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Canadian consumer a 'bright spot' for Couche-Tard amid grab bag of pressures: CEO

Company's Canadian operations led the way for a strong start to the convenience store giant's financial year
9/7/2023

Canada appeared to be a "bright spot'' for Alimentation Couche-Tard Inc. in its latest quarter as the convenience store giant battles a slew of pressures.

President and CEO Brian Hannasch told analysts that the company's Canadian operations led the way for a strong start to the convenience store giant's financial year, while U.S. consumers seemingly feeling the financial pinch.

"When we look at our sales in the U.S., we're seeing certainly some trading down to more budget and price-conscious decisions,'' Hannasch said on a conference call Thursday (Sept. 7) to discuss the company's latest results.

"We continue to see double-digit growth year over year on private label. So that tells me a certain segment of our customer base is stretched ... a little bit.''

However, he noted continued resilience in Canada.

"We continue to see that be a bright spot in our business,'' Hannasch said.

Same-store merchandise sales, or sales at stores open for at least one year, jumped 6.4% in Canada in the quarter. They increased 2.1% in the U.S. and 2.7% in Europe and other regions.

Meanwhile, same-store fuel sales volumes rose 7.2% in Canada, 0.7% in the U.S. and declined 1.5% in Europe and other regions.

In addition to the beginnings of U.S. consumer pressures, lower gas prices and higher expenses also dented the company's financial results.

The Laval, Que.-based company reported net earnings of US$834.1 million, down from US$872.4 million a year earlier, while revenues fell 16.3% to US$15.6 billion.

Total road transportation fuel revenue sank 21.5% to US$11.2 billion, though the volume of road transportation fuel sold rose in the quarter.

Normalized operating expenses increased by 3.7 year-over-year, CFO Filipe Da Silva told investors.

"This is mainly driven by the impact of costs from rising minimum wages, inflationary pressures, and incremental investments to support our strategic initiatives, while being partly offset by the continued strategic efforts to control our expenses,'' he said.

Couche-Tard shares were trading 1.27% lower in the late afternoon on the Toronto Stock Exchange.

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