Lower gas prices helped the Ankeny-based Casey’s convenience store chain offset a downturn in store traffic to increase its earnings in the first quarter of the fiscal year compared to last year.
Casey’s reports earnings were $1.70 a share compared to $1.57 a share one year ago. Casey’s Chief Financial Officer, Bill Walljasper, discussed the quarter in a conference call, and says the number of gallons of gas increased by more than 3 percent in the quarter.
“Fuel margin was up about two cents per gallon from the first quarter last year, due to a decline in the wholesale cost of fuel and a favorable environment for renewable energy credits — resulting in a fuel margin of 19.5 cents for the quarter,” Walljasper says. The average cost of a gallon of fuel was down 43 cents compared to the same quarter last year. In-store sales were up 4.7 percent, but below the company goal.
Walljasper says store traffic was off at the start of the quarter in July due to bad weather. “We did experience what I would call some inclement in a majority of our marketing area, specifically over the Fourth of July weekend,” Walljasper says. “We had nearly record lows during that time with precipitation — (we) certainly we were impacted during that period of time.” He says the Fourth of July holiday is usually one of their busier holidays.
Walljasper says the down farm economy also contributes to declines in customer traffic. “Right now we are seeing some challenges in corn and soybean prices, farm income is down, so that’s affecting consumer spending right now,” Walljasper says. He says they’ve seen a decline in cigarette sales as customers are moving away from purchasing cartons to purchasing individual packs, in in another sign of slowdown in spending.
The down farm economy was not a total negative as the company gained from lower costs for the ingredients in its pizzas. “Prepared food margin benefited from lower commodity prices in the quarter relative to a year ago — primarily form cheese and coffee,” Walljasper says. “The average margin rose to 62.8 percent compared to 62.5 percent for the same quarter a year ago.” Sales of the company’s prepared foods were up a little more than five percent in the quarter. Walljasper says while many retailers in the food service industry are seeing a slowdown, Casey’s continues to see strong sales.