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Couche Tard on hunt for acquisitions but CEO doesn’t get rival’s Speedway deal

couche-tard2-780x520=Alimentation Couche-Tard continues to be on the hunt for acquisitions even as it claims convenience store rival 7-Eleven’s blockbuster US$21-billion acquisition of the Speedway network in the U.S. doesn’t make sense.

Chief executive Brian Hannasch told investors September 2 that the deal announced last month for the 3,900-store network owned by Marathon Petroleum “traded at value, quite honestly, I can’t understand.”

He said potential acquisition deals have been relatively quiet in the quarter but that activity should pick up as the focus on the COVID-19 pandemic lessens.

“Now that COVID has become a bit of the new normal, we are starting to see a little more deal flow … And if the value is there, we’ll certainly take advantage of those opportunities.”

The fragmented U.S. market remains a prime target as are significant opportunities in Western Canada.

Asia-Pacific, including Australia, remains “a strong area of focus due to long-term growth potential.”

“We are exploring several opportunities actively there,” Hannasch said, adding that the pandemic has created uncertainty Down Under.

He said Ampol (formerly called Caltex), which Couche-Tard had previously targeted, has been weaker than expected. Peter Sklar of BMO Capital Markets said he doesn’t believe Couche-Tard will pursue a deal in the near-term because of its weak financial performance.

While there are markets in Europe that are interesting, the region isn’t a priority, Hannasch noted.

Acquisitions are part of Couche-Tard’s strategy to double its size within five years.

Hannasch said its five-year plan remains on track after two years despite the coronavirus.

“I’m pleased that we continue to make good progress on most of our initiatives. While the pandemic has had an impact short-term on traffic patterns and behaviours, there’s a lot of pushes and pulls.”

Couche-Tard’s shares surged 7.5% Sept. 2, after it reported strong first-quarter results after markets closed on Tuesday.

The company said its net profit surged 44% despite a big drop in fuel sales at its convenience stores because of COVID-19.

The Quebec-based retailer that operates the Circle K brand says it earned US$771.1 million or 70 cents per diluted share in its first quarter, up from US$538.8 million or 48 cents per share a year earlier.

Adjusted earnings attributable to shareholders came in at 71 cent per share, up from 40 cents per share forecast by analysts, according to financial markets data firm Refinitiv.

“We had an exceptional quarter, I think, both financially and operationally, as we’ve seen an increase in shopping occasions and solid execution by our teams to take advantage of changing consumer behaviours during this COVID period,” Hannasch told analysts.

Revenues for the three months ended July 19 decreased 31.4% to US$9.71 billion, compared with US$14.2 billion a year earlier and below forecasts of US$10.55 billion.

The retailer said its in-store sales benefited from shoppers buying more, while fuel sales were hurt by lower demand and prices, partially offset by strong fuel margins.

Tobacco sales were strong, especially in Canada.

Same-store fuel volume decreased 21.2% in the U.S., 25.6% in Canada, and 12.4% in Europe.


Canopy Growth opens cannabis stores in Alberta

Ontario-based Canopy Growth Corp. is preparing to open its first retail cannabis stores in Alberta.

The company is to open 10 stores under its Tweed and Tokyo Smoke banners and says it has additional locations in the pipeline.

Visitors Centre_Tour_jp94Rx9A“With 10 new stores set to open and additional locations in the pipeline, we are thrilled to announce this milestone and excited to bring the Tokyo Smoke and Tweed guest experiences to Alberta for the first time,” Grant Caton, general manager Canopy Growth, said in a statement. “We’ve seen the value brick-and-mortar retail brings to our consumers – welcoming new guests to learn about cannabis and building relationships in new communities – and we’re excited to share our knowledge and industry leadership across the region.”

The stores include seven locations in Calgary and one each in Spruce Grove, Lethbridge and Edmonton. Canopy says it will create more than 100 jobs in Alberta.

The following retail locations are set to open their doors this week:

Tokyo Smoke:

  • Unit 100, 4310 MacLeod Trail SW, Calgary, AB
  • 418 16th Avenue NW, Calgary, AB
  • Unit 101, 1022 17th Avenue SW Calgary, AB
  • 3011 14th Street SW, Calgary, AB
  • Unit 204, 131 Century Crossing, Spruce Grove, AB
  • Unit 104, 1020 9 Ave SE, Calgary, AB


  • 8650 112 Ave NW, Calgary, AB
  • Unit 122, 425 Aviation Road NE, Calgary, AB
  • Unit 130, 333-6th Street South, Lethbridge, AB
  • 10431 82 Avenue, T6E 2A1, Edmonton, AB

Canopy is one of Canada’s largest cannabis producers and retailers. In February 2019, Couche-Tard Inc. entered into a multi-year agreement with Canopy Growth. Through this partnership, the convenience giant said it planned to “lean on Canopy Growth’s cannabis expertise and leverage its experience with other age-restricted products to focus on the safe, responsible and lawful sale of cannabis, consistent with the  legislation enacted by the federal and provincial governments.”

