Couche-Tard posted a profit of US$477.7 million in the fourth quarter, down 15.3%.
The rising cost of living may have contributed to an upsurge in cigarette smuggling in Canada, Alimentation Couche-Tard suspects.
The convenience store and gas station operator's management made the assumption on Wednesday during a conference call to discuss its most recent quarterly results.
“In Canada, we have felt pressure in our cigarette sales. There seems to be a transfer to the black market. »
— Claude Tessier, Chief Financial Officer
President and CEO Brian Hannasch sees other shifts in consumer habits. On average, motorists in the United States put less gas in their tank per visit.
This is a sign that the pressure is mounting on consumers. We are lucky to see unemployment at a historic low, which means that the consumer is still in better shape than in 2008-2009 during the financial crisis.
The leader says he is satisfied with the traffic, but he sees that consumers are changing their consumption habits by buying brands at low prices. We see consumers switching from premium beer to lower priced beer.
Mr. Hannasch believes that the expansion of its private label offering has also paid off, while sales in this category have grown strongly in the two-decimal place range in the United States.
We've done a lot of work with private labels over the past three years and we've seen a lot of growth. This allowed us to make a greater profit per item sold.
The Laval-based company unveiled slightly better-than-expected fourth-quarter results the day before markets closed, while fuel margins in the United States offset the effect of higher expenses and lower margins. in Europe.
During the conference call, management was asked about the increase in the company's operating costs, up 19% in the fourth quarter ended April 24 and 14.3% for the year.
Mr. Tessier explained that the increase was due to three factors. He said comparing it to last year, when spending fell in the wake of tougher lockdowns, was difficult.
Inflation also put pressure on costs and payroll. Finally, the company made investments to encourage sales growth.
On the workforce, Mr. Hannasch said the company was seeing light at the end of the tunnel as it managed to hire more employees than it did. she hasn't lost any in the last few weeks.
The increase in the number of employees suggests a reduction in the use of overtime at a higher hourly rate.
Couche-Tard posted a profit of US$477.7 million in the fourth quarter, down 15.3%. The company reported an impairment of 56.2 million related to the loss of control of all of its investments in its subsidiaries in Russia.
In April, the Quebec flagship announced the suspension of operations of 38 stores in Russia following the invasion of Ukraine by the regime of Vladimir Putin .
Revenues, for their part, increased by 34% to reach 16.4 billion against 12.2 billion.
Diluted adjusted earnings per share reached 55¢, compared to 52¢ for the same period last year. According to analyst forecasts compiled by Refinitiv, Couche-Tard was expected to report net earnings of 53 cents per share on expected revenue of $15.5 billion.
High fuel prices are expected to continue to put pressure on fuel sales volumes, believes Stifel GMP analyst Martin Landry. In the United States, same-store volume decreased 1.7%, but increased 3.7% in Europe and 4.3% in Canada. We believe high fuel prices may have hurt convenience store sales due to the shock at the pump.
RBC Capital Markets analyst Irene Nattel points out for its part that the convenience store segment remains relatively resilient. In the current economic context, Couche-Tard's size and expertise could enable it to gain market share.