of money into them and a lot of effort and sweat for them to perform. We just need to be a little patient to make sure these stores mature and perform the way we want them to perform," Yemin said.
He added that Delek US is building the MAPCO chain around its terminal and refining system. "More and more, we are integrating that system into the retail to enjoy both ends," he said. To that end, the mega stores are rising in the Arkansas and Memphis markets to support its terminal and refining business.
By the Numbers
Looking at first-quarter earnings, the retail segment contribution margin was $5.9 million in the first quarter of 2014, down from $7.9 million in the first quarter of 2013. Lower fuel and merchandise margins were the primary factors in the year-over-year decline.
Specifically, merchandise margin was 28.4 percent in the latest quarter, compared to 29.3 percent in the same period in 2013. The dip was partly due to a change in cigarette pricing strategies, which began in April 2013.
In addition, fuel margin was 12.4 cents per gallon compared to 14.5 cents per gallon in the prior-year period.
These declines were partially offset by a 5.3-percent increase in same-store merchandise sales on a year-over-year basis.
Operating expense was $32.2 million, up from $31.6 million in the first quarter of 2013, primarily due to maintenance, lease expense and utilities associated with the shift toward large-format stores, according to the results.
Overall, Delek US reported first-quarter net income of $33.7 million vs. net income of $77.5 million in the 2013 first quarter.
Brentwood-based Delek US Holdings Inc. is a diversified downstream energy company with assets in petroleum refining, logistics and convenience store retailing. The retail segment markets motor fuel and convenience merchandise through a network of approximately 361 company-operated convenience store locations operated under the MAPCO Express, MAPCO Mart, East Coast, Fast Food and Fuel, Favorite Markets, Delta Express and Discount Food Mart brand names.