Quebec-based Couche-Tard is vying for a piece of the North American market and is investing heavily, including a partnership with Alberta retailer Fire & Flower. This summer, the cannabis retailer co-located two locations with Circle K stores.

Canopy Growth says its expansion into Alberta will bring its number of retail locations across Canada to a total of 50, with more planned later this year.

-With files from The Canadian Press




Ontario’s pot store lottery winners sell shops as more consolidation expected

shutterstock_1140581744More than a year after winning the chance to open one of Ontario’s first cannabis stores through a provincial lottery, Lisa Bigioni has walked away from her Niagara Falls pot shop.

The store had become like a second home and it was painful to leave, but Bigioni wanted to make good on a deal she signed with a large cannabis brand that helped get her shop up and running under the tight deadlines set by the province.

“(Choom Holdings Inc.) offered a whole bunch of expertise that I needed after the lottery, but then in exchange for that, they said, ‘we’d like to buy your store when the time is right.’ The time came and there was a great deal on the table, so here we are,” said Bigioni, who sold to the Vancouver-based company in April for $2 million in cash and $2 million in common shares.

She’s using the proceeds to open her own Stok’d cannabis store chain.

The Alcohol and Gaming Corporation of Ontario, which oversees cannabis retailers, couldn’t say how many of the first lottery store winners are still associated with the shops they opened, but The Canadian Press has counted several that have changed hands _ and experts say more are likely to follow.

Such sales are being replicated by several of Bigioni’s 24 fellow lottery victors from round one, who were not allowed to sell their stores until last December, and 42 from a subsequent lottery.

Fire & Flower / Circle K Co-Located Cannabis Stores - (c) 2020 Fire & Flower Holdings Corp. (CNW Group/Fire & Flower Holdings Corp.)

Fire & Flower / Circle K Co-Located Cannabis Stores – (c) 2020 Fire & Flower Holdings Corp. (CNW Group/Fire & Flower Holdings Corp.)

Fire and Flower (which recently co-located two stores with Circle K) has already scooped up two stores in Kingston and Ottawa, High Tide landed two in Sudbury and Hamilton and Canopy Growth Corp. got in on the action too.

Cannabis retail licences held by lottery winners technically cannot be transferred, but the stores can be taken over by new owners if the buyer applies for and is granted a new licence and authorization to operate the location.

For many of the lottery winners, selling is a no-brainer.

With one transaction they can make millions and rid themselves of the challenges of supply and security, regulatory changes and general hiccups that have come with owning a business in a newly legal sector.

The cannabis companies clamouring for the properties have a lot to gain too.

Many are battling it out across Canada to grab as much of the bricks-and-mortar market as they can. Stores already operating are ideal because they have some name recognition with consumers and save buyers the time and headaches associated with building from scratch.

“It’s certainly attractive on both ends,” said Melissa Gallagher, Canopy Growth’s director of franchising.

Canopy-backed Tokyo Smoke signed a deal in May with lottery winner Christopher Comrie, who operated Central Cannabis in London, Ont., but was based in Toronto.

Tokyo kept Comrie’s staff through an agreement, but chose to switch up the store’s branding and layout.

“The entire process probably took about three weeks in total, and required us to close only for one day, which ended up being a holiday, so it worked out quite well,” said Gallagher.

The experience was so positive that she says taking over more properties from lottery winners “is not off the table,” especially as Tokyo looks to “aggressively” expand.

However, not everyone is in the selling mood.

Hunny Gawri, a realtor who runs the Hunny Pot Cannabis Co. store in downtown Toronto, is keeping his business. He remembers having to turn his phone off after winning a licence in the lottery because so many cannabis brands wanted to partner with him with the potential to buy later.

“A lot of people won the lottery without the resources or the skillset to be able to execute on it and there was a lot of people that were chomping at the bit that had laid the groundwork to be able to roll out a retail chain or were already doing it on the West Coast,” recalled Hunny Pot spokesman Cameron Brown.

“But striking a deal and going with these other brands was not really what Hunny wanted to accomplish.”

So Gawri stuck with his first store and added another five across Canada – all run without partnering with a bigger player.

Brown believes the next six months will be interesting for cannabis retail in the province.

The AGCO said it has received 1,066 retail operator licence applications and 892 retail store authorizations _ both necessary for opening a cannabis store. So far, 116 stores have opened across the province.

Some shops just won’t open because of the length of the approval process and the costs and challenges of running a store, said Brown.

Others, he predicted, will close.

