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ANKENY, Iowa — Now that its second distribution center in Terre Haute, Ind., has been up and running without any hiccups for four months, Casey's General Stores Inc. will soon expand into a new market of Ohio, Chief Financial Officer Bill Walljasper revealed Tuesday during the company's 2016 fiscal fourth-quarter earnings call.
“We’re excited about Ohio,” he said. “It has similar demographics to seasoned states we already serve, like Iowa and Illinois.”
The executive added that although definitive plans have not been made, Casey’s is looking into expansion into Michigan as well. “We should be there in the near future,” stated Walljasper.
The convenience store chain's organic growth plan also calls for further expansion into Casey’s newest states of Arkansas, Tennessee and Kentucky, where the retailer has been quite successful despite having lesser brand awareness than in seasoned states. Casey’s Pizza at the Pump program, which offers consumers cents off per gallon when buying a large pizza, has been a major driver of success in these new states.
In all, Ankeny-based Casey’s has a goal of building and/or acquiring 77 to 116 stores in its fiscal year 2017, which began May 1, as well as replacing 35 existing locations and remodeling an additional 100 stores.
The c-store retailer plans to convert an additional 110 locations to 24-hour locations in its 2017 fiscal year and add pizza delivery service to 100 or more locations during the 12-month timeframe, relayed Walljasper.
Casey’s operated 1,931 c-stores as of April 30. Approximately 980 of these stores are 24-hour locations currently and 420 offer pizza delivery.
HEADWINDS ON THE HORIZON
Although Casey’s had a strong fiscal 2016 across all in-store categories, as well as the forecourt, the c-store chain does face headwinds in the form of operating expenses that all of its competitors face. Walljasper acknowledged that increasing minimum wages and new exempt employee overtime rules will most likely result in increased operating expenses for the retailer in the future.
The EMV automated fuel dispenser liability shift deadline, scheduled for Oct. 1, 2017, is another expense that Casey’s is currently researching. EMV is an acronym for Europay, MasterCard and Visa, the three companies that originally created the security standard. If c-store retailers don’t upgrade their forecourt dispensers to accept chip-and-signature cards by October 2017, they could be held financially responsible for fraud occurring at the pump.
“We’ve already completed the EMV upgrade at the POS [point-of-sale],” Walljasper said. “We are currently evaluating EMV at the forecourt. The EMV conversion could cost $30,000 to $40,000 per store, depending on the number of pumps it has.”
For a review of Casey’s 2016 fiscal fourth-quarter and full-year results, click here.