Strong beverage alcohol sales in Ontario behind Couche-Tard's strong third quarter results
Alimentation Couche-Tard Inc. reported its third-quarter revenue increased 3.3% from the say quarter last year to US$645 million, up from US$624.4 at this same time last year.
The company says that its strong revenue showing for this third quarter was due to acquisitions the company has made and from higher revenue from the wholesale fuel business. Couche-Tard acquired 38 company-operated stores, including 20 stores operating under the Hutch's brand located in the states of Oklahoma and Kansas, as well as 15 stores located in the Netherlands, reaching a total of 40 company-operated stores acquired through various transactions since the beginning of fiscal 2025.
It also announced that it completed the construction of 31 stores and the relocation or reconstruction of eight stores, reaching a total of 69 stores since the beginning of fiscal 2025. As of February 2, 2025, another 56 stores were under construction and should open in the upcoming quarters.
"We are pleased to report positive improvements in the business this quarter,” said president and CEO Alex Miller in a written statement upon the release of the company’s financials at the end of business day on Tuesday.
READ: Seven & i Holdings announces leadership change, IPO plan for U.S. 7-Eleven operations
Seven & i Holdings talks continue
During an analyst briefing held on Wednesday morning Miller took time to speak for a moment about the ongoing efforts by Couche-Tard to acquire Seven & i Holdings, operator of the 7-Eleven convenience chain of convenience stores. This was prompted by news reports in Japan and elsewhere that Seven & I Holdings signed a confidentiality pact with Alimentation Couche-Tard, that would allow the two companies to move those discussions forward by addressing the ongoing antitrust concerns around the takeover, and the possibility of the divestiture of some of Seven & i U.S. stores.
Miller said no such non-disclosure agreement was signed and explained Couche-Tard’s ongoing efforts in bringing the companies together in an agreement that will be mutually beneficial to both companies, and to their respective stakeholders and shareholders.
“For many years we have firmly believed that there is a unique strategic fit between us, and that we can achieve significantly more together than each of our companies can achieve individually including accelerating the global growth of the iconic 7-Eleven brand and strengthening the Seven & i business in many parts of the world,” he emphasizes to the assembled analysts. “We also firmly believe that such a combination provides an opportunity for the shareholders and stakeholders of both companies to realize significant value. We have reiterated several times over the past few months that we intend to be friendly and persistent in pursuing a transaction which we believe is in the best interest of all stakeholders. We have done that in the face of significant frustration and distraction. We look forward to fulsome engagement with seven and I so that we can reach definitive terms and move forward with the transaction that is in the best interest of all stakeholders.”
READ: New roadblocks ahead for Couche-Tard’s takeover bid of 7-Eleven’s parent company
Private label and fresh food offerings will expand
Miller then moved onto the results for the quarter, focusing on the challenges facing the company going forward as consumers continue to be cautious about their discretionary spending. He pointed out that while inflationary concerns persist, Couche-Tard had overall healthy total merchandise and service revenues for the quarter, up by 5% to US$5.3 billion even while same-store merchandise revenues decreased by 0.1% in the United States. In its European operations, it increased by 0.2% in Europe and other regions, and by 2.8% in Canada.
In Canada and the United States, in-store revenue growth will be further driven by Couche-Tard bundling popular food items at “value prices to create satisfying and affordable meal option across North America,” Miller said.
“We are now at 465,000 meal deals being sold on a weekly basis and that number is growing every week. And we recently appointed a new senior vice-president for global food and marketing Mette Uglebjerg, who is bringing her decades of experience in our popular European food program to our global operations. Under her leadership and listening closely to customer feedback and data, we are focusing now more than ever on value consistency and having the right products available at the right time.”
Going forward, Couche-Tard will focus on expanding its private label range of products and fresh food offerings to capture both budget-conscious shoppers and those looking to have a wider range of meal options available to them when the come into Couche-Tard’s convenience operations.
“We continue to see customers looking for [private label] and we see it as a healthy growth area with plenty of opportunities for it to grow,” Miller said. “We are going to make sure to grow this category and we are looking to expand not only the number of SKUs there, but to make sure that we are presenting the right mix of products within that segment. We plan to add at least 100 SKUs in the coming months and will continue to add more.”
When it comes to fresh foods, Miller sees tremendous growth opportunities, and the goal moving forwards is to increase the number of locations offering fresh foods to customers, and to work to providing localized fresh food items that will tap into taste and foods trends that are growing amongst customers in their areas, along with a staple of the company’s many popular fresh food items.
READ: Couche-Tard reports results for second quarter of fiscal year 2025
Beverage alcohol a success in Ontario
Miller said in Canada he has been very pleased with the continuing growth of beverage alcohol sales in its convenience stores in Ontario after the government opened its retail beverage alcohol market to convenience stores, groceries and larger box stores.
“Following a change in legislation in Ontario, Canada's largest market, we've been able to offer a selection of beer, cider wine and ready to drink alcoholic beverages in our nearly 600 eligible stores,” he continued. “The response has been overwhelming with customers, thrilled about the added convenience, wider selection, and competitive pricing. Now close to 50% of beer sales both in dollars and unit share for the entire country comes from our Central Canada business unit, which also has the highest percentage of sales coming from beer in our entire global network.”
Miller added that the addition of beverage alcohol has also brought an increase in sales of other foods in the stores, and going forward, Couche-Tard will look at customer purchasing data to optimize its offerings to find what mix of items can be best paired with beverage alcohol.
“We're learning around what mix to have, how much alcohol to have, how much packed beverage alcohol to have, and so we will continue to optimize our sites for that,” he continued. “Initially, e we saw a lot of solo alcohol purchases at the beginning but now we are starting to see that consumer purchase basket start to grow as we put adjacencies next to the products, from the usual things you would expect to see with alcohol—chips, snacks, some energy drinks, and some nicotine with those purchases. But obviously our goal is to continue to realize and grow that basket of items to continue to increase customers coming into our stores for beer and alcohol.”