Corey Gillon, the chief executive of Choom, believes Ontario will still see deals like the one he struck with Bigioni, who was a director at the University of Toronto before getting into the cannabis business.

Choom hasn’t bought properties from Bigioni’s fellow winners or from the winners of a second lottery because Gillon said some of the numbers being tossed around have not made sense from a payback or performance perspective.

He believes opening stores from scratch is the best model for Choom overall, but still said, “we’re going to see consolidation in the space.

Brands with several stores may look to expand their footprint by reaching deals with people who only own one or two shops, he said.

“I think there are opportunities and people are already realizing that.”

Read: Couche-Tard vying for a piece of the North American cannabis market


Business model helps Couche-Tard navigate COVID-19

LAVAL, Quebec — Alimentation Couche-Tard Inc., parent company of Circle K, reported a relatively strong fourth quarter for its 2020 fiscal year despite grappling with the challenges of the COVID-19 pandemic.

Brian Hannasch

Brian Hannasch

“Our agile, decentralized model, as well as the advancements we made in operational excellence this past year, helped us to face the unprecedented challenges of COVID-19 and I’m proud to say, I think we’ve emerged from this historic year a better and stronger company, both financially and culturally,” president and CEO Brian Hannasch stated during the company’s Q4 earnings call on June 30.

“We ended the fourth quarter with strong top-line trends, including 12 weeks of positive traffic, before we endured a significant decline in traffic and fuel volumes with the pandemic stay-at-home orders implemented across our global footprint,” he added.

Looking at the fourth-quarter numbers, same-store merchandise revenue decreased by 0.5 percent in the United States and 6.5 percent in Europe, while increasing 4.7 percent in Canada compared to the same quarter last year.

From a fuels perspective, volumes declined sharply during the first weeks following the stay-at-home orders. For the fourth quarter overall, same-store road transportation fuel volumes decreased 18.3 percent in the U.S., 13.4 percent in Europe, and 23.5 percent in Canada compared to the same quarter a year ago. The sharp decline in volumes was mitigated by higher fuel margins, which benefited from the rapid and steep declining crude prices during the quarter, as well as lower competitive activity at retail.

“Through the implementation of restricted social measures in the various geographies in which we operate, the COVID-19 pandemic had a meaningful impact on our financial results, mostly driven by declining traffic across our entire network,” Hannasch explained.

The retailer saw its convenience store customers change their shopping behaviors, moving to larger basket sizes with more impulse and emergency items, and take-home packages — which partially offset the negative impact of lower traffic.

“We innovated quickly to meet the desire for less touchpoints, as well as different SKUs and package sizes,” he said. “We are placing the health and safety of our employees and customers at the forefront of our decision-making, and we are committed to being part of the solution in our communities where we work and live. I am truly grateful for the courage, care and commitment that our employees are showing toward each other, toward our customers, and the business.”


As the health crisis spread across countries and regions, Couche-Tard stepped in to “become part of the solution” in its communities, according to the chief executive.

For example, the retailer launched a free coffee, tea or Polar Pop offer for front-line and first-responder workers beginning in March. In addition, it contributed more than 40 million meals to Feeding America in the United States and beginning in June, the company pledged 5 million meals to food banks in Canada. In Europe, Couche-Tard delivered goods to the elderly and impaired, as well as care packages to hospitals and other facilities.

Couche-Tard also worked to innovate rapidly to meet the changing needs of its customers.

“We rapidly developed a click-and-collect model both in Europe and in North America for curbside delivery, and we’ve expanded home delivery to third parties with more than 1,000 sites now having home-delivery capability globally,” Hannasch explained.

The new innovations also included mobile payment options.

“The urgency of the pandemic brought out the best in our company’s ability to adapt the new community of solutions and technology, adjusting to the rapidly changing retail landscape,” he said.


One of the biggest adaptions for any convenience store operator during the past few months has been the suspension of self-serve items, and Couche-Tard’s locations were no different. Self-serve items were removed in many parts of its network — more prevalent in the U.S. since the retailer does not do a lot of self-serve in Europe.

Despite the change being mandatory in the affected areas, Hannasch observed: “I think it was resounding that the customers preferred the old way; they preferred the self-serve. We saw sales decline in those stores more than we did in stores where self-serve remained in place.”

With the U.S. in the relatively early stages of reopening, the chief executive said it is too early to tell what COVID-19 changes will stick around.

“I think it’s premature to say what the future will bring on, in terms of permanent changes in consumer habits. That said, the grab-and-go, low-touch nature of our ‘Fresh Food Fast’ program could be beneficial to us where we’re delivering quality products, good taste — great taste, actually — that doesn’t need to be handled by our staff in-store,” he said.


So far in the first quarter of its 2021 fiscal year, Couche-Tard is seeing a strong increase in merchandise sales as traffic gradually improves week to week.

