Alimentation Couche-Tard can gas up you and your car on both sides of the US-Canada border. It's the second-largest convenience store operator in North America and the leader in Canada with some 5,875 outlets: Couche-Tard in Québec; Mac's in central and western Canada; and more than 3,500-plus Circle K shops in more than 40 US states. (It bought the Circle K chain in the US from ConocoPhillips in 2003.) Nearly 80% of its sales are rung up in the US. Alimentation Couche-Tard, French for "food for those who go to bed late," sells gas at more than two-thirds of its stores. With an eye on Europe, fast-growing Couche-Tard has acquired Statoil Fuel & Retail, the largest acquisition in its history.
The $2.6-billion purchase of Statoil Fuel & Retail ASA, with about 2,300 locations in northern Europe, mainly in Scandinavia, closed in June 2012. Statoil is a Norway-based road transport fuel retailer and operates a network of retail stores across Scandinavia, Poland, the Baltic States, and Russia. Statoil owns and operates a dozen key terminals as well as 38 depots in eight countries and a fleet of about 400 road tankers. Through its Circle K subsidiary, Couche-Tard has license agreements for the operation of stores in Asia (including Japan and China), Mexico, and the Middle East.
Couche-Tard operates more than 2,000 convenience stores from Atlantic to Western Canada. Central Canada and the western half of Québec Province are home to about 70% of the stores. The company divides the US market into eight geographic business units, with the largest retail presence in the Great Lakes region and Arizona.
Sales at Couche-Tard's convenience stores in fiscal 2012 (ends April) climbed to $23 billion, an increase of 21% vs. the prior year. Net income grew more than 23% over the same period. Indeed, sales, net income, and cash flow from operations have all been on a steep upward trajectory over the past two years, after relatively-flat annual comparisons during the recession. The recent rise is mainly attributable to an increase in fuel sales due to higher average prices at the pump, as well as acquisitions, and an increase in same-store merchandise sales at its stores in the US and Canada. Fuel sales (measure by volume) also increased in the US. Fuel accounted for 76% of total US sales vs. 55% in Canada.
Acquisitions are a big part of Couche-Tard's growth strategy. Its purchase of Statoil is the latest, and largest, in a long chain of acquisitions that includes the purchase of Circle K nearly a decade ago. The Circle K acquisition established the Canadian firm as a major player in the US market, and the company hopes to repeat that success in Europe. The fragmented US convenience store market and trend by major oil companies to cast off their retail operations has afforded Couche-Tard (and rival 7-Eleven) ample opportunity to acquire small, independently-operated chains, and occasionally a big fish. After a five-month struggle, Couche-Tard in 2010 reluctantly abandoned its hostile $2-billion bid for Casey's General Stores. The purchase of Casey's, which operates more than 1,500 stores in the Midwestern US, would have strengthened Couche-Tard's Circle K's retail business. Overall, in fiscal 2012 the company acquired about 440 stores, including 33 On the Run stores in Southern Louisiana from ExxonMobil, and built only 28. With about 70% of its sales (even more in the US) coming from gas, Couche-Tard is vulnerable to fluctuations in motor fuel prices. To protect itself from such volatility, the retailer is focused on developing its in-store merchandise sales (especially fresh foods), which return higher margins and are less volatile.
FMR LLC is the company's largest shareholder with about 10% of the stock. – less