Casey's grew a lot, including its gas profit margins
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Photo: Courtesy of Casey's
Casey's posted record profits in its last fiscal year, fueled by surging gas margins and strong in-store sales, leaders shared during an earnings call this week.
Why it matters: Gas stations are the great equalizers in our society, and purchasing habits at Casey's can reflect how Iowans are doing in general.
State of play: Casey's experienced record fuel profit margins this last quarter, and while volatility surrounding the Iran War drove fluctuations in oil prices, CEO Darren Rebelez says he expects strong margins to stick.
By the numbers: Gas stations earned an average of 35 to 40 cents per gallon over the last five years.
- But fuel margins this last year averaged 42.6 cents per gallon. Last quarter alone, it spiked to 46.9 cents, Rebelez said.
- Ethanol blends are up, and people are buying a little less per fill-up but are visiting more frequently.
Zoom in: Small gas station chains make up the majority of the convenience store industry, but those owners are working on thin margins because of increased labor costs, weaker purchasing power and fewer revenue streams.
- Because they have fewer ways to offset rising costs, they rely on higher fuel margins to "stay above water," benefiting Casey's, Rebelez said.
- Gas prices also rise with inflation.
🍕 Food sales: Whole pizza sales are up about 10% year-over-year, and wings are emerging as a potential next growth driver.
- Whole pizzas are priced around $1 to $3 less than national competitors, a draw for customers seeking cheaper meals, Rebelez says.
- Wings could someday rival pizza sales, though it could take a long time to build.
🚬 Nicotine products: Cigarettes are out; vapes and pouches are in. This is good for the company because they sell at significantly higher margins.
The big picture: Casey's tracks shoppers by three annual income tiers: Under $50,000, $50,000–$100,000 and above $100,000.
- Growth is still happening across all three, though the lowest income tier is softening, he says.
- Fuel rewards redemptions through the Casey's app were up 23% last quarter, a sign that price-conscious shoppers are leaning harder on loyalty discounts, he says.
What's next: The company plans to open at least 120 stores next year.