“Many factors appear to be contributing here but, more notably, we continue to see the move to larger baskets that I pointed out earlier, and see the customer adjusting their shopping habits,” Hannasch pointed out.

“We think there’s some preference for the ease and convenience of our locations, and our channel over some other channels during this COVID period and COVID recovery,” he continued. “We’ve also gained new customers as we stayed open throughout the pandemic to meet their needs for emergency products, impulse buys and grocery items, which became increasingly popular, and we’re seeing some stickiness.”

On the fuels side, the retailer is seeing fuel volumes gradually return, and fuel margins have remained healthy through May and June.

“In recent days, there’s been a resurgence of COVID in parts of our U.S. network, and it is unclear how the virus in the global economy will develop in the weeks and months ahead,” Hannasch said. “So as such, we will continue to adhere to our customary financial discipline and maintain a robust contingency planning.”

As of April 26, Laval-based Couche-Tard’s network comprised 9,414 c-stores throughout North America, including 8,221 stores with road transportation fuel. Its North American network consists of 18 business units, including 14 in the United States covering 48 states and four in Canada covering all 10 provinces.

In Europe, Couche-Tard operates a retail network across Scandinavia, Ireland, Poland, the Baltics and Russia through 10 business units. As of April 26, its European network comprised 2,710 stores, the majority of which offer road transportation fuel and convenience products while the others are unmanned automated fuel stations that only offer road transportation fuel.

In addition, under licensing agreements, close to 2,350 stores are operated under the Circle K banner in 15 other countries and territories, which brings the worldwide total network to close to 14,500 stores.

Originally posted at Convenience Store News. 


Couche-Tard rolls out new “Fresh Food Fast” program

Like all convenience store retailers, Alimentation Couche-Tard Inc. has adjusted its operations during the COVID-19 pandemic. However, it has not taken its foot off the gas when it comes to key initiatives, such as the rollout of its new food program throughout North America.

Brian Hannasch

Brian Hannasch

The new program, which Couche-Tard calls “Fresh Food Fast,” presents a significant organic-growth opportunity, with expectations for both top-line and margin improvement, according to president and CEO Brian Hannasch.

“We continue to be excited about its potential. In markets where the new program has been available, customer feedback has been very positive, and both food unit sales and overall sales in the stores with the program have significantly outpaced comparable sales at other stores in those same markets,” he reported during the company’s fourth-quarter fiscal year 2020 earnings call, held June 30.

As the world entered the coronavirus pandemic, Couche-Tard moved quickly to cut costs, but there were a few items the company felt were “sacred,” Hannasch explained. These included IT initiatives, new-to-industry builds, and the new food program.

Unknown-1The parent company of Circle K did hit the pause button temporarily on rolling out the program because, according to Hannasch, Couche-Tard did not think “it was prudent” to allow sampling or to conduct training during the health crisis.

“However, we will continue to build out the program, and we continue to install equipment as planned. We laid the groundwork with approximately 500 stores during the [fourth] quarter and continue to expand rapidly toward our target of 1,500 installations for the calendar year and 2,300 stores during the fiscal year,” he stated.

Couche-Tard has resumed training on the new program, and all of its converted c-stores will soon offer the new food assortment.

In addition, the retailer continues to roll out its on-demand coffee program. The U.S. rollout is now complete, and Couche-Tard has shifted its focus to rolling it out across Europe, according to the chief executive, who added that the espresso-based beverage equipment was deployed with 450 machines during the fourth quarter.

Also in Europe, its Froster frozen dispensed beverage program is now available at more than 200 stores. The program has been a Circle K mainstay in North America.

“We continue to see great opportunity to scale this offer in that region, as it’s been a solid driver of incremental trips to our stores, especially in Ireland where we started testing last year, where traction with customers has been impressive, and more recent in the Baltics as we moved into warm summer months,” Hannasch said.

As of April 26, Laval-based Couche-Tard’s network comprised 9,414 c-stores throughout North America, including 8,221 stores with road transportation fuel. Its North American network consists of 18 business units, including 14 in the United States covering 48 states and four in Canada covering all 10 provinces.

In Europe, Couche-Tard operates a retail network across Scandinavia, Ireland, Poland, the Baltics and Russia through 10 business units. As of April 26, its European network comprised 2,710 stores, the majority of which offer road transportation fuel and convenience products while the others are unmanned automated fuel stations that only offer road transportation fuel.

In addition, under licensing agreements, close to 2,350 stores are operated under the Circle K banner in 15 other countries and territories, bringing the worldwide total network to close to 14,500 stores.

Originally published at Convenience Store News. 

Fire & Flower / Circle K Co-Located Cannabis Stores - (c) 2020 Fire & Flower Holdings Corp. (CNW Group/Fire & Flower Holdings Corp.)

