Couche-Tard reports results for second quarter of fiscal year 2025
Alimentation Couche-Tard Inc. remains confident in its long-term growth plans and its bid to acquire 7-Elveven’s owner even as softness in traffic and fuel demand continue be impact the North American convenience and fuel provider’s results as low-income consumers remain impacted by challenging economic conditions.
For its second quarter ended October 13, 2024, Couche-Tard reported net of US$708.8 million compared with US$819.2 million for the corresponding quarter of fiscal 2024.
The results for the second quarter of fiscal 2025 were affected by a pre-tax net foreign exchange gain of US$9.0 million and by pre-tax acquisition costs of US$2.9 million. The results for the comparable quarter of fiscal 2024 were affected by a pre-tax reclassification adjustment of gain on forward starting interest rate swaps of US$32.9 million, by a pre-tax net foreign exchange gain of US$6.3 million, by pre-tax acquisition costs of US$4.2 million, as well as a pre-tax impairment loss of US$2.0 million on its investment in Fire & Flower Holdings Corp.
Total merchandise and service revenues of US$4.4 billion, an increase of 6.6%. Same-store merchandise revenues decreased by 1.6% in the United States, by 1.5% in Europe and other regions, and by 2.3% in Canada.
Couche-Tard added that the regions were impacted by constraints on discretionary spending due to challenging economic conditions for low-income consumers, as well as the continuous decline in the cigarette industry.
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"While parts of our convenience and fuel business continued to be challenged this quarter as consumers carefully watched their spending, we remain confident in the advantages of our globally diversified network and long-term strategic growth plan,” said Alex Miller, president and chief executive officer of Couche-Tard during an analyst briefing on the fiscal results.
“In our European markets, most categories performed positively, as well as fuel volumes in Europe and Canada. Fuel margins also remained healthy across the network. Throughout the quarter, we focused relentlessly on providing value to our customers including introducing bundle meal deals in the United States, expanding our private brand offer at affordable price points, and continuing popular Fuel Day promotions. I want to thank all our team members for their outstanding commitment to the business, especially those in our Southeastern United States business units whose heroic efforts during two catastrophic hurricanes kept hundreds of our stores open, serving our customers and communities with essential goods and services.”
While Miller acknowledged that while consumers continue to watch their spending due to economic uncertainty and persistent inflation, Couche-Tard’s continuing drive to provide value to consumers through its products line-up and private label brands. He took time to highlight the strong showing Couche-Tard has made in its beverage alcohol sales in Ontario which earlier this year opened its retail beer and wine market to convenience stores, more grocery stores and big-box operations.
“At the beginning of the quarter, following a change in legislation in Ontario, Canada’s largest market, we have been able to offer a selection of beer, ciders and wines, and ready-to-drink alcoholic beverages in our eligible [Ontario] stores. We now command an impressive market leadership in beer sales in Ontario.”
“We are also working to improve our food program and grow our sales there,” Miller continued. “We fully recognize that continued strain on our customer’s discretionary spending. I’m pleased with the many ways we are providing meaningful value while keeping our focus on driving traffic to our locations. While meal deals have become popular in QSRs, we can differentiate ourselves through our partnerships with our suppliers to provide a wide variety of options, including energy drinks and chips, that are not available in QSRs. We are providing value through our expanding array of private label products that are increasing in popularity with customers who are looking for saving but still want good quality and taste. Private label is growing for us and we are looking to introduce over a hundred private label products this year.”
Regarding Couche-Tard's continuing efforts to buy Miller old analysts that the company will continue to make friendly approaches to the Japanese owner of the 7-Eleven convenience store, Seven & i.
“No doubt you have seen much in the media about our most recent proposal to purchase the entire business as well as our visit to Japan to learn more about its store operations and to meet with key stakeholders,” Miller said. “We continue to see strong a strong opportunity to grow together and enhance our offerings and services to millions of customers across the globe. We will be persistent in our friendly approach to creating what we see as the most compelling outcome for all shareholders, employees and key constituents in both countries.”
