CORPUS CHRISTI, Texas -- A deal by Susser Holdings Corp. late last year to purchase fuel supply contracts in the Dallas/Fort Worth market has set the stage for the Texas retailer to grow both its wholesale and convenience retail presence in the state's second-largest market.
"We're seeing new sites in the pipeline in the DFW market that we would have never had without that acquisition," CEO Sam Susser said on an earnings call Wednesday. "We've got people on the ground in the market, and we're seeing results already this year from those efforts. We're very optimistic about being able to continue to drive that growth."
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Susser Holdings' wholesale division, Susser Petroleum, acquired the assets of Dallas/Fort Worth-based Community Fuels of Texas LP in October. The acquisition included the fuel supply contacts to 121 dealer locations and fuel supply rights to 24 commercial accounts.
With those contracts now integrated into Susser's systems, the Corpus Christi, Texas-based retailer is now focused on wholesale growth in the area, according to Rocky Dewbre, president and COO of Susser Petroleum.
"We added seven new dealers last quarter and two more in July," he said. "Three of these new dealers are in the Dallas/Fort Worth area, where we are leveraging the new market presence we acquired through the acquisition."
Dewbre said the Community Fuels purchase opened the market to Susser. "The majority of our dealers are concentrated within a 60-mile radius of Houston, where Susser Petroleum is based, and our second-largest urban market is San Antonio," he said. "One of our priorities is to grow our dealer base in northern Texas, and we now have a good base from which to expand."
In updated company guidance, Dewbre said Susser hopes to end fiscal 2012 with 28 to 35 new dealer locations, many of them independent c-stores.
"The independent-dealer channel is the fastest-growth segment of the c-store industry, with 36% growth in store count over the last 10 years," Dewbre said. "Since the beginning of 2007, we have grown our dealer network by 54% to approximately 565 dealers, and we have increased wholesale gallons sold to third parties by 25%, from 457 million gallons in fiscal 2007 to 569 million gallons in the trailing 12 months."
On the retail side, Susser reported that it plans to open a total of 26 to 29 new Stripes stores in fiscal 2012. For 2013, the company is targeting 28 to 35 new stores while aggressively investing in it land bank, which currently includes 33 sites and about 45 sites under contract.
That growth will come primarily in Texas, Oklahoma and New Mexico, with a strong emphasis on Texas.
"Our penetration [in Texas] remains small," Susser said. "There are close to 15,000 convenience stores in Texas; we operate less that 500 of those. With the expected continued dynamic growth of population, there's going to be far more convenience stores in Texas over the next five to 10 years, and I think we can be very, very, very busy and fully engaged just trying to fill in our existing footprint. So we're not spending a lot of energy looking at states outside of these three [states] for new retail store development.
"On the wholesale side," he added, "having high penetration in a metropolitan area is not key. We can be efficient spreading our footprint, and we're very likely to expand the territory on the wholesale side of the business before we expand the footprint on retail."
Corpus Christi, Texas-based Susser Holdings Corp. is a third-generation, family-led business with approximately 1,100 company-operated or -contracted locations. The company operates approximately 545 convenience stores in Texas, New Mexico and Oklahoma under the Stripes banner. The company also supplies branded motor fuel to approximately 565 independent dealers through Susser Petroleum Co., its wholesale fuel division, which it intends to spin off via an initial public offering of stock in the near future.