Fire & Flower co-locates cannabis stores with Circle K

Fire & Flower / Circle K Co-Located Cannabis Stores - (c) 2020 Fire & Flower Holdings Corp. (CNW Group/Fire & Flower Holdings Corp.)

Fire & Flower / Circle K co-located cannabis stores

Fire & Flower Holdings Corp. is opening two cannabis retail stores adjacent to Circle K locations in the province of Alberta.

In a release, Fire & Flower says it expects “to benefit from high traffic Circle K locations to deliver an unprecedented level of convenience to cannabis customers, maximizing the benefit of the Spark Perks program and Spark Fastlane online ordering services at conveniently located stores.”

In July 2019, Couche-Tard announced it would make a strategic investment in Fire & Flower, providing the Canadian cannabis retailer with additional capital to further accelerate its expansion strategy. Couche-Tard invested approximately $26 million in the form of unsecured convertible debentures to obtain a 9.9% ownership interest in Fire & Flower on a fully diluted basis.

READ: Couche-Tard closes cannabis retailer deal

“Through this strategic investment, we reinforce our intention to become a key player in North America’s cannabis industry,” Brian Hannasch, president and CEO of Couche-Tard, said at the time. “We are excited to see what we can achieve together with Fire & Flower, as we further expand in Canada and look to leverage our presence in the United States and beyond.”

At the time, Fire and Flower has 23 locations and today, with the new openings, it has 51 stores, mostly in Alberta, Saskatchewan and Manitoba, but also in Ontario and Yukon.

The two new stores in Calgary and Grande Prairie are the duo’s first co-located retail stores, but they are looking at “additional opportunities to co-locate cannabis retail st

Fire & Flower / Circle K Co-Located Cannabis Stores - (c) 2020 Fire & Flower Holdings Corp. (CNW Group/Fire & Flower Holdings Corp.)

Fire & Flower / Circle K Co-Located Cannabis Stores – (c) 2020 Fire & Flower Holdings Corp. (CNW Group/Fire & Flower Holdings Corp.)

ores in the future.”

The co-located stores will be owned and operated by Fire & Flower and, in accordance with applicable regulations, are officially separate from the adjacent Circle K stores.

The Grande Prairie store is opening this week and the Calgary store is to open the week of July 13, 2020.

“As we continue to build our relationship with Alimentation Couche-Tard, Fire & Flower is very pleased to be embarking on this initiative together,” Trevor Fencott, CEO of Fire & Flower, said in a statement. “We believe that combining convenient pickup locations with digital engagement offered by the Hifyre platform and Spark Perks program presents our customers with a differentiated value proposition in an increasingly competitive cannabis retail market. This approach to innovation in omni-channel and convenience-oriented cannabis retail differentiates Fire & Flower and positions us well to capitalize on both domestic and international opportunities.”


Through its strategic investment with Alimentation Couche-Tard Inc., Fire & Flower has set its sights on the global expansion as new cannabis markets emerge.


Consumer shopping habits have changed during COVID-19 pandemic, says Couche-Tard

Alimentation Couche-Tard says shopping patterns have changed during COVID-19 lockdowns with consumers purchasing larger-sized goods and stocking up on beer, wine and tobacco products.

The Quebec-based convenience store chain says there has been strong growth in the sale of alcoholic beverages, in jurisdictions where these sales are permitted.

Brian Hannasch

Brian Hannasch

“With the closure of bars and restaurants, we saw a movement in packaged beverage towards larger take-home packages, particularly impacting all beer segments as customer buying shifted to larger pack formats,” CEO Brian Hannasch said June 30 during a conference call about fourth-quarter and record full-year results.

Couche-Tard beat expectations as it reported a fourth-quarter profit of US$576.3 million or 52 cents per share for the period ended April 26, up from US$293.1 million or 26 cents per share a year earlier.

He noted that there was a shift to cases of 24 and 30 beers from six-packs, along with grocery-sized packages of salty and confectionery items.

“There was also a notable shift from instant consumption or single-serve to take-home packages in that category.”

Even with traffic starting to improve as the economy reopens, Hannasch told analysts that he’s been surprised that some of the larger-sized formats remain popular as customers are limiting their shopping trips.

“We’ve also gained new customers as we stayed open throughout the pandemic to meet their needs for emergency products, impulse buys and grocery items, which became increasingly popular, and we’re seeing some stickiness,” he said.

Sales of food, fountain soft drinks and coffee, which declined with lower consumer traffic, have started to increase. But fuel volume, which suffered big drops as people worked from home, is coming back more slowly than merchandise in Canada “and remains a challenge.”

Hannasch said the shift to larger packages was “pretty global” even though alcohol sales aren’t available in Europe or much of Canada.

