Total non-cigarette sales increased 7.4%.
Core-Mark Holding Co. Inc. has released its financial results for the second quarter ended June 30, 2017.
Net sales increased 3.1% to $3.8 billion for the second quarter of 2017 compared to $3.7 billion for the same period in 2016.
“Core-Mark was able to generate modest sales growth in a weaker-than-expected second quarter retail sales environment, but our overall performance fell short of our standards,” said Tom Perkins, president and CEO. “Our focus is on improving operational execution and leveraging our operating costs as we grow Core-Mark, as well as, continuing to execute on our core growth strategies where we are making good progress. The challenges of managing through a soft convenience industry sales environment and our operating efficiency initiatives are reflected in our revised outlook for 2017. We remain confident in our long-term growth thesis and believe we are positioning Core-Mark for enhanced performance and value creation in the years to come.”
Non-cigarette sales increased 7.4% in Q2, while cigarette sales increased 1.3%. Non-cigarette sales increased due primarily to net market share gains, including the June 2016 acquisition of Pine State Convenience (Pine State), the addition of 7-Eleven Inc. (7-Eleven) and Wal-Mart Stores Inc. (Walmart), and incremental food/non-food sales to existing customers.
Candy sales grew 25%, driven primarily by sales to Walmart, which the Company began servicing in May 2017. Sales of the Fresh category grew 5.5% relative to the comparable period. Cigarette sales benefited from increases in cigarette manufacturers’ prices and increases in cigarette excise taxes in certain jurisdictions, offset by a decline in carton sales to existing customers. In addition, both cigarette and non-cigarette sales were impacted by a soft convenience industry sales environment and the expiration of distribution agreements with Circle-K, a brand of Alimentation Couche-Tard Inc., and with Kroger Convenience in 2017.
Gross profit decreased 1% to $186.1 million for the second quarter of 2017 compared to $187.9 million for the same period in 2016. The periods were impacted by a $6.1 million net reduction this year in cigarette inventory holding gains, due to the timing of manufacturer price increases. Remaining gross profit, a non-GAAP financial measure, increased 2.6% to $188.6 million from $183.8 million. The increase in remaining gross profit for the three months ended June 30, 2017, was driven primarily by net market share gains, including the acquisition of Pine State and an increase in sales to existing customers.
