Convenience stores operator Casey's General Stores Inc. (CASY), Monday reported a rise in third-quarter profit on higher revenue from grocery items and other merchandise. The increase in earnings were partly offset by higher costs, lower same-store gasoline sales, and eroding margins at Prepared Food & Fountain segment.
Earnings for the quarter came in short of analysts' estimate by a penny, while revenues also missed expectations.
Same-store gasoline gallons sales for the quarter slid 2.4 percent with an average margin of 13.6 cents per gallon. In the prior year, same-store sales were up 3.5 percent, with an average margin of 13.9 cents per gallon.
"Same store gallons continue to be impacted by higher prices at the pump." said CEO Robert Myers.
The company has set a target to increase fiscal 2012 same-store gasoline gallons sales by 1 percent with an average margin of 13.5 cents per gallon.
Results for the quarter were boosted by a rise in same-store grocery and other merchandise sales by 6.3 percent with an average margin of 31.8 percent. This is up 90 basis points from last year. Total sales at the segment improved 12.7 percent from last year.
"Favorable weather comparisons, as well as the increased contribution from our new store design and remodel program helped drive sales in higher-margin items throughout the quarter," said Myers.
Casey's annual goal is to increase same-store grocery and other merchandise sales by 5.8 percent with an average margin of 32.8 percent.
Prepared Food & Fountain same-store sales grew 12.6 percent, but average margin slid 61.2 percent due mainly to increase in cheese cost. The goal for fiscal 2012 is to increase same-store sales 7.7 percent with an average margin of 61.8 percent.
Operating costs for the quarter were up 12 percent from last year, due mainly to a rise in expenses related to operating 68 more stores.
Casey's reported third-quarter net income of $16.7 million or $0.43 per share, compared to $12.9 million or $0.34 per share last year.
On average, six analysts polled by Thomson Reuters expected earnings of $0.44 per share for the quarter. Analysts' estimates typically exclude special items.
Ankeny, Iowa-based Casey's posted revenue of $1.58 billion, up from $1.37 billion last year. Analysts expected revenue of $1.65 billion.
The company has declared a quarterly dividend of $0.15 per share, payable May 15 to shareholders of record on May 1.
CASY closed Monday on the Nasdaq at $50.49, up $0.16 or 0.32%. In after hours, the stock lost 1.94%.
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