But he cautioned that it’s premature to say whether the changes in consumer habits will be permanent.

“What could have been the worst of times is turning us into a better, stronger company moving forward with our strategic growth plans and making it easy for our customers’ lives every day even during these difficult days.”

Meanwhile, Couche-Tard has joined Canadian grocers in ending its “appreciation” pay boost for workers. The $2.50 per hour increase ended June 12 in the U.S. and June 22 in Canada.

“We still have some thank-you bonuses in the summer for qualified workers and we also kept health benefits through the end of our calendar year for our employees,” said chief financial officer Claude Tessier.

Tessier added that the novel coronavirus could create some acquisition opportunities for the global retailer as smaller operators and chains struggle to keep up with investments in technology and enhanced safety measures for customers and employees.

“This could even be truer if we are going into a prolonged period of weakness or recession that could reduce their ability to deliver a strong performance.”


Alimentation Couche Tard Q4 profits nearly doubles despite lower revenues

couche-tard2-780x520Alimentation Couche-Tard Inc. beat expectations as it capped its fiscal year with profits nearly doubling in the fourth quarter despite a revenue decrease mainly due lower fuel demand because of COVID-19.

The Laval, Que.,-based convenience store operator reported after markets closed that it earned US$576.3 million or 52 cents per share for the period ended April 26. That compared with US$293.1 million or 26 cents per share a year earlier.

“This year, Couche-Tard became a better, and stronger company,” said CEO Brian Hannasch. “Our agile, decentralized model and advancements in operational excellence allowed us to face the unprecedented challenges of the COVID-19 crisis and fare far better than many other businesses.”

Reporting in U.S. dollars, Couche-Tard results were affected by a pre-tax gain of $41 million on the sale of its U.S. wholesale fuel business, a $22.8 million foreign exchange gain and $4.6 million adjustment on deferred taxes.

Excluding one-time items, adjusted profits were $521 million or 47 cents per diluted share, up from $289 million or 26 cents per share a year earlier.

Revenues decreased 26.1% to $9.69 billion from $13.11 billion, largely due to 34% decrease in fuel volumes.

“We also had a strong fourth quarter with positive traffic trends to begin with before we endured significant decline in traffic and fuel volumes with the pandemic stay-at-home orders implemented across our global footprint,” Hannasch added.

He said customers changed their shopping behaviours by purchasing more at each visit, including more impulse and emergency items.

Implementation of physical distancing measures decreased traffic across its entire network, starting mid-March in Europe and slightly later in North America.

Merchandise product demand shifted during the pandemic, which hurt margins.

Merchandise and service revenues decreased 2.6% to $3.2 billion with same-store revenues falling 0.5% in the U.S., 6.5% in Europe and increased 4.7% in Canada.

Merchandise gross margin decreased 0.9% in the U.S. to 33%, by 1.2% in Europe to 40.6%, and 1.2% in Canada to 31.8%.

Fuel sales declined rapidly during the first weeks after stay-at-home orders, but margins remained healthy.

Same-store road transportation fuel volume decreased 18.3% in the U.S., 13.4% in Europe, and 23.5% in Canada.

The retailer was expected to earn an adjusted profit of 43 cents per share on $9.36 billion of revenues, according to financial markets data firm Refinitiv

For the full-year, it earned $2.35 billion or $2.09 per share on $54.1 billion of revenues, up from $1.83 billion or $1.62 per share on $59.12 billion of revenues in 2019.

The results demonstrated Couche-Tard’s resiliency with better-than-expected same-store sales, said Derek Dley of Canaccord Genuity.

He said the 0.5% decrease in U.S. same-store merchandise sales was much better than his estimate for an eight% decrease.

Fuel margins rose to a record 46.9 cents US in the United States and were high in Europe and Canada as well, Dley added in a research note.

“With consolidation likely to accelerate over the next six to 18 months, in our view, we believe Couche-Tard is in an advantageous position to take advantage of what is likely to become a ‘buyers’ market,” he said.

Brian Hannasch

A clear set of guiding principles help Alimentation Couche-Tard navigate COVID-19 crisis

In a statement outlining its business stance in the wake of COVID-19, Alimentation Couche-Tard says it is adhering to a clear set of guiding principles as its business navigates the COVID-19 outbreak.

Brian Hannasch

Brian Hannasch

“During these troubled times, Couche-Tard is committed to being part of the solution in the communities where we work and live. Our mission as a company has always been to make our customers’ lives a little easier every day, and we know the best way to get through these difficult days is to band together and support each other,” president and CEO Brian Hannasch said in a business update published on the company’s website. “In most areas where we operate, we are considered an essential and critical business. As such, we have worked hard to stay open and serve the needs of our customers and employees. While the effects of this crisis may be felt for some time, our business model is robust and resilient against economic cycles, which will allow us to ride out this storm.”

