Susser Holdings Keeps Watch on Sequestration, 'Obamacare' Issues

These "unknowns" remain challenges to Stripes convenience store sales

Published in CSP Daily News

By  Steve Holtz, Online News Director & Beverage Editor

CORPUS CHRISTI, Texas -- Even as Susser Holdings Corp. celebrated its 24th consecutive year of same-store merchandise sales growth this past week, executives raised a flag of caution as they maneuver into the third month of 2013, alerting investors to national issues that could slow sales.

"Our current expectations include continued expansion of the Texas economy, which is driving commercial investments, construction activity and continued population growth," said president and CEO Sam Susser on a fourth-quarter earnings conference call. "But there are a couple of unknowns coming out of Washington that could impact our future results."

Among them are sequestration, the fiscal legislation and ongoing negotiations that could mean cutbacks in military spending and the pending details of "Obamacare."

Sequestration officially took effect on Friday, and much debate surrounds if, where and when any cuts will kick in.

"Sequestration could especially reduce consumer confidence in the many markets where we have military bases," Susser said. If military personnel begin worrying about their jobs or are released from duty, that could have a substantial impact on spending in Susser's nearby Stripes convenience stores.

Meanwhile, health-care reform continues to stand as an unknown for the chain and many others like it.

"While the impact is not expected to materially impact our results until 2014, we are actively working on this issue right now," Susser said. "Just like many other companies, we're trying to understand what all the rules are going to be and what options are really available to us. Unfortunately, the requirements are still evolving.

"We will provide further updates later in the year once we are able to describe our benefit changes to our own team members and to then quantify the potential impact to the company."

One federal change that has already had an effect on Stripes sales is the increase to the payroll tax that went into effect Jan. 1.

"Generally we try to avoid any end-quarter updates, but there's been so much news from Walmart and others as to what's going on with the consumer I think it deserves a comment," Susser said.

"The very, very first part of the year, right when the media was focusing on the machinations in Washington and the payroll tax took effect, we too saw some bobbling in consumer spending. But as the quarter marches on, we're hearing less about it, seeing less signs of it, and we think that we're getting back to more of a normal state," Susser said. "But our consumers are not immune, even here in the great state of Texas, to what's happening in Washington and the impact on their paychecks from these tax changes. So, yes, we are seeing an impact, and we're very respectful of how consumer confidence could turn one way or the other as the year plays out."

Regardless, Corpus Christi, Texas-based Susser Holdings presented a generally positive outlook for 2013.

"Although our robust economic climate, especially in Texas, is attractive new ground-up competition by a wide variety of retailers," said Steve DeSutter, president and CEO of Susser's retail group, "and our customers have been impacted by higher payroll taxes and the uncertainty associated with the federal government programs Sam mentioned, we remain optimistic that we will produce a 25th consecutive year of positive same-store sales growth as we indicated in our guidance."

Keywords: 
financial, health care
By Steve Holtz, Online News Director & Beverage Editor
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