Casey's (CASY) Rides on Its Business Model & Digitization
Casey's General Stores, Inc. CASY has a strong business operating model that includes omnichannel capabilities, enhanced customer reach and private-label offerings. These elements help the company remain competitive in the industry.
Additionally, CASY has invested in digital engagement tools, such as a mobile app and online ordering capabilities, to cater to changing consumer preferences and behaviors.
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Let’s Delve Deeper
Casey's has strategically invested in technology, merchandise ordering efficiency, inventory management and data analytics, which have positioned it well for growth and operational excellence. The expansion of private label offerings, with more than 300 items under its private brand, is another strategy to enhance profitability and customer loyalty.
The company has successfully integrated digital technologies, such as a mobile app and online ordering capabilities, into its operations. These digital initiatives have contributed to seamless shopping experiences, resulting in strong same-store sales growth. The Casey's Rewards program, boasting more than 6.5 million members, indicates a favorable customer response. The company registered an 8.4% year-over-year increase in Inside sales and 6.5% growth in Inside same-store sales.
Grocery & General Merchandise sales experienced an 8.8% year-over-year increase, reaching $809.8 million, while Prepared Food & Dispensed Beverage sales grew 7.1% to $314.2 million in the fourth quarter of fiscal 2023.
Casey's plans to further accelerate its food business by increasing the sale of whole pies, introducing limited-time menu items, forming exclusive brand partnerships and expanding its popular thin-crust pizza offerings.
The company is embracing insight-driven innovation to align its convenient food options with customer preferences, demonstrating its commitment to staying attuned to consumer needs. Also, it is committed to expanding its physical footprint, aiming to add 350 stores by the end of fiscal 2026, including 110 stores in fiscal 2024.
Casey’s has been making notable efforts to enrich the guest experience. In its latest move, the company unveiled plans to acquire 63 convenience stores from EG America, LLC. EG America is a subsidiary of EG Group Ltd. The deal is expected to conclude later in the current year and is subjected to customary regulatory approvals.
These stores, presently operated under the Minit Mart and Certified Oil banners, are located in Kentucky and Tennessee. Employees at each store are likely to be retained by Casey’s. This deal strategically fits with the acquirer’s store-growth plan, aiming to expand stores in the coming three years and reach more customers.
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 #3 (Hold) company have advanced 14.1% in the past year, in tandem with the industry’s growth.
3 Red-Hot Stocks to Consider
Here we have highlighted three better-ranked stocks, namely Walmart Inc. WMT, Grocery Outlet GO and Celsius Holdings CELH.
Walmart has evolved from being a traditional brick-and-mortar retailer to an omnichannel player. It currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 6.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Walmart’s current fiscal-year sales and earnings suggests growth of 5% and 2.1%, respectively, from the year-ago reported numbers. WMT has a trailing four-quarter earnings surprise of 11.6%, on average.
Grocery Outlet, the extreme value retailer of quality, name-brand consumables and fresh products, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 12.3%.
The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales and earnings suggests growth of 11.2% and 3.9%, respectively, from the year-ago reported numbers. GO has a trailing four-quarter earnings surprise of 14.3%, on average.
Celsius Holdings, which offers functional drinks and liquid supplements, currently carries a Zacks Rank #2. CELH delivered an earnings surprise of 100% in the last reported quarter.
The Zacks Consensus Estimate for Celsius Holdings’ current financial-year sales and earnings suggests growth of 88.9% and 168.8%, respectively, from the year-ago reported numbers.
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