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Produce driving profits a c-stores

Screen Shot 2019-11-22 at 11.06.53 AMWhile convenience stores have been expanding their fresh produce for years now, new evidence from the U.S. reveals the trend isn’t slowing down. In fact, c-stores are hungry for more.

The Produce News in the U.S. recently reported that convenience stores sold US$242 million worth or produce in the U.S. last year.

According to Jeff Lenard, vice-president of strategic industry initiatives for National Association of Convenience Stores (NACS), cut fruit sales increased 14% in the past year and now account for more than half of all fruit sales.

About 41% of NACS retail members stocked more fresh fruit and vegetables in the first half of 2018, and 24% stocked more cut fruits and vegetables.

Bananas are the most popular fresh fruit, accounting for $81 million of sales, with mixed fruit as the most popular cut fruit at $65 million.

Other popular items include grapes, watermelon, mangos and apples.

C-store sales represent a small fraction of the nearly $61 billion in produce sold at grocery, but it speaks to the continuing push from the sector to capture a piece of the ready-to-eat food market that has grown to meet evolving consumer tastes in recent years. (The most recent estimates for fresh fruit and vegetable sales in Canada for the first quarter of 2019 was C$4.48 billion.)

As CNBC recently reported, people are stocking their cupboards and fridges less and opting instead for the convenience of more prepared foods. “And the higher the income, the fewer grocery trips that consumer is likely to make. Millennials, for instance, would prefer to grab a premade salad after work than go home, make a meal, eat alone and clean up dishes.”

Convenience stores are usually nearby, open later and offering better product than they did in the past.

Originally published at Canadian Grocer. 


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Couche-Tard strategic plan aims to double net profit in five years

UnknownQuebec convenience store giant Alimentation Couche-Tard aims to double its net earnings in the next five years.

The company, which primarily operates under the Circle K banner, says it will achieve the target through a combination of organic growth and further acquisitions.

Chief executive Brian Hannasch describes the goal as “ambitious” but one that can be achieved by remaining true to its core business while maximizing its strengths.

Couche-Tard’s net profit grew 10% last year to US$1.8 billion while adjusted earnings per share were up 27.7% to $3.32 as revenues increased 15%t to US$59.1 billion.

The retailer has become one of the world’s largest convenience store chains through a series of acquisitions and adoption of coffee, food and cold beverage programs that grew by double digits last year.

Analyst Keith Howlett of Desjardins Capital Markets says doubling its profitability will depend on sustained sales momentum and expanded gross margins that will likely come from a shift in product mix to high margin food service.

Last week, Couche-Tard missed expectations as its net income attributable to shareholders decreased 25% to US$293.1 million in the fourth quarter of its fiscal year on a dip in revenues.

The company says it earned 52 cents per share for the period ended April 28, down from 69 cents per share or $391 million a year earlier. The company received a net tax benefit of $69.7 million in the fourth-quarter of fiscal 2018 from U.S. tax cuts.

Adjusted profits of 52 cents per share compared with 59 cents per share in the fourth quarter of 2018.

Revenues fell 3.7 per cent to $13.1 billion from $13.6 billion.

The retailer was expected to earn 54 cents per diluted share in adjusted profits on $13.3 billion of revenues, according to analysts polled by Thomson Reuters Eikon.

For the full year, Couche-Tard’s net profit increased 10% to $1.8 billion or $3.25 per share, up from $1.67 billion or $2.95 per share in 2018. Adjusted earnings were up 27.7 per cent to $3.32 per share. Revenues were $59.1 billion, up 15% from $51.4 billion.