Couche-Tard says inflation, fuel costs curb consumer spending

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Photo by Graham Hughes/Bloomberg via Getty ImagesConvenience and gas station retailer Alimentation Couche-Tard Inc. reported record fuel sales as oil prices soared amid the Middle East conflict, but consumers are also tightening their budgets and visiting stores less often. 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Same-store fuel volumes fell by 1.6 per cent in the United States and 4.3 per cent in Europe and other regions, and increased by 1.1 per cent in Canada. Same-store merchandise revenues rose by 1.7 per cent or less across all markets in the period ended July 19, largely missing estimates from analysts surveyed by Bloomberg.Breaking business news, incisive views, must-reads and market signals. Weekdays by 9 a.m.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Posthaste will soon be in your inbox.We encountered an issue signing you up. Please try againThe stock dropped as much as 3.8 per cent in Toronto, the most intraday since March 18, before paring some of those losses and trading at $81.87 as of 12:08 p.m.Couche-Tard’s strong fuel supply chain allows it to sustain higher gas margins as the oil market remains volatile and consumers look for value in their discretionary spending. Crude prices are about 30 per cent higher than before the Iran war started at the end of February and curtailed maritime traffic in the Strait of Hormuz, a key waterway through which about a fifth of the world’s oil and liquefied natural gas previously passed.“The notion of inflation, of the K-shaped economy or the stress on the lower-income consumers, that’s been a conversation for really multiple years now,” Miller said. “When you stand back, the consumer, in many of the metrics, they’ve proven to be highly resilient.”Sales of packaged soft drinks, salty snacks, packaged sweets and confectionery remain softer than historical levels, Miller said, “as consumers become more deliberate in what they put in their baskets” and as the prevalence of weight-loss drugs challenges the segment.Excluding these categories, performance would have been more in line with growth targets, TD Cowen analyst Derek Lessard said in a note to clients: “With consumers continuing to visit the network but becoming more selective with purchases, we see loyalty, food service, and category-mix initiatives as opportunities for Couche-Tard to drive stronger conversion.”On Aug. 26, Laval, Quebec-based Couche-Tard officially launched its US$8.7 billion takeover of Poland’s biggest convenience store chain Zabka Group SA by offering 32 zloty per share. The subscription period runs through Sept. 25, with the share purchase transaction expected to settle on Sept. 30. CVC Capital Partners and Partners Group, Zabka’s biggest shareholders, have separately agreed to tender all of their shares into the offer.We apologize, but this video has failed to load.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.