The leaders of the Ankeny-based Casey’s convenience store chain say the weak ag economy is showing its impact as sales were up but didn’t reach the goals set for the company’s fiscal year that ended in April.
Casey’s president and CEO Terry Handley talked about the issue during a conference call today on the fourth quarter results. “During our fiscal year — like many others in the convenience and grocery store sector, as well as the broader food services industry — we’ve experienced downward pressure on customer traffic, which adversely impacted same-store sales across all of our categories,” Handley says.
He says customers were spending less on prepared foods. “We believe this pressure is related to the agricultural economy in our marketing area, the growing spread between pricing of food away and food at home, as well as increased promotional activities of other competitors,” Handley says.
Handley says despite the challenging environment the company saw the 16th consecutive year of positive same-store sales growth in both the grocery and other merchandise and prepared food and fountain categories.
Chief financial officer Bill Walljasper says the company had hoped to increase the sale of prepared foods and fountain drinks in the stores by a little more than ten percent, but they didn’t hit that mark. “In the prepared food and fountain category, total sales were up nearly 6.8 percent to over $233 million for the quarter. Despite the economic environment in our market area, same store sales in the quarter were up 3.2 percent,” Walljasper says.
He also says steady fuel prices impacted their profit on gas sales in the fourth quarter. “The average retail price of fuel during this period was $2.22 a-gallon, compared to a dollar-81 last year. The average fuel margin in the quarter was 17.2 cents per gallon — down from the same period a year ago — primarily due to lower volatility in wholesale costs throughout the quarter,” Walljasper says.
Casey’s is lowering expectations for 2018, projecting growth in sales of between 2 and 4 percent for groceries and between 5 and 7 percent for prepared foods.