Couche-Tard reports first quarter profit down as consumers watch spending
Alimentation Couche-Tard Inc. says net earnings slipped in its first quarter of fiscal 2025 as consumers continue to watch their spending.
The convenience store giant says it had net earnings attributable to shareholders of US$790.80 million in the quarter, down from US$834.1 million in the same quarter last year.
The company says revenues totalled $18.3 billion, up from US$15.6 billion last year, boosted largely by its European operations after buying retail assets from French oil giant TotalEnergies SE.
Merchandise and service gross margin decreased by 0.6% in the United States to 33.7%, to support our summer campaigns, by 0.1% in Europe and other regions to 39.8%, and increased by 0.9% in Canada to 34.8%. Same-store road transportation fuel volumes decreased by 0.8% in the United States, by 1.4% in Europe and other regions, and by 2.1% in Canada. Global fuel demand remained unfavorably impacted by challenging economic conditions.
READ: Alimentation Couche-Tard announced fourth quarter and fiscal year 2024 results
Chief executive Brian Hannasch says that as weakness in consumer behaviour persists, the company is focused on its long-term strategy.
"As weakness in consumer behavior persists, we are keeping our focus on our long-term strategy and bringing everyday value to our customers,” Hannasch wrote in a release accompanying the results made public Wednesday after markets closed. “The number one reason customers visit our locations is to quench their thirsts, and our summer beverage campaigns have been providing exceptional value and exciting exclusive flavors. We are also bringing personalized offers and savings to our most valuable customers through our growing loyalty membership programs. On the fuel side, while volumes have been impacted by customers watching their spend, we continued to have healthy margins. Overall, we remain confident in the advantages of our globally diversified business to successfully navigate these near-term headwinds.”
"The fragmented market in the United States offers significant consolidation opportunities, and the challenging economic landscape is accelerating this trend, creating exciting growth prospects for us. We just announced a definitive agreement to acquire GetGo Café + Market from supermarket retailer Giant Eagle Inc.”
Couche-Tard entered into a binding agreement to acquire the approximately 270 company-owned and operated convenience retail and fuel sites operating under the GetGo Café + Market brand from supermarket retailer Giant Eagle Inc., for a purchase price of approximately US$1.6 billion. GetGo sites are located Indiana, Maryland, Ohio, Pennsylvania and West Virginia and the acquisition is expected to close in 2025.
Incoming CEO Alex Miller said that as consumers try to stretch their dollar, it has meant that consumers are spending less during the visits.
"Fuel is a great example of that," he said during the analyst’s call. "We actually have higher traffic to our forecourts, but the average fill is down to a level that leads to negative same-store volume."
In order to save money, customers are turning more towards private label products, and showing a growing preference for bundled meals offers that in the United States are priced anywhere between $3 and $5.
Miller also took time to answer questions about Couche-Tard’s bid to take over 7-Eleven-owner Seven & i Holdings Co. Ltd. Earlier in August, the company announced it had made what it called a “friendly, non-binding bid” to acquire all outstanding shares in Seven & i.
Currently, the bid has hit a snag with regulators in Japan, however Miller said that he was confident that the company would close the deal.
“We have a deep respect for Seven & i and the business they have built in Japan and around the world, including their great operating model franchisee network and brand,” Miller added. “As you know, we are a company that has led by discipline growth by merging with locally-led businesses across the globe. We see a strong opportunity to grow together, enhance our offerings to customers and deliver a compelling outcome for the shareholders, employees and key constituencies of both companies. We are confident in our ability to finance and complete this [acquisition], and we look forward to engaging with seven and a high constructively.”
With files from The Canadian Press. This story will be updated throughout the day.
