Casey's (CASY) Gains From Its Customer-Centric Approach
Casey's General Stores, Inc. CASY has shown a strong and consistent growth trajectory, driven by strategic initiatives in product diversification, technological advancements and expansion through acquisitions. The company's focus on enhancing customer experience and operational efficiency, along with its ambitious growth plans, positions it well for continued success in the convenience store industry.
Sales Growth in Key Categories
In the first quarter of fiscal 2024, Casey’s inside sales increased 8.1% year over year to $1,369.7 million and inside same-store sales saw a 5.4% rise. The success was largely attributed to the strength in the prepared food and dispensed beverage category, including products like whole pizza pies, hot sandwiches and donuts, as well as a variety of beverages, snacks and candy.
In specific categories, the Grocery & General Merchandise segment saw an 8% rise in sales to $997 million, with a slight margin improvement. The Prepared Food & Dispensed Beverage segment reported an 8.5% increase in sales. Results were attributed to operating approximately 3% more stores on a year-over-year basis.
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Successful Product Innovation
The introduction of thin-crust pizza marked a milestone in Casey's menu innovation in the fiscal first quarter. This new offering filled a crucial gap in its product lineup and catered to a broader customer base.
Apart from the introduction of thin-crust pizza, Casey's has implemented other significant product innovations, such as the Barbecue Brisket Sandwich on King's Hawaiian Buns. This addition to the hot lunch sandwich category is an innovative offering that combines the unique taste of barbecue brisket with the sweetness of King's Hawaiian Buns.
The launch of this product led to a significant increase in sales in this category, with a 30% rise in the quarter, underscoring its popularity among customers. Casey's has been expanding its private-level product offerings, with nearly 350 items currently available. The company plans to add more than 40 items in the fiscal year.
Acquisitions Plan to Increase Footprint
Casey's is expanding its reach with the acquisition of 63 stores from EG Group located in Kentucky and Tennessee. These stores are situated in the rural and suburban markets, which align well with Casey's existing footprint and strategy.
This acquisition is a key part of its three-year strategic plan, reflecting the company’s focus on expanding its geographical footprint. It plans to add at least 150 stores in fiscal 2024.
Wrapping Up
Casey's has positioned itself as a strong and dynamic player in the convenience store industry by capitalizing on the key growth drivers, embracing technology, expanding private-label offerings, and consistently improving the customer experience.
For fiscal 2024, the company estimates inside same-store sales to increase 3-5% and the inside margin to rise 40-41%. It expects to invest $500-$550 million in fiscal 2024.
Shares of this Zacks Rank #2 (Buy) company have advanced 19.8% in the past year, in tandem with the industry’s growth.
3 Other Red-Hot Stocks to Consider
Here we have highlighted three other top-ranked stocks, namely Lamb Weston Holdings, Inc. LW, Target Corporation TGT and Celsius Holdings CELH.
Lamb Weston is a leading global manufacturer, marketer and distributor of value-added frozen potato products, particularly French fries. It also provides a range of appetizers. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston Holdings’ current fiscal-year sales and EPS suggests growth of 28.3% and 24.8%, respectively, from the year-ago reported figures. LW has a trailing four-quarter earnings surprise of 46.2%, on average.
Target has evolved from just being a pure brick-and-mortar retailer to an omni-channel entity. It has a Zacks Rank #2 at present.
The Zacks Consensus Estimate for Target’s current fiscal-year earnings suggests growth of 38.5% from the year-ago reported number. TGT has a trailing four-quarter earnings surprise of 30.8%, on average.
Celsius Holdings, which offers functional drinks and liquid supplements, currently carries a Zacks Rank #2. CELH delivered an earnings surprise of 81.6% in the last reported quarter.
The Zacks Consensus Estimate for Celsius Holdings’ current financial-year sales and earnings suggests growth of 98.5% and 184.1%, respectively, from the year-ago reported numbers. CELH has a trailing four-quarter earnings surprise of 110.9%, on average.
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