Screen Shot 2020-05-19 at 12.47.55 PM

From the start of the crisis, the company says its response has been defined by a clear set of guiding principles across all banners:

  • We are all in this together: our company, our employees, our customers, and our suppliers.
  • We must put the health and safety of our employees and customers as our first priority.
  • We must stay true to our mission of making our customers’ lives a little easier every day.
  • We must think and act with a long-term mindset.
  • We must ensure the safeguard of our assets and manage the business with a strong focus on maximizing cash flows.

Measures to protect staff and customers

Couche-Tard’s global Health, Safety & Environment team moved quickly, capitalizing on its experience in dealing with past emergencies, such as hurricanes, floods, and widespread fires, to put in place preventative measures. These included, the installation of Plexiglas dividers at checkouts, the addition of queue line separators and floor markings to ensure proper social distancing, and the supply of gloves at the fuel pumps in certain parts of our global network.

On the food safety front, the c-store giant introduced strict cleaning and sanitization procedures in stores and food preparation areas, adding single-item packaging to bakery and other self-serve food items, suspending the use of refillable mugs and cups, and ceasing in-store product sampling.

At its distribution centres, the company did temperature checks to screen employees for possible symptoms of the virus.

Couche-Tard also put additional measures in place to support and reward employees for their efforts, including:

  • An Emergency Appreciation Pay Premium of $2.50 per hour in North America for all hourly store and distribution center employees.
  • An Employee Assistance Program to all North American employees for the duration of the pandemic.
  • An Emergency Sick Care Plan for hourly employees in North America that included both a bank of sick pay, as well as a pay continuation benefit for anyone that is either diagnosed with COVID-19 or placed under mandatory quarantine.
  • Access to virtual healthcare for hourly employees in the United States.
  • A COVID-19 Assistance Fund to help employees most severely impacted by the pandemic. The Fund is seeded through substantial salary contributions by company founder Alain Bouchard, as well as Hannasch and members of the company’s executive leadership team. The company said some employees also donated to the fund.

Like most organizations, Couche-Tard put supports in place for office employees to work from home whenever possible, while also moving ahead with plans to adapt spaces to comply with social distancing requirements and limit participants for in-person meetings.

As offices open around the globe in accordance with local health authority recommendations, the is introducing detailed checklists of cleaning and sanitization procedures, social distancing of seating and common areas, and potential work shift options have been put into place across the network.

 Community support initiatives

  • Couche-Tard launched an offer globally of free dispensed beverages for all first responders, medical personnel and employees. To date, more than two million drinks have been given out.
  • In Europe, the Company put in place the Circle K Patrol to help local communities by delivering, free of charge, merchandise to people who are most vulnerable to COVID-19 and assembling care parcels for hospital workers and those under strict confinement.
  • On April 9, Couche-Tard launched the “Little Thank Yous” initiative in Canada, which empowers customers to directly thank someone with a free Polar Pop or coffee on behalf of Circle K and Couche-Tard. On May 8, the initiative was launched in Europe. To date, close to 19,000 “Little Thank Yous” have been gifted in Canada and more than 3,000 in Europe.
  • On April 10, the Company pledged to donate 25 million meals to Feeding America. On May 4, that target was reached and Couche-Tard extended the pledge to 40 million meals to be given to local food banks. This commitment will continue through June 30.

Store performance

In Europe, from a broad perspective, shopping behaviour started to change during the second week of March, as the World Health Organization officially declared on March 11 that the novel coronavirus had reached a state of pandemic, according to a the company. In North America, the impact on shopping trends was similar but lagged that of Europe by one week. Sites remained open throughout most of the countries and regions in which Couche-Tard operates, as fuel retailers and convenience stores were deemed essential.

couche-tard2-780x520On the fuel side, the company said: “volumes declined rapidly during the first few weeks that followed the implementation of restrictive measures across the different regions, but stabilized during April and began to see a gradual improvement in the latter part of the month. Fuel margins overall have benefitted from the rapid and steep declines in crude pricing.”

From a merchandise perspective, “sales benefitted from pantry stocking in the early days of the crisis. Starting in mid-March, merchandise sales decreased due to reduced customer traffic, but were mostly stable in their decline week-over-week since then. Overall, a higher average basket helped offset a portion of the lost customer visits.”

What are people buying?

The company said, “demand has been greater for alcohol, tobacco products, basic staples, canned and dry goods, and cleaning and sanitation products. This has helped mitigate the negative impact from lower demand in the prepared food category.”

Informed by their early learnings, Couche-Tard’s teams in Europe recommended adjustments to the in-store assortment, which allowed stores in North America to better anticipate the changes in shopping behaviour.

What’s next?

