Couche-Tard profit jumps on sales, shares rise
(Reuters) - Canadian convenience store operator Alimentation Couche-Tard Inc (ATDb.TO: Quote) reported a sharp increase in earnings on Tuesday, sending its shares higher, with results helped by strong sales, minor acquisitions and a robust motor fuel business.
Couche-Tard operates about 5,800 convenience stores across North America, the majority of which sell fuel. Its banners include Couche-Tard, Mac's and Circle K.
Fuel volume sold jumped 25.5 percent in the United States and 14.0 percent in Canada in the company's fiscal fourth quarter, ended April 29, largely due to the impact of acquisitions. At existing locations, volume was roughly flat.
Gross profit margin on fuel rose in both Canada and the United States. Canaccord Genuity analyst Derek Dley said strong U.S. fuel margins played the biggest role in lifting earnings above his expectations, but other factors were also relevant.
"Same-store sales were really strong again in the U.S. and Canada, and I think this was driven by continued outperformance in food," he said. "And the company's cost cutting continued at an impressive clip."
Couche-Tard has been expanding its fresh food offerings, which can offer better margins than convenience store standbys like cigarettes, Dley said.
There were 13 weeks in the quarter, which also helped results.
After the end of the quarter, in June, Couche-Tard entered Europe, acquiring Norway's Statoil Fuel & Retail in a $2.6 billion deal. Statoil has about 2,300 outlets, mainly in Scandinavia, as well as in Poland, the Baltics and Russia.
The company said the acquisition would contribute to earnings immediately, although it had also increased debt. Continued...