The Ankeny-based Casey’s convenience store chain reports it’s gross profit for the third quarter was up more than 13 percent thanks to increased sales of its prepared food.
Speaking on a conference call, Casey’s chief financial officer Bill Walljasper says the sale of their food products increased as they moved more stores to 24-hour operations and completed major remodels on others.
“With the 24-hour conversion, we typically see about a 20 to 30 percent increase in prepared food and fountain sales. About a 10 to 20 percent increase in the grocery and other merchandise category,” Walljasper says. “With respect to major remodels, we see about a 25 to 30 percent lift in prepared food. And about a five to 15 percent in groceries and other merchandise.”
The company has also continued to increase the number of stores that offer pizza delivery and that has helped sales. “We would see about a 20 to 30 percent lift in prepared food and fountain sales in the first year of roll out,” according to Walljasper. The company has completed 11 replacement stores and 60 major remodels through the third quarter, and plans to add pizza delivery to 45 more stores and complete 40 major remodels in the fourth quarter.
Walljasper says the company also benefited from the drop in gas prices as they sold 1.6 percent more gallons of gas, and made a profit of 18.1 cents on each gallon. That is above the company’s goal of making around 16 cents on each gallon of gas sold. “Typically a strong environment for us is a declining wholesale environment coupled with volatility. That’s probably one of the better environments. But even in a rising wholesale environment you can have volatility — significant volatility — which will benefit your fuel margin,” Walljasper says.
The drop in gas prices is giving customers more money to spend inside the stores and he says they’ve seen that in cigarette sales. “We do see a trade up phenomenon still continuing within the cigarette category — people are transitioning over more to the premium brand of cigarettes. They are also a little bit more toward cartons,” Walljasper says. The quarterly report shows earnings for each share dropped four cents for the third quarter of this year compared to last year to 97 cents.
