September 2, 2008 / 6:59 PM / in 10 years

Couche-Tard profit falls, makes executive shuffle

TORONTO (Reuters) - Alimentation Couche-Tard Inc (ATDb.TO) reported a 32 percent drop in quarterly profit on Tuesday as a sluggish U.S. economy weighed on results, at the same time as it announced an executive shuffle.

North America’s second-biggest convenience store operator said net earnings were $47.2 million, or 24 cents a share, in the first quarter, ended July 20, down from $69.1 million, or 33 cents a share, a year earlier.

Analysts, on average, had expected Couche-Tard to report earnings of 21 cents a share before items, according to Reuters Estimates. The company’s shares closed up 5 percent at C$13.65, bucking a sharp downturn in the broader market.

The Laval, Quebec-based company said quarterly results were also hampered by a non-recurring income tax expense of $8.3 million related to a corporate reorganization.

Couche-Tard, which operates under the Circle K banner in the United States and Mac’s in Canada, said revenue rose to $4.3 billion from $3.6 billion, helped by an increase in retail gasoline and diesel prices, and major acquisitions.

Fuel margins in the United States fell to 15.55 cents a gallon from 16.73 cents, the company said.

Chief Executive Alain Bouchard said in a conference call that record-breaking motor fuel prices hurt the company’s volumes and margins as customers were more careful with their spending.

“This is the first time we have faced such difficult economic conditions since our entry in the U.S. market,” Bouchard added.

Couche-Tard, a retailer and gas station operator, said its total merchandise and service gross margin was 33.4 percent. U.S. same-store sales were flat, and down 0.7 percent in Canada.

Couche-Tard’s board declared a quarterly dividend of 3.5 Canadian cents a share to shareholders of record as of Sept 11, to be paid Sept 19.

Couche-Tard stock was up 6.5 percent at C$13.84 on the Toronto Stock Exchange on Tuesday afternoon.

Also on Tuesday, Couche-Tard announced Richard Fortin was stepping down as chief financial officer, effective immediately, but will continue to sit on the executive committee. He will become chairman of the board on Oct 12.

Raymond Pare, currently vice-president, corporate finance and treasurer, will become CFO.

Alain Bouchard, currently acting as the company’s chairman, will continue as president and chief executive.

($1=$1.07 Canadian)

Reporting by Jennifer Kwan and Leah Schnurr; editing by Rob Wilson

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