You are here
CORPUS CHRISTI, Texas -- While other c-store retailers have reported soft earnings in the face of a struggling economy, this is not the case for Susser Holdings Corp., which released positive first quarter results late yesterday -- including an 80.8 percent jump in merchandise sales to $168.8 million, from $93.4 million seen in the year-ago quarter -- thanks to the addition of the company's recently acquired Town & Country Food Stores, and sales increases of packaged drinks, cigarettes, beer and foodservice. On a same-store basis, merchandise sales increased 8.2 percent for the quarter.
The stellar results don't end with its sales. Total revenue for the company increased 89.3 percent to a record $1 billion, from $528.6 million in the first quarter of 2007. Gross profit also jumped 74.7 percent to $91.5 million, compared with $52.4 million seen in the comparable quarter from the stand-alone Susser operation.
In addition, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) grew 113.2 percent to $16.6 million, compared to $7.8 million seen in the prior year's first quarter. The company attributed this figure to the Town & Country contribution, along with experiencing a quarterly merchandise margin of 33.6 percent -- the strongest in more than six years, according to the company.
"Our above-average same-store sales growth and our increased merchandise margin of 33.6 percent in the first quarter demonstrate that our primary markets in South and West Texas are not seeing the kind of economic slowdown that has impacted other parts of the country," Sam L. Susser, president and CEO, said in a statement. "In fact, although rising oil and refined product prices are putting pressure on the broader economy -- and putting pressure on our retail fuel margins and credit card fees -- our oilpatch markets in west and southeast Texas and southern Oklahoma are seeing a boost in economic activity from higher energy prices."
He continued: "We will, however, remain vigilant as we look for any sign of a consumer slowdown, and we intend to manage our business and our capital outlays prudently and conservatively."
However, not all figures were positive. Susser saw a first quarter net loss of $3.4 million, growing $1 million from the $2.4 million loss suffered in the year earlier quarter. The company said net income was impacted by slightly lower gross profit from retail fuel sales, increased credit card expenses and higher interest expenses related to the fourth quarter 2007 acquisition of Town & Country.
At the forecourt, retail fuel volumes increased by more than two-thirds to 169.3 million gallons for the first quarter, due to the Town & Country acquisition. Average gallons sold per location increased 7.2 percent compared to the first quarter of 2007, which the company attributed in part to the re-branding of its fuel islands to Valero brand during the year-ago first quarter and strong overall customer traffic.
Activities taking place during the quarter included the continued integration of the Town & Country stores. Susser noted that the company has begun its final phase of systems integration, and expects to complete it this quarter.
"We remain on track with our integration program for Town & Country, and we are pleased with the performance of those stores in west Texas and eastern New Mexico since we closed the transaction last November," he said. "We are starting to see improvement in our merchandise margins from improved supply contracts and in-store merchandising efforts, and we continue to look for additional opportunities for savings."
Some integration milestones underway this quarter include:
-- The implementation of a streamlined management structure;
-- Achieved purchasing synergies on numerous supply agreements;
-- The consolidation of food purchasing and distribution with Stripes' suppliers;
-- Completed implementation of its Human Resources information system and improved store staffing; and
-- Remerchandised stores and the addition of a number of new products to increase sales and profitability.
Other activities during the quarter included the opening of three new locations, bringing the company's store count to 507 as of March 30. To date, one more store has been opened, and four are under construction or under contract for purchase, according to the company. Susser also opened four new restaurants within stores, and closed one, bringing the number of stores with restaurants to 285, or 56 percent of all stores.
Also during the quarter, the company completed the sale/leaseback of seven retail sites for $19.6 million, the company stated. For the remainder of 2008, the company has received an additional $45 million of sale/leaseback funding.
Susser also reaffirmed its guidance for the rest of 2008, except for its new store builds, noting that it has decreased the number of stores it plans to build this year to 12 to 18.