Casey’s ‘looking at a number of deals’ as M&A dominates c-store landscape

Dive Brief:

Casey’s General Stores “has stayed busy evaluating potential deals both large and small” and is “looking at a number of deals” as M&A activity continues to dominate the convenience store landscape, President and CEO Darren Rebelez said during the company’s third-quarter earnings call Wednesday.
As Casey’s total revenue increased over 9% in its third fiscal quarter year over year, the company has “plenty of balance sheet strength” as it aims to “ramp up” its network from both an acquisitions and new-builds perspective, Rebelez said.
Casey’s aims to add about 80 stores to its network in fiscal 2023 and expects to exceed its current commitment of adding 345 units over the next three years, according to the company’s recent earnings report.

Dive Insight:

Casey’s revealing it has the liquidity to execute larger scale deals this year comes as the company continues to integrate stores from its most recent large-scale moves. Between May and December 2021, Casey’s acquired a total of 182 stores between three separate acquisitions with Alimentation Couche-Tard, Pilot Corp. and Buchanan Energy, the owner of Bucky’s Convenience Stores.

“We like to have the optionality to adapt to what the playing field is giving us,” Rebelez said. “And what I’d tell you right now is that in this current environment, we're seeing a lot of potential acquisition activity.”

About nine weeks into the new year, M&A has dominated the conversation within the c-store industry, as players like Couche-Tard, BP and EG Group have all made large-scale moves. Challenges like inflation, digital transformations, electrification and tight labor pools have made running a c-store business more difficult than in the past — which, in turn, has made this year an opportune time for c-store M&A, experts say.

Closing its recent deals with Couche-Tard, Pilot and Buchanan has given Casey’s a better rhythm and understanding of the large-scale M&A process, as well as more confidence in its ability to successfully integrate larger acquisitions, Rebelez said.

“We have not in any way told our real estate team to slow down on finding new sites,” he said.

However, Casey’s challenge isn’t in the size of the deal, but how it fits within the company’s portfolio, Rebelez said.

“It's really more about finding the right deal,” he said. “It's in the right geographies, it's at the right valuation.”

Inside its stores, Casey’s sales were up 8.2% for its third fiscal quarter, which ended Jan. 31, driven by the prepared foods, grocery, general merchandise and dispensed beverage categories, while same-store sales increased 5.6%. The company saw strong performances from pizza slices, doughnuts, energy drinks, private-label items and both alcoholic and no-alcoholic beverages.

Ankeny, Iowa-based Casey’s General Stores operates nearly 2,500 locations in 16 U.S. states. It is the third-largest convenience retailer in the country by store count, according to NACS’ 2023 Top 100 ranking.