As the new threat of Amazon tiptoes into the $575B convenience store industry, GasBuddy puts it into perspective.
CEO Walt Doyle tells Seeking Alpha that 80% of U.S convenience store sell gasoline. Those 124,374 stores have a clear advantage over a brick-and-mortar play by Amazon.
"Gas station convenience stores have evolved to providing more amenities and products like groceries and food, to fit the growing needs of the consumer," he notes.
Major c-store operators in the U.S. include Kroger (NYSE:KR), Casey's General Stores (NASDAQ:CASY), CST Brands (NYSE:CST), Alimentation Couche-Tard (OTCPK:ANCUF), Murphy USA (NYSE:MUSA), Marathon Petroleum (NYSE:MPC), 7-Eleven, Kum & Go, QuikTrip and Sunoco (NYSE:SUN).
A large part of the retail sector will need to keep a watchful eye on Project Como at Amazon. The plan from the Seattle company to sell perishables out of small brick-and-mortar stores could be a disrupter if it were to be built out at scale.
Convenience store chains such as Casey's General Stores (NASDAQ:CASY), Murphy's USA (NYSE:MUSA), and CST Brands (NYSE:CST) are already being targeted by 7-Eleven's aggressive expansion goals in the U.S. A store roll-out by Amazon could also impact drug store chains Walgreens (NASDAQ:WBA) and Rite Aid (NYSE:RAD) - as well as apply pricing pressure to the sensitive grocery store sector (KR, SVU, SPTN, IMKTA).
All eyes in the retail sector will be on the Department of Commerce's report on August sales tomorrow. Economists will be looking for confirmation that the dip into negative territory in July was only transitory. The impact of the recent slowdown in auto sales has been debated, with some analysts saying it's indicative of tight consumer spending, while others feel it reverses the "crowding out" effect of auto purchases.
The consensus estimate is for a 0.4% M/M gain after backing out the gas and auto categories. The direction of U.S. retail sales will also give Fed watchers their latest talking point.
If there's a wildcard in the mix, it could be price deflation in the grocery store category (KR, SFM, WFM, SVU, WMK, IMKTA). That pricing weakness could also spill over to affect general merchandise stores (WMT, TGT), drug store chains (WBA, RAD), and even nip at chains like Casey's General Stores (NASDAQ:CASY) and CST Brands (NYSE:CST).
Alimentation Couche-Tard (OTCPK:ANCUF, OTC:ANCTF) says it struck a deal with Parkland Fuel to sell some Canadian assets of CST Brands (CST +0.2%), including convenience stores operated by CST and the Cardlock business.
The number of stores that will be involved will be determined after the transaction is reviewed by the Competition Bureau of Canada.
CST Brands, Inc. (NYSE:CST) announces it accepted a buyout offer from Alimentation Couche-Tard Inc. (OTCPK:ANCUF) at $48.53 per share.
The deal represents a total enterprise value of approximately $4.4B, including the assumption of debt.
“After the Board’s comprehensive review of strategic alternatives to enhance stockholder value, we are pleased to reach this agreement with Couche-Tard, which we expect to provide immediate and compelling value to our stockholders,” said CST CEO Kim Lubel.
After the deal closes, Circle K will establish a new business unit in San Antonio.
Couche-Tard expects to finance the transaction with available cash, its existing credit facilities, and a new term loan.
The transaction is currently expected in the early part of 2017, subject to the approval of CST's stockholders and regulatory approvals in the U.S. and Canada.
CST Brands (NYSE:CST) reports U.S. retail merchandise and services revenue rose 21.2% to $474M in Q2.
Canadian retail merchandise and services revenue grew 4.5% to $70M.
U.S. merchandise and services gross margin rate improved 110 bps to 33.8%.
Company-operated retail store base increased 19% Y/Y through acquisitions and new-to-industry store construction.
U.S. retail store count +232 Y/Y to 1,225.
Q3 Guidance: U.S. retail merchandise and services gross margin: 33.5% to 34.5%; U.S. retail merchandise and services sales per store per day: $4,400 to $4,500; Canadian retail merchandise and services gross margin: 30.5% to 31.5%; Canadian retail merchandise and services sales per store per day: $2,550 to $2,650.