Shareholder group insists the large publicly traded retailer has been underperforming for a while.
Casey’s General Stores Inc. has issued a statement regarding a letter to Casey’s shareholders publicly released yesterday by JCP Investment Management LLC, BLR Partners LP and Joshua E. Schechter, who collectively own approximately 1% of Casey’s outstanding shares.
“Casey’s board of directors and management team welcome and appreciate input from all shareholders,” said Terry Handley, president and CEO of Casey’s. “To that end, we met with representatives from JCP this past summer. During that discussion they did not raise their recommendation that Casey’s explore strategic alternatives, and there has been no substantive engagement with them since that time. However, the Board will review the content of their letter thoroughly.”
Mr. Handley continued, “The company is focused on generating increased long-term value for shareholders through new initiatives to accelerate same-store growth and returning cash to shareholders through share repurchases and a steadily increasing dividend. With the combination of the Company’s growing acquisition pipeline, new store construction activity, new initiatives aimed at enhancing operations – such as digital engagement and price optimization projects – Casey’s expects to deliver substantial value for its shareholders.”
The shareholder group, which collectively own approximately $45 million of the Casey’s common stock, issued yesterday’s open letter to shareholders pointing out how the Ankeny, Iowa-based convenience chain, which operates more than 2,000 stores in 15 states, has been underperforming for an extended period of time.
“Casey’s no longer delivers best in class returns as measured by either operating metrics or share price performance,” the JCP letter stated. “Casey’s has missed earnings targets for seven straight quarters due in part to decelerating same store sales and bloated operational expenses.”
The group went on to voice concerns that Casey’s store level returns on invested capital have declined as the company has gone from operating in nine states to 15 states. “Prior to 2010 (before the offer from ATD), the Company had only operated in nine states since 1995. We believe such rapid expansion coupled with seeming declining returns on invested capital is symptomatic of a company that has been unable to manage growth effectively.”
Instead, they believe Casey’s offers more value in a sale than as a standalone company.