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The small shop that keeps getting bigger
Alimentation Couche Tard Inc. (TSX—ATD), a global leader in convenience and fuel retail, continues to grow through acquisitions.
In fiscal 2022 (ended April 24), the company acquired over 90 company-operated and dealer-operated stores primarily in the U.S. And earlier in the year, it agreed to acquire 79 company-operated convenience retail and fuel locations, 147 dealer locations and a fuel terminal in Atlantic Canada. This acquisition is expected to close in the first half of this fiscal year.
Couche-Tard is operating in 24 countries and territories, with more than 14,000 stores, of which about 10,700 offer road transportation fuel. It is one of the largest independent convenience store operators in the U.S. and it is a leader in the convenience store industry and road transportation fuel retail in Canada, Scandinavia, the Baltics, as well as in Ireland.
Improving profits for both fuel and merchandise
For the year ended April 24, 2022, Couche Tard made an adjusted $2.8 billion (all figures in U.S. dollars unless otherwise noted), or $2.60 a share, compared with $2.7 billion, or $2.45 a share, in the same period of 2021. Results were driven by same-store and margin improvements at both the fuel and merchandise segments.
Couche Tard’s solid financial performance has let it return capital to shareholders. In fiscal 2022, the company declared dividends of C41.75 cents a share, an increase of 25.6 per cent from C33.25 cents in fiscal 2021. It also bought back $1.9 billion worth of its shares in fiscal 2022. This leads to fewer shares outstanding, thereby boosting earnings per share.
Earnings slow down next year but outlook remains positive
In fiscal 2023, earnings per share will likely pull back to about $2.54, as operating, selling, administrative and general expenses are expected to outpace gross profit growth.