Private Label Momentum Strong At Casey's
The performance of private label products at Casey’s General Store was “outstanding” during the first quarter, its President and CEO Darren Rebelez said, noting the convenience store chain’s growing assortment of own brand items is also helping keep product margins strong.
“Our growing private label program offers our guests a lower retail price option that is margin accretive to the company, and it's especially attractive to guests in the current economic environment,” Rebelez said during the company’s recent investor conference call to discuss first quarter results. “Our private label program has great momentum, exceeding 5% (in sales) of grocery and general merchandise penetration by the end of the first quarter and providing our guests with a high-quality and cost-effective product.”
He noted unit share of private brands at Casey’s is more than 9% and gross profit dollar contribution from private label products is also more than 9%.
“As national brands get more expensive, more people shift over to those private brand products, and those are all margin-accretive for us,” Rebelez said.
While not pointing to any specific product types that are driving Casey’s private brand success, convenience stores in recent years have worked to boost their assortments of own brand products. While beverages and snacks have been the focus for most, others have used their own brands to offer shoppers unique selections ranging from apparel to ice cream.
In addition to a growing number of Casey’s shoppers switching to private brands to save money, they’re also trading down in pack size. Pointing to the beer category, Rebelez noted shoppers aren’t turning away from super-premium brands and imports, they are just choosing to purchase smaller quantities.
Additionally, the growing shift to private label items by Casey’s shoppers has yet to have an impact on the pricing structure of national brand products, he said.
“We have not seen national brands look at the data and make different decisions regarding their cost posture,” Rebelez said. “We still see national brands passing on cost increases, and we continue to flow most of that through to the consumer. And that's a bigger gap between the national brands and the private brands, which works to our benefit.”
His comments on private label came just after the convenience store chain announced a solid first quarter. Total revenue of $4.1 billion was up over total revenue of $3.9 billion in the comparable quarter the previous year. Net income was $180.1 billion, or $4.83 per diluted, as compared to net income of $169.2 billion, or $4.52 per diluted share in the first quarter of the prior fiscal year.
Total inside sales were up 7.6% to $1.5 billion for the quarter driven by strong performance in the prepared food and dispensed beverage category, including hot sandwiches and bakery as well as non-alcoholic and alcoholic beverages in the grocery and general merchandise category. Inside margin was up 110 basis points compared to the same quarter a year ago, driven primarily by proactive cost of goods management and product mix, company officials said.
