Casey's General Stores, a prominent convenience store operator, observed a decline in its shares early Thursday following the announcement of its fiscal first-quarter results. The company reported that its revenue fell short of market estimates, while its earnings exceeded Wall Street expectations. For the quarter ending in July, Casey's declared a net income of $4.83 per share, reflecting an increase from $4.52 reported in the same quarter last year.
Notably, this surpassed the consensus estimate from Capital IQ, which had anticipated earnings of $4.48 per share. However, despite a revenue increase to nearly $4.1 billion, compared to $3.87 billion the prior year, the figure still fell below analysts’ projections which stood at $4.15 billion. Consequently, the company's stock experienced a 1.3% drop in premarket trading.
Darren Rebelez, the Chief Executive Officer, remarked on the performance, stating that same-store sales ascended by 2.3%, driven primarily by the prepared food and dispensed beverage sectors. Grocery and general merchandise same-store sales also saw a 1.6% uptick, although this was below the anticipated 3.8% increase derived from five Capital IQ-polled analysts. Rebelez expressed optimism by commenting, "Casey's started the fiscal year off on the right foot and delivered another solid quarter highlighted by strong inside gross profit growth.
Our fuel team continues to balance volume and margin as they delivered positive same-store fuel gallons while also achieving over $0.40 per gallon fuel margin." Despite the positive aspects, operating expenses rose significantly to $609.5 million from $560.9 million reported in 2023. Around 5% of this rise was attributed to the company’s expansion, as Casey's now operates 138 more stores compared to last year.
During the quarter, Casey's managed to construct 10 new stores while closing 3 branches. Adding to its strategic growth initiatives, Casey's recently announced its agreement to acquire Fikes Wholesale, the parent company of CEFCO Convenience Stores, for $1.15 billion in cash. This significant acquisition includes 198 stores and their associated assets and is anticipated to conclude within the 2024 calendar year. This acquisition is poised to have a notable impact on Casey's growth trajectory, leading the company to revise its store growth expectations to approximately 270 units for fiscal 2025.
This revision is a substantial increase from its previous forecast that anticipated the addition of at least 100 stores. Additionally, Casey's maintains its projections for inside same-store sales growth to be between 3% and 5% for the current fiscal year. The company has reiterated its expectations for same-store fuel gallons sold to experience a slight decline of 1% to an increase of 1%, alongside a projected rise in operating expenses by around 6% to 8%.
In light of these developments, investors and analysts will continue to monitor Casey's performance in the evolving convenience store market. $CASY.