Casey’s fiscal 2018 guidance was to increase same-store sales 2.0% to 4.0% with an average margin of 31.0% to 32.0%. For the quarter, same-store sales were up 3.1% with an average margin of 31.9%.
Casey’s General Stores Inc. the week reported diluted earnings per share of $1.46 for the first quarter of fiscal 2018 ended July 31, 2017, compared to $1.70 per share for the same quarter a year ago.
Moreover, the publicly-traded company, based in Ankeny, Iowa, is on track to grow its retailing footprint.
“Expansion activity for new store construction continues to increase as there are now 179 sites either under construction or under agreement,” said Terry Handley, president and CEO, in a prepared statement. “We are well positioned to sustain a higher level of unit growth in fiscal 2018 and beyond.”
Fuel – The Company’s fiscal 2018 guidance was to increase same-store gallons sold 1.0% to 2.0% with an average margin of 18.0 to 20.0 cents per gallon. For the quarter, same-store gallons sold were up 1.7% with an average margin of 19.3 cents per gallon. “Same-store gallons sold for the quarter benefited from continued low retail fuel prices,” said Handley. The Company sold 15.7 million renewable fuel credits for $10.5 million during the first quarter. Total gallons sold for the quarter were up 5.4% to 565.0 million gallons while gross profit dollars increased 4.6% to $109.2 million.
Grocery and Other Merchandise – The company’s fiscal 2018 guidance was to increase same-store sales 2.0% to 4.0% with an average margin of 31.0% to 32.0%. For the quarter, same-store sales were up 3.1% with an average margin of 31.9%. “Both same-store sales and average margin were within the annual performance guidance,” said Handley, “and we continue to outpace other retailers in the industry.” For the first quarter, total grocery and other merchandise revenue increased 5.5% to $597.4 million, and gross profit dollars were up 6.3% to $190.4 million.
Prepared Food and Fountain – The retailer’s fiscal 2018 guidance was to increase same-store sales 5.0% to 7.0% with an average margin of 61.5% to 62.5%. Same-store sales for the quarter were up 3.7% with an average margin of 62.5%. “Like others in the broader food service industry have reported, we experienced a softening of traffic, particularly in the month of July,” said Handley.
Total prepared food and fountain revenue increased 7.5% to $261.8 million in the first quarter while gross profit dollars grew 6.9% to $163.6 million.
Operating Expenses – Casey’s fiscal 2018 guidance was a 9.0% to 11.0% increase in total operating expenses. For the first quarter, total operating expenses increased 10.0% to $321.2 million. The increase was primarily attributable to increases in employee-related costs from operating more stores and implementing growth programs in more stores compared to the first quarter a year ago, and a $7.3 million incremental accelerated expense recognized due to changes in vesting provisions in the current year grant awards under the long-term stock incentive plan.
“Total expense for the new grants is expected to be comparable with previous grants; however, changes in provisions of the award agreement accelerated the recognition of expense,” said Handley.
Excluding the $7.3 million increase, total operating expenses were up 7.5% for the quarter. Store level operating expenses for open stores not impacted by recent growth programs were up 3.9% for the quarter, compared to 6.6% for all of fiscal 2017.
“Overall, we are encouraged by the improvements made in this area and will continue to focus on this area the remainder of the fiscal year,” added Handley.
Expansion – The company’s fiscal 2018 guidance was to build or acquire 80 to 120 stores, replace 30 existing locations, and complete 75 major remodels. At the end of the first quarter, the Company had built and opened two new stores, acquired three stores, completed one replacement, and remodeled 11 stores. In addition, there were 47 new stores, 27 replacement stores, and 16 major remodel stores under construction.
Finally, Casey’s had 132 sites under agreement for new store construction and 18 acquisition stores under agreement to purchase. “We are pleased with the gains made in accelerating new store construction, and we will remain disciplined in evaluating acquisition opportunities,” said Handley.
Fiscal 2018 Guidance – Based on the ongoing softening of traffic experienced in the first quarter, Casey’s is revising its prepared food and fountain same-store sales guidance to 4.0% to 6.0%, from 5.0% to 7.0%. Also, due to the continued increase in new store construction activity and the number of acquisition stores under agreement, the company is revising its expansion guidance to build or acquire 90 to 120 stores from 80 to 120 stores.