Casey's General Stores Inc. turned in a strong performance during the second quarter of its 2021 fiscal year, as gross profit rose across its convenience store network.
"Our team deserves all the credit for continued growth and positive performance. Despite the pandemic and changing environment, our over 40,000 team members are serving our guests and ensuring our stores have what they need to be there for our communities," President and CEO Darren Rebelez said during the company's earnings call on Dec. 8.
Casey's had "a tremendous second quarter," according to Rebelez. "The results of this quarter were quite well-balanced, driven by both stronger fuel margin and higher inside sales volumes and profits than a year ago," he explained.
Total inside sales were up 5.1% to more than $1 billion, according to Chief Financial Officer Steve Bramlage. Grocery and other merchandise sales increased by $58 million, while sales of prepared food and fountain fell by roughly $9 million. All reported figures were favorably impacted by approximately 2% more stores in operation on a year-over-year basis, he noted.
In terms of profits, Casey's reported overall gross profit of $632 million for the quarter, an increase of nearly $75 million from the prior year. "This is primarily attributed to higher fuel and inside gross profit of $63 million and $11 million, respectively," Bramlage cited.
The retailer's grocery and other merchandise gross profit increased by $19 million, while its prepared food and fountain gross profit declined by $8 million.
"Generally, our inside-the-store performance — both in terms of volumes and margins — improved sequentially on a year-over-year basis vs. the first quarter as guest counts in the stores improved, and our operating and merchandising teams executed well," the CFO explained.
On the forecourt
During Q2, Casey's continued to experience a favorable fuel margin environment. Fuel gross profit was up 45% vs. the prior year, with a fuel margin of 35.3 cents per gallon.
Same-store gallons were down 8.6% from the same period a year ago as a result of continued disruption from the COVID-19 pandemic, Rebelez said, although Casey's did see sequential improvement from the first quarter of fiscal 2021.
At the pump, the average retail price of fuel was $2.07 a gallon compared to $2.47 a year ago. Total gallons sold in the quarter were down 6% to 578 million gallons.
"Our fuel team continues to do a great job driving performance and we are pleased with our fuel results relative to the industry and publicly available information," Rebelez said. "The team is using real-time data to drive pricing decisions and has been incredibly successful at maximizing gross profit dollars at our stores."
In terms of procurement, 64% of Casey's gallons are currently under contract.
Inside the store
Casey's same-store inside sales were up 3.5% for the three-month period, with an average margin of 41%. Inside gross profit increased by 2.8%. The company also saw sequential sales improvement of 400 basis points vs. the first quarter.
"Like the first quarter, we continued to see larger basket size more than offset the lower inside guest traffic," Rebelez noted.
Drilling down into specific product categories, the chief executive highlighted the grocery and other merchandise category. Same-store sales in this category were up 6.6% in the second quarter, and the average margin was 33.3%.
Beer and alcohol also continued to perform well at Casey's c-stores during the quarter. Packaged beverages and tobacco showed growth as well due to higher package size demand, higher Marlboro loyalty redemptions, and improved in-store execution.
On the other hand, total prepared food and fountain sales were down 3% to $289 million in the quarter. Same-store sales in the category were down 3.6 percent. The average margin for the quarter was 60.1% vs. 60.9% a year ago.
Ankeny, Iowa-based Casey's operates more than 2,200 convenience stores in 16 states. It is positioned to add 94 c-stores and 79 dealer locations across the Midwest through its pending acquisition of Omaha, Neb.-based Buchanan Energy and its Bucky's convenience stores.