RetailAnalysis
23 November 2016
Circle K re-branding fuels Couche-Tard

As the retailer reports on its second quarter performance, we review how the global roll-out of the Circle K brand is also helping to lift sales.

Global programs underpin growth

Couche-Tard delivered a solid performance in the quarter as it continues to benefit from its aggressive acquisition strategy, the global roll-out of the new Circle K brand and other global programs. Merchandise and service revenues increased by 5.4%, including a 36.9% increase in Europe, reflecting the acquisition of Topaz in Ireland. Same-store sales increased by 2.3% in the US, by 3.4% in Europe and by 1.2% in Canada.

New global Circle K brand supporting traffic growth

A key element which underpinned same-store sales growth was the roll-out of the new global Circle K brand. More than 1,400 stores, including 650 in Europe, have been converted, with the conversion driving a higher than anticipated increase in traffic in the latter region, where it replaces a well-established brand. As part of this program it will be retiring several brands, including Mac’s, Kangaroo Express and Topaz. The roll-out is taking placed progressively across the US, Scandinavia, Eastern Europe and Canada, with the goal of having a single convenience retail brand across its global network. 

In the US, the roll-out of its Simply Great Coffee program has also performed ahead of expectations, with the retailer expected to also launch this in other markets.

Acquisitions central to strategy

Deal making, which has been central to Couche-Tard’s growth for several years, continues at pace. Recently the retailer reached an agreement to acquire CST Brands Inc., the fourth largest convenience chain in North America with over 2,000 stores, for $4.4bn. This is a strategically important deal for Couche-Tard as CST is one of the few remaining North American public convenience operators with over 1,000 stores, it enables entry into Texas and fills a void in its US Southeast network. 

The retailer also signed a deal to acquire 53 sites from American General Investments in the US, completed on the previously announced acquisition of 23 sites in Estonia, and received regulatory clearance to acquire 278 sites from Imperial Oil in Canada. Despite this strong level of activity, further deals are likely to be in the pipeline as it continues to build out its global network.

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