ANKELEY, Iowa – Profits for c-store operator Casey’s General Stores Inc. dropped 13% in the fourth-quarter ending April 30, but its performance still defied Wall Street’s expectations, The Associated Press reported.
The company reported income of $14.4 million for the three-month period, or 28 cents per share, compared with $16.6 million, or 33 cents per share, in the year-ago period.
Revenue rose 20% to $1.2 billion, from $1 billion in the same period in 2007. Analysts had estimated the company’s earnings would have been 25 cents per share on sales of $1.19 billion.
Operator of 1,450 corporate-owned locations, Ankeny, Iowa-based Casey’s ended fiscal 2008 with a 17.6% increase in total gross profit and a 37.2% increase in net earnings, said company CEO Robert Myers.
“These results show the value of adhering to our long-term strategic plan and at the same time having the flexibility to adapt to a changing business environment,” Myers said.
The company’s category performances:
Gasoline: Casey’s annual goal was to increase same-store gasoline gallons sold 2% with an average margin of 10.7 cents per gallon. “Our longstanding policy of pricing with local competition has won us customer loyalty over the years,” Myers said. “High retail prices meant customers bought fewer gallons per visit in fiscal 2008, but same-store customer counts remained positive. Same-store gallons sold were down 2% from a year ago with an average margin of 13.9 cents per gallon.” Total gallons sold were up 1.8%, and gasoline gross profit rose to $168.9 million.
Grocery and Other Merchandise: The Company’s goal was to increase same-store sales 4.3% with an average margin of 32.2%. For the fiscal year, same-store sales were up 7.3% with a margin of 33.1%. Total sales rose 10.5% to $942.7 million, and gross profit was up 11.9% to $311.9 million. The growing popularity of high-margin beverages was a significant contributor to the gains, the company said.
Prepared Food and Fountain: The annual goal was to increase same-store sales 8.4% with an average margin of 62%. Fiscal 2008 same-store sales grew 9.8%, and the average margin was 62.3%. Total sales were up 12.8% to $301.6 million, and gross profit grew 13.4% to $187.9 million. “This category continues to perform exceptionally well,” Myers said. “The strategic price increases we were able to take throughout the year and refinements to each store’s daily food production plans helped us extend our positive trends.”
Operating Expenses: Though operating expenses were outpaced by gross profit growth, they grew 15.6% mainly because of a rise in credit card fees, wages, and insurance claims. “The Company and the industry felt the impact of customers’ more frequent use of credit cards to pay for gasoline and the higher fees that resulted from rising retail prices,” Myers said. “We are encouraged that our rate of increase in operating expenses slowed in the fourth quarter.”
Expansion: The goal was to acquire 50 stores and build 10 new stores. The Company acquired 12 stores and built none. “Acquisition activity was constrained by inflated seller expectations,” Myers explained. “We will continue to seek attractive properties at reasonable prices and will resume building stores in the coming months.”
Myers also shared the company’s four corporate performance goals for fiscal 2009:
Increase same-store gasoline gallons sold 2% with an average margin of 10.8 cents per gallon.
Increase same-store grocery & other merchandise sales 7% with an average margin of 33.2%.
Increase same-store prepared food & fountain sales 6.8% with an average margin of 61.6%.
Increase the total number of stores 4%.