Three Projects That Keep Casey's Sales Growing

Retailer outlines plans to build on key initiatives

Published in CSP Daily News

By  Steve Holtz, Online News Director & Beverage Editor

ANKENY, Iowa -- Executives at Casey's General Stores Inc. are crediting three recent initiatives for about half of the 16.8% same-store sales growth in the fourth quarter of its fiscal 2012, and all three programs will be increased aggressively in the coming year.

"Stores recently converted to 24 hours [of operation] represented 4% to 4.5% [of that growth], major remodels about 1.5% to 2%, and pizza delivery about 1.5% to 2%," CFO Bill Walljasper said on a quarterly earnings conference call Wednesday.

The improved sales didn't come without some added expense, but Walljasper said the three programs are proving to be worth the cost.

"For the quarter, expenses were up 16.9%, driven primarily by the increase in operational initiatives mentioned previously," he said. "Same-store operating expenses for the quarter were up 6%. Over half of these same-store expenses in the quarter were the result of the stores converted to 24 hours, the major remodels and the pizza-delivery imitative."

"We are optimistic about the long-term earnings growth of these initiatives," he added before outlining the chain's fiscal 2013 goals for each program.

Store Remodels

With about 130 store remodels--projects that give stores larger coffee and fountain offerings, made-to-order sub sandwich programs and expanded cooler capacity--completed so far, Casey's intends to add another 75 sites to the program in the next 12 months.

"We currently have 25 major remodels under construction, which we anticipate being completed by the end of our first fiscal quarter in 2013," Walljasper said. "We have identified another 25 stores that we plan to complete by the end of December, and we will look at an additional 25 locations to be completed by the end of the fiscal year."

He added that the remodeled stores have provided financial results "in line with the returns that we experience with new-store construction and acquisitions."

24 Hours Stores

With 175 stores currently operating 24 hours a day, Walljasper said the company is please with the results and will expand the hours at more stores through summer and fall.

"We have plans to have another 100 stores converted by Oct. 31," he said. "We are typically experiencing same-store customer count double that of our store base, resulting in a 20% to 30% lift in inside sales from a store converted to this format."

Pizza Delivery

Casey's pizza-delivery program is the newest of the chain's operational initiatives, but showing very positive preliminary results. "We have been experiencing 25% to 30% increases in prepared food sales upon rollout of a store to pizza delivery," Walljasper said.

Acknowledging that there was early concern that the delivery service would equate to fewer feet walking through Casey's doors, Walljasper said that has not proven to be true.

"Right now we are not seeing that cannibalization of other stores and that is primarily because the stores that we are targeting for pizza delivery are typically outside of the area of an existing Casey's store to prevent cannibalization," he said.

A total of 76 stores currently offer pizza delivery, and another 150 sites are in the wings for the coming year. "It's our intent to add another 50 stores to this program in July, another 50 stores in October, followed by 50 more in January," Walljasper said.

Based in Ankeny, Iowa, Casey's is a leading independently owned convenience store chain in the Midwest and one of the largest in the country. As of April 30, 2012, the company owned and operated 1,699 stores in 11 states.

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By Steve Holtz, Online News Director & Beverage Editor
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