Dive Brief:
- CrossAmerica Partners is leaning into its retail business, Charles Nifong, president and CEO, outlined during the company’s Q2 2024 earnings call on Friday.
- The convenience retailer acquired 59 Applegreen stores in February that it previously had lease agreements for, and has converted other dealer sites to company-owned, as well, as it seeks to beef up its retail footprint, executives noted during the call.
- CrossAmerica’s interest in expanding its company-operated c-store network comes as fellow retailer Arko Corp. moves in the opposite direction, beginning to convert a number of its own c-stores to dealer sites.
Dive Insight:
CrossAmerica had 80 more company-owned sites at the end of Q2 2024 than it did a year before, according to its latest earnings release. While the bulk of those conversions came from the Applegreen deal, CrossAmerica also converted another 30 sites “as part of our broader overall strategy to increase our retail operating exposure,” Nifong said.
CrossAmerica’s retail operating income was up 7% year over year because of these conversions, Nifong said. He noted that the company now draws more of its operating income from retail than wholesale.
“The benefit to the ongoing execution of this strategy is apparent in our current financial results,” Nifong said. “And we expect this benefit to grow over time, as we get the converted sites operating at the level we expect of them.”
The retailer also spent $3.4 million last quarter on store improvements, including new food options at some locations as well as “site image and dispenser investments,” CFO Maura Topper noted during the call.
Inside sales were flat, although Nifong said that when looking at national data, the retailer outperformed the broader industry. CrossAmerica’s strongest inside sales categories were packaged beverages, salty snacks and tobacco products other than cigarettes.
Margins were down slightly as the company cut prices on some items and chose not to pass some of its own higher costs on to customers, Nifong said.
Allentown, Pennsylvania-based CrossAmerica Partners operates more than 370 convenience stores across 10 states.
