Dive Brief:
- Casey’s General Stores is on track to add “at least” 150 stores to its network by fiscal 2024 as part of its larger plans to open 350 new locations by 2026, according to the company’s first-quarter earnings report released Monday.
- More than half of those stores have come through acquisitions made with EG America. So far this year, Casey’s has purchased 89 c-stores across Missouri, Kentucky and Tennessee from EG under several banners. The deal made last month for 63 stores is expected to close this calendar year, Steve Bramlage, CFO of Casey’s, said during the company’s earnings call Tuesday.
- During the call, Casey’s CEO Darren Rebelez said current economic conditions are playing in Casey’s favor, and the company has the appetite and financial flexibility to continue acquiring stores moving forward.
Dive Insight:
Earlier this summer, Rebelez noted that Casey’s would target “small” c-store operators — those with between 1 and 50 locations in their networks — as it looked to scale via M&A and organic growth towards its 350-store goal by 2026.
Although Casey’s intends to seek out more acquisitions, some of which may include small operators, its purchase of 89 EG-owned stores indicates its willingness to also tap some of the c-store industry’s largest players for new stores.
As of July 31, Casey’s had about $1.3 billion in available liquidity, setting up the company to pursue more deals, Rebelez said during Tuesday’s earnings call.
“Our balance sheet remains in excellent condition and we have ample financial flexibility,” he said.
High operating costs and declines from the tobacco category have made business increasingly difficult for many small operators, “especially for those that don’t have scale,” Rebelez said. Additionally, he noted that small retailers’ earnings before interest, taxes, depreciation and amortization have declined, putting pressure on their operations — and creating opportunities for Casey’s to acquire them.
“It’s really indicative of the fact that the smaller players that lack scale haven't been able to offset a lot of the cost increases in a way a company like ourselves has been able to,” he said. “They're just under a lot of pressure, even though they've got those higher margins, and so I think that's worked out to our benefit.”
Inside the store, Casey’s same-store sales increased 5.4% compared to this time last year, while total inside gross profits grew 10.3% during the same time frame, according to the company’s earnings report. Much of this growth was driven by whole pizza pies and the launch of Casey's thin crust pizza, Rebelez said during the call.
Ankeny, Iowa-based Casey’s operates more than 2,500 c-stores in 16 states.
