As its retail arm continues to take a back seat to its refining and logistics segments, Delek US Holdings is expecting to invest less into its convenience stores in 2024 than it did last year.
Brentwood, Tennessee-based Delek, which operates about 250 convenience stores in West Texas and New Mexico, plans to dedicate about $15 million this year for “rebranding and reimaging initiatives” at its convenience stores, the company said in its fourth-quarter earnings report released on Wednesday.
These funds are part of Delek’s 2024 Capital Program, in which the company will dedicate $330 million towards certain areas of its business this year. About $290 million worth of those funds will go towards Delek’s refining and logistics segments, while approximately $25 million will be used for information technology improvements, according to Wednesday’s report and earnings presentation.
The $15 million dedicated to “rebranding and reimagining” its convenience stores is exactly half of what Delek dedicated to its retail arm in its 2023 Capital Program, according to the presentation.
A spokesperson from Delek did not respond to multiple inquiries for details on its allocated funds for its c-store rebranding and reimaging initiatives.
Delek’s announcement to invest less into its c-store arm in 2024 comes after a down year for the segment. The company’s retail division saw less total revenue last year than it did in 2022, falling from about $957 million to $883 million, according to Wednesday’s earnings report.
During its earnings call Wednesday, Delek’s Vice President of Investor Relations Rosy Zuklic attributed the loss in retail revenue last year to “seasonal trends.”
“We saw lower margins but maintained strong volumes at our stores,” Zuklic said during the call.
On the merchandise side, Delek’s total sales and margins barely changed between last year and 2022. The company hauled in $316 million in merchandise sales last year — about $1 million more than it did in 2022. Meanwhile, Delek’s c-stores averaged $1.3 million in merchandise sales in both 2022 and 2023, while its merchandise margins grew half a percentage point between the two years.
About a year ago, Delek’s leadership hinted at a potential divestiture or acquisition on the horizon within its c-store segment. President and CEO Avigal Soreq said last March that the company was “evaluating various options and opportunities,” and that when it came to retail, “you can go big all the way or you’re almost not relevant.”
No changes to Delek’s c-store network have been made since then.
