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Well-known convenience store chain, Casey's General Stores, Inc. CASY, has been expanding its store base to boost sales. Progressing along such lines, the company announced an agreement to acquire 40 Pilot convenience stores from Pilot Corporation. The acquisition, worth $220 million, will be carried out in an all-cash transaction. Let’s delve into this latest move and other growth efforts being undertaken by the company.
Store Expansion Plans on Track
Through the acquisition of the 40 Pilot convenience stores, Casey's will be able to expand its presence in Tennessee and Kentucky. The expansion will help the company to gain footing in the attractive Knoxville, TN market.
Management highlighted that the stores being acquired have a strong performance record and are expected to be a prudent fit for Casey’s portfolio. These stores are likely to contribute toward the company’s fresh food program, especially handmade pizza. Moreover, Casey’s will continue the stores’ legacy of growing their core travel center network and energy businesses. This includes investments in people and stores to provide superior customer experience.
Management noted that Pilot’s convenience stores are owned and operated separately from its travel center and energy businesses. These stores are also excluded from the Berkshire Hathaway transaction. Casey’s will be funding the transaction through a combination of cash on hand and bank financing. The agreement is subject to customary closing conditions and regulatory approvals, including the Hart-Scott-Rodino clearance.
Through this acquisition, Casey's is taking its store expansion plans a step further. Last year, the company unveiled its three-year strategic plan to add nearly 345 stores. Earlier this year, the company completed the acquisition of Bucky’s convenience stores from Buchanan Energy.
Casey’s prides on being one of the leading convenience store retailers in the United Stated with a strong brick-and-mortar footprint. During the first quarter of fiscal 2022, the company constructed three new stores, acquired 139 stores and closed five. As of Jul 31, 2021, it operated 2,380 stores. The acquisition of Buchanan Energy adds 94 retail stores and 79 dealer locations to Casey's business.
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Other Prudent Growth Efforts
Apart from fortifying its physical store base, Casey’s is also engaged in the expansion of its digital capabilities. In this respect, the company has been working toward strengthening delivery capabilities. It has expanded Uber Eats marketplace across 750 stores while the DoorDash marketplace is available at the company’s 890 outlets. The company continues to utilize its own delivery drivers at 400 stores as well as keeps offering in-store pickup and curbside pickup at above 2,200 outlets. Such efforts have helped the company provide its customers with a seamless shopping experience and thereby aid same-store sales growth.
Casey’s has also been focused on pricing and product optimization strategies, cost-containment efforts and boosting distribution efficiency. The company’s breakfast line-up, especially pizzas, have been doing well and it looks forward to undertaking innovations in order to accelerate breakfast category growth.
Shares of this Zacks Rank #1 (Strong Buy) company have gained 6.9% in the year-to-date period compared with the industry’s rise of 9.5%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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