Alimentation Couche-Tard reports lower earnings due to economic headwinds

Laval, Que.-based Alimentation Couche-Tard, a multinational operator of convenience stores such as Couche-Tard, Circle K and Ingo, as well as and gas bars, reported its third-quarter fiscal results of 2024. 

During an analysts press conference, the company reported net earnings attributable to shareholders totalled US$623.4 million in its third quarter, down 15.5% from US$737.4 million a year earlier, and revenues for the quarter, which ended February 4, 2024, were US$19.6 billion, down from US$20.1 billion during the same quarter last year. 

President and CEO Brian Hannasch says the lower earnings were the result of several factors, including lower average road transportation fuel gross margins in the United States and a softening of consumer spending and traffic because of uncertainty with the health of the economy and tightening of consumer budgets.

Still, Hannasch told analysts that even with such challenges, the outlook for the company remains strong going forward. 

“As we continue to navigate some near-term headwinds, particularly in the U.S., we remain focused on providing value and meeting the needs of our customers with a growing selection of private label options,” he told analysts. 

He pointed to the growing success of the Couche-Tard’s Inner Circle loyalty program, which now is 1,600 members, including almost 5 million fully enrolled members in the U.S. and the continuing success of is Circle K fuel promo days. 

“We continue to focus on the expansion of Inner Circle as a free membership program with rewards, fuel rewards, food rewards and much more. Inner Circle is providing a differentiated personalized experience to our most loyal and valuable customers.”

“All these offers are providing meaningful rewards and compelling value, especially for more cash conscious consumers that are out there,” he continued. “Our business is extremely diversified around the globe, and we feel very good about its proven resilience and the continued focus on our strategy, building on our key points of differentiation with our customers and maximizing the advantages of our scale.”

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While Hannasch acknowledged that same store merchandise revenue decreased by 1.5% in the United States by 0.3% in Europe and other regions and by 1.2% in Canada, these drops were the result of “near term headwinds in the economy as well as the continued softness in the cigarette category, partly offset by the growth in other nicotine products.”

“We continue to see pressure on cigarettes units globally,” “In the U.S., we have initiatives underway with our supply partners, including brand focused contests and personalization programs. Here we're starting to see positive results with gains in market share as we look to stay relevant and provide choice to our nicotine consumers.”

The company’s "Fresh Food, Fast" foodservice concept continues to help the company with its margins and profits increasing year over year, according to Hannasch. “However, as we continue this journey of building our food culture, we need to ensure availability and stock during our busiest times of the day. We're excited to be rolling out a new forecasting production tool in North America that leverages AI to more accurately determined demand on a site by site and time of day basis.”

Hannasch added that Couche-Tard’s fuel margins continue to remain health, despite economic headwinds. “We're continuing to build value for our customers and business, the optimization of our fuel supply chain globally.”

At the same time, Hannasch said Couche-Tard will continue to invest in growing its global EV charging network. That network currently has 2,400 charging points, and the company has added new charging points in four new European counties and 50 charge points for heavy trucks in Sweden. 

“We're seeing a significant increase in charging actions on our Circle K-branded chargers, driven by network expansion, improved payment offers and station upgrades,” he continued. “In North America, we remain committed to deploying 200 chargers at 200 sites. Our footprint in Canada now covers Quebec, Ontario, B.C. and Alberta, and 11 States in the U.S.”