Though some large convenience store chains are aggressively building stores, rising construction costs over the last couple of years have prompted Casey's General Stores to lean more toward acquisitions than new store construction, officials said Tuesday.

Iowa-based Casey's, one of the largest convenience store chains and fuel retailers in the U.S., said its ratio of acquisitions to new-to-industry stores is now about 50-50. And despite its recent large acquisition of the Fikes Wholesale fuel distribution operation and convenience store chain, the company tends to purchase one to three stores at a time.

In fiscal 2025 ended April 30, Casey's built or acquired 270 stores, the most in its history. That included Fikes Wholesale and its 198 CEFCO stores.

Casey's said it can acquire stores, add a kitchen and remodel the sites to fit its business model at below replacement cost. The company considers the large acquisitions "more opportunistic."

It also has the flexibility to lean more toward new construction if economic conditions change because Casey's has amassed a significant amount of land for potential development.

"We can lean either way," Chief Executive Darren Rebelez told analysts said during a conference call discussing fiscal 2025 and fourth-quarter financial results.

Consumers are "hanging in there and continuing to visit Casey's stores as frequently as they have in the past" despite inflation and uncertain economic conditions surrounding U.S. tariff policy, Rebelez said.

The company is seeing healthy traffic from high-income households. Even low-income consumers are still visiting stores, though modifying their purchasing behavior.

An example involves the candy and bakery categories. As candy prices rise, some consumers are turning to Casey's reasonably priced fresh bakery items to satisfy their sweet tooth, the company said.

Casey's distinguishes between two categories of low-income households, saying those with children are struggling, while many others are single, younger and early in their career -- Generation Z or younger millennials. Purchasing habits for the two groups are very different, the company added.

Like other retailers, Casey's continues to benefit from expanding its line of private-label store brands that tend to offer higher margins but at a lower price than comparable national brands.

However, Casey's is now revising its strategy by creating three tiers of private-label goods instead of "a one-size-fits-all" approach, officials said.

Casey's is offering a premium product line for high-end customers, a mid-level line of products equivalent to national brands and a "value" product line for the budget-conscious customer.

With the Fikes purchase, Casey's expanded its footprint outside its traditional Midwest markets.

However, the stores in new areas of Texas and Florida that have been converted to the Casey's brand have performed well despite local differences. Customers there welcomed Casey's fresh food service, especially the pizza.

As anticipated, fuel operations in Texas and Florida see thinner margins than in the Midwest but much higher volume, the company said.

Many of the Fikes stores Casey's acquired also are in small towns and rural areas that fit the company's traditional business strategy, Rebelez said.

Casey's, which reported "record" results for fiscal 2025 as well as healthy results for the fourth quarter ended April 30, saw a 0.1% increase in fourth-quarter same-store fuel volume year to year, with a fuel margin of 37.6cts/gal. Its total fuel gross profit increased by 21.4% from the prior year to $307.8 million.

The company outperformed the national average at U.S. gasoline stations, which saw a 4.4% year-to-year decline in same-store retail fuel volumes for the three months ending April 30 and gasoline margins averaged 36.8cts/gal, according to OPIS data.

While diesel is only about 16% of Casey's fuel volume, the company saw an increase in over-the-road truckers at its sites, and diesel "helped move the needle" during the quarter.

Fourth-quarter inside same-store sales increased 1.7% year to year, with an inside margin of 41.2%. The company said its total inside gross profit increased 12.5% from a year earlier to $582.4 million.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

-- Donna Harris, dharris@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com

(END) Dow Jones Newswires

June 10, 2025 13:56 ET (17:56 GMT)

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