Widespread signs of people watching their spending
Canada’s largest convenience store chain may soon grow again.
“In the last couple of months, we’ve seen quite a few deals come across our desk,” president and chief executive Brian Hannasch told analysts on a conference call to discuss the company’s latest results.
“We’ll remain disciplined. We commit to that,” Hannasch said, noting the company can’t guarantee any deals will come to fruition. “But we’d like to think we can land a few opportunities over the coming quarters.”
The company said Wednesday that Hannasch, who has been with the firm for 10 years, will retire on Sept. 6.
When chief operating officer Alex Miller takes over the top job, Hannasch will become a special adviser to his successor and the executive chair of the company’s board, tasked with assisting with mergers and acquisitions.
News of Hannasch’s future came the same day the company hosted a call to discuss its fourth-quarter performance with analysts.
During the period ended April 28, the chain saw its net earnings attributable to shareholders tumble to $453 million from $670.7 million a year earlier.
RBC Capital Markets analyst Irene Nattel described the results as “not a quarter for the history books,” but said it was “a better outcome” than the company had seen in its prior quarter.
Couche-Tard blamed the results on lower gross margins on fuel, the quarter being a week shorter than last year, and expenses and depreciation related to investments and acquisitions, but said the period was also marked with economic headwinds.
“No doubt, this was another challenging quarter with persistent inflation and continued pressure on consumers who are carefully watching their spending,” Hannasch said.
On the fuel front, he has noticed customers buying lower amounts per visit.
Inside stores, there’s been a gravitation toward private label products and shoppers trading down from premium to lower tier brands in categories like alcohol.
Cigarette sales have also been “an issue,” he said.
“As prices have gone up, consumers have gotten squeezed, the percentage of people buying in the illicit channels continues to rise and that’s a big headwind to fight,” he said.
“It’s going to continue to be a bit of a drag on us in Canada.”
These factors have already hampered the business, pushing same-store merchandise revenue down 0.5 per cent in the United States, two per cent in Europe and 3.4 per cent in Canada in the last quarter alone.
The results nudged the company’s share price down by about two per cent or, or $1.65, to $77.85 just after markets opened Wednesday.
Yet Hannasch was still optimistic about the business.
He noted it has been working to expand its loyalty program, improve employee training and launch promotions in the beverage category, which he said is the No. 1 reason why people visit the chain’s stores.
“We feel good — barring any weather — that the summer is going to be good for us,” he said.