Couche-Tard said it “has taken many actions aimed at right-sizing such things as non-critical capital expenditures, marketing and promotional expenses, and various professional fees.” Additional measures include:

  • Adjustments to store hours and shifts based on the analysis of data from labour models.
  • The sharing of best practices across business units and frequent scenario modeling to help optimize decision-making and minimize business risks.
  • The required authorization by a member of the executive team for all hiring related to non-store vacancies and for all business travel.

Couche-Tard said its Global Procurement team was in frequent contact with key vendors to discuss possible issues in the supply chain, identifying areas of potential shortages and putting plans in place. For instance, leveraging its Private Brands team, the company worked to source key items and maintains “there have been few meaningful stock-outs across Couche-Tard’s network.”

Innovation continues

On March 18, Couche-Tard discussed with analysts and investors its target to implement the Food at Scale program in 1,500 locations by fall. This company said this “continues to be an important area of focus and capital expenditures for this initiative remain in the budget for fiscal 2021.” It continues to build out and installing structures and equipment inside stores and the planned rollout pace remains on track. A number of stores have suspended team training sessions related to Food at Scale, however, the plan is to “turn the switch back on and support the program with sampling and marketing when safety measures are relaxed.”

The company said is has many every effort to adapt to changing customer behaviours. For instance, it has been able to expand many delivery platforms and pull forward enabling technologies, such as:

  • The expansion of home delivery in North America to more than 620 stores.
  • Click & Collect and curbside delivery in both Europe and North America, with pre-ordering and payment through the Circle K app.
  • Frictionless payment technology in Norway to accept fuel payments using license plate recognition.

Looking ahead

Couche-Tard said it “is taking action to preserve its cash position and financial flexibility, including a pause to share repurchases.”

On April 19, the company halted plans to acquire Caltex Australia Ltd. to “focus its energy on managing operations and maintaining its financial strength through the crisis.”

As at February 2, 2020, Couche-Tard had $1.8 billion in cash and equivalents on its balance sheet and a further $2.5 billion available on its revolving credit facility. The company’s cash balance has since improved, in line with the focus placed on maximizing cash flows through the crisis.

CFO Claude Tessier said: “Couche-Tard has always been managed with a disciplined mindset and a readiness to face possible rainy days ahead. We have come into this crisis in a strong position from both a financial standpoint, with a solid balance sheet and well spread debt maturities, and from an operational standpoint, with experience in temporary network shutdowns that permitted us to respond quickly to the changing landscape. We have implemented weekly COVID-19 financial reporting focused on daily cash position summaries, working capital, as well as details on retail sales, volumes and margin trends. We are taking all necessary steps to be ready to reinvest in our business and in the economy when the time comes to exit this crisis.”

In the company’s business update, Hannasch concluded: “I want to thank all our employees, customers, suppliers and partners, the leadership team, and our shareholders for their trust in the face of this pandemic. Our heart goes out to all who are suffering from the virus or taking care of loved ones. I have never been prouder to be CEO of this company, as during the most difficult days our employees have shown great kindness and care for each other, our customers, and our communities. Whether working tirelessly in our stores or remotely to support our operations, it is clear we are all in this together and will come out of this a stronger, better company.”

Fire & Flower Deliver - (c) 2020 Fire & Flower Holdings Corp. (CNW Group/Fire & Flower Holdings Corp.)

Fire & Flower powers up for home delivery in the GTA

Fire & Flower Deliver - (c) 2020 Fire & Flower Holdings Corp. (CNW Group/Fire & Flower Holdings Corp.)

Fire & Flower Holdings is now offering home delivery in the greater Toronto area.

Fire & Flower, an independent adult-use cannabis retailer that owns (directly or indirectly) cannabis retail store licences in Alberta, Saskatchewan, Manitoba and Ontario and the Yukon.

Through its strategic investment with Alimentation Couche-Tard, the Canadian company has set its sights on the global expansion as new cannabis markets emerge.

In addition to the curbside pickup and home delivery offered in Ottawa and Kingston, the technology powering home delivery in Toronto is enabled through the Hifyre Digital Retail and Analytics Platform. Customers can order via for free next day home delivery on orders over $50.00.

“Fire & Flower welcomes this opportunity to demonstrate how private cannabis retail can showcase fully-compliant best-in-class services such as e-commerce, home delivery and curbside pickup to our customers. It is essential that private retail is able to compete on a level playing field with government-run e-commerce and home delivery cannabis services,” CEO Trevor Fencott said in a release. “Through the Hifyre Digital Retail and Analytics platform, we are well positioned should other methods of servicing customers open across Canadian provinces.”

Under the current shutdown of non-essential businesses, cannabis retail stores are permitted to operate through online, curbside pickup and home delivery services for the duration of the emergency order on business closures in relation to COVID-19.