Convenience store retailer’s Q4 misses Street

Despite 16 consecutive years of positive same-store sales growth among key categories, Casey’s General Stores’ top and bottom line revenues missed the mark in the fourth quarter.



For the period ended April 30, the convenience store chain reported total revenue of $1.85 billion, just shy of analysts’ estimate of $1.87 billion. Diluted earnings per share for the quarter were $0.76, a drop from $1.19 for the same period a year ago. This also missed analyst expectations of 82 cents a share. Meanwhile, net income hit $30 million, compared with $47 million in the same period last year.



For the fiscal year, diluted earnings per share were $4.48 versus $5.73 for the same period last year. However, the company hit a milestone as it ended its fiscal year, achieving its “16th consecutive year of positive same-store sales growth in both the grocery and other merchandise, and prepared food and fountain categories," said Terry Handley, the chain’s president and CEO.



Specifically, in fuel, same-store gallons decreased 0.5% with an average margin of 17.2 cents per gallon. The company sold 15.5 million renewable fuel credits for $7.1 million in the fourth quarter.



For fiscal 2017, total gallons sold were up 5.6% to 2.1 billion. Gross profit was down slightly to $378.3 million, primarily due to a 1.2 cents per gallon lower fuel margin partially offset by an increase in gallons sold.



In grocery and other merchandise, fourth quarter same-store sales were up 1.5% with an average margin of 31.1%. For the year, total sales were up 5.7% to $2.1 billion and gross profit dollars increased 4.4% to $657.2 million.



Prepared food and fountain same-store sales were up 3.2% for the quarter, with an average margin of 61.7%. For fiscal 2017, total sales increased 8.3% to $953.4 million, and gross profit dollars rose 7.9% at $594.0 million.



The company also continues with its aggressive store expansion and renovation plan. For the fiscal year, Casey’s built and opened 48 new stores, acquired 22 stores, completed 21 replacements, and remodeled 103 stores. As of April 30, there were 27 new stores, 21 replacement stores, and 11 major remodel stores under construction.



At fiscal year end, Casey’s had 116 sites under agreement for new store construction and five acquisition stores under agreement to purchase. "We also recently opened our first store in the state of Ohio,” Hadley added. “We are optimistic about our growth opportunities.”



Looking ahead to fiscal 2018, the company plans to increase same-store fuel gallons sold by 1.0% to 2.0% with average margin of $0.18 to $0.20 cents per gallon. Same-store grocery and other merchandise sales will increase 2.0% to 4.0% with average margin of 31.0% to 32.0%. Same-store prepared food and fountain sales will grow 5.0% to 7.0% with average margin of 61.5% to 62.5%.



Finally, the chain plans to build or acquire 80 to 120 stores, replace 30 existing locations, and complete 75 major remodels.