The Company and its wholly owned subsidiaries operate convenience stores under the name 'Casey's General Store' which carry a selection of food, beverages, tobacco products, health and beauty aids, automotive products and other nonfood items.
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‘Come once, Come again!’ Casey's General Stores, Inc. operates convenience stores in nine Midwest states in The U.S., including Iowa, Missouri, and Illinois. It offer gasoline for sale on a self-service basis, which constituted to almost 70% of the company’s revenue in 2006. In addition, stores carry a selection of food items (including freshly prepared foods such as pizza, donuts, and sandwiches), beverages, automotive products, and other non-food items.,
As company has its own fleet of trucks with installed information systems that provide real time data on inventory, it enables the procurement of gasoline at the lowest cost and at the right time.
Casey’s grocery revenues are expected to increase with the introduction of higher-margin products, such as bottled water, sports drinks, energy drinks, and wine at select stores. Strategically moving ahead company is also analyzing Point of sales data to replace some of the slower-turn grocery merchandise and replace it with faster-turn items. Discounting the same we expect the company to perform inline with its past performance.
Casey’s prepared food segment drives the company’s growth going forward as it generates the chain’s highest gross margin each year compared to other segments. Moreover, it also manages a rotating menu that reflects seasonal foods, new items, and shifts in dining trends. Now-a-days Made-to-order pizza is Casey’s signature product which lead to generate more loyal customers and makes Casey’s a dependable meal provider.
In August 2006, the company signed an agreement to acquire upto 33 convenience stores from Nordstrom Oil Company of Cedar Rapids, Iowa for a purchase price of $63 million. The acquisition was completed in October 2006. All of the stores are located in Iowa and operate under the HandiMart banner. The acquisition of the HandiMart locations serves as an excellent fit with its acquisition strategy and further strengthens its existing market presence in Iowa.
For the third quarter ending January 2007, the company posted strong results as top line increased by 15.6% driven by double-digit total sales increases across every business category. The company posted 4% gain in same-store gasoline gallons sold in the third quarter and a 14.6% increase in total gallons sold. Total grocery & other merchandise sales for the quarter increased 15.3% with an average margin of 30.8%, with same-store sales were up 6.7% This double-digit increment in sales led to 62% rise in earnings.
The goal for fiscal 2007 is to acquire 50 stores and build 10 new stores. At the nine-month mark Casey’s had acquired 47 stores and built 8 stores. The management is looking out for some acquisitions as it has stated that the environment for acquisition remains favorable. Considering the above factors, the shares of Casey Stores offers potential returns for long-term investors.