Couche-tard sales drop as consumers cut back

Alimentation Couche-tard Inc., owner of the Circle K chain of convenience stores and gas stations, missed analyst estimates as consumers cut back on discretionary spending. The company reported a 2.2 per cent decline in sales for the quarter ended Feb. 4 and adjusted profit fell sharply to 65 cents U.S. a share.

That was far below the 84 cents U.S. expected by analysts, according to data compiled by Bloomberg. Couche-tard is dealing with “near-term headwinds,” especially in the U.S. market, chief executive Brian Hannasch said in a statement Wednesday.

The retailer, which earns the majority of its revenue from fuel sales, saw weaker customer traffic. Fuel volumes fell 0.8 per cent in the U.S. on a same-store basis and declined 1.9 per cent in Europe and other regions, excluding Canada. Merchandise revenue per store, such as food and cigarettes, dropped in all three of the company’s geographic segments — a first in more than 10 years, Stifel Financial analyst Martin Landry said in a note.

But 7-Eleven’s decline was even worse, “which is reassuring and suggests industry-wide weakness,” wrote Landry.

Consumers everywhere are feeling the squeeze of higher prices and elevated borrowing costs. In the U.S., the annual interest bill that Americans pay on mortgages, credit cards and other debt has climbed by almost US$420 billion since the United States Federal Reserve started tightening policy in March 2022, according to the latest numbers from the Bureau of Economic Analysis.

Couche-tard, which had US$19.6 billion in revenue during the quarter, operates a total of about 16,700 sites, mostly in the U.S. and Europe. The company closed the acquisition of 2,175 European sites for US$3.8 billion from Totalenergies SE during the quarter. More than half of those are in Germany.

Shares of Couche-tard reached a record high close of $86.27 in Toronto in February, but they’ve since dropped more than five per cent amid concerns about fuel sales.