Fuel margins power c-store sales

Chicago An otherwise tough year for convenience stores was balanced out by strong retail fuel margins from the unprecedented drop in wholesale fuels prices during fourth quarter 2008, according to data released Tuesday by NACS.

Overall convenience-store-industry profits rose 54% in 2008 to reach $5.2 billion, reversing a two-year decline where profits dropped 42% over that period.

Industry sales jumped 8.1% to reach $624.1 billion, with both motor fuels sales (up 10.1% to $450.2 billion) and in-store sales (up 3.2% to $173.9 billion) showing growth.

The convenience-store industry sells an estimated 80% of the fuels purchased in the United States, and motor fuels sales continue to dominate industry revenues, accounting for 74.5% of all sales dollars, in examining same-firm sales data. However, overall fuel gallons sold declined 2.4%. Meanwhile because of low gross margins on fuel (5.7%), only 31.7% of all profit dollars came from fuels sales.

Credit-card fees continue to be the industry’s top pain point, surging another 10.5% in 2008 to reach a record $8.4 billion -- nearly three times the level just five years ago.

The industry saw a modest 0.8% gain in number of employees, which rose to 1.73 million.

Once again, cigarettes dominated in-store sales, accounting for nearly one in every three dollars spent in stores, but cigarette gross margins continued to plummet, falling to 15.3%. Meanwhile, foodservice -- which includes dispensed beverages and food prepared on site -- continues to show strong growth, accounting for nearly one in four in-store profit dollars.