Will acquiring Kroger’s c-stores be more than Casey’s can handle?
The convenience store chain, Casey’s General Stores, might soon expand its footprint through a big acquisition, even as it has been experiencing pressure from investors to sell off its operations entirely.
Casey’s has put in a bid on 783 of Kroger’s convenience stores, according to the Des Moines Register, a significantly larger acquisition than any other the company has yet pursued. The chain’s largest single acquisition so far consisted of between 55 and 60 locations (all of which are now Casey’s-branded convenience stores). Casey’s currently operates more than 2,000 stores in 15 states.
In December, a group of Casey’s investors urged the company to sell the entire c-store chain, according to an earlier Register article. The group cited Casey’s rapid expansion coupled with apparent declining ROI as an indication that the company was unable to manage growth effectively. It also noted declining same-store sales and bloated operational expenses. At the time, CEO Terry Handley said that the store was focused on generating shareholder value through increasing same-store growth.
Despite the concerns over managing expansion expressed by investors, analyst Brittain Ladd, quoted in the Register’s account of the acquisition bid, said that the aforementioned investor pressures are the driving force behind the move. Mr. Ladd saw it as part of Casey’s strategy to reduce costs and complexity, increase market share and improve the chain’s competitive position.
The question of who will pick up Kroger’s convenience stores has been a point of speculation since last October, when Kroger first began discussing the possibility of selling off its stores to a company more focused on the c-store space. Kroger operates convenience stores under the monikers KwikShop, Loaf ‘N Jug, QuickStop, Tom Thumb and Turkey Hill Minit Markets in 18 states.
Among others, big names such as 7-Eleven and Canadian chain Couche-Tard were floated by CSP Daily as likely suitors for the Kroger convenience stores.
But 7-Eleven’s most recent big, footprint-boosting acquisition instead came with the purchase of 1,030 convenience stores owned by Sunoco across 17 states. The acquisition will bring the 7-Eleven’s total store count up to 9,700 throughout the U.S. and Canada.
- Casey’s pursues buying 783 Kroger convenience stores, report says – Des Moines Register
- Investors urge Casey’s to sell Iowa-based convenience store chain – Des Moines Register
- Should Kroger sell its c-stores? – RetailWire
- 7 Companies That Could Acquire Kroger’s C-Stores – CSP News
- What will 7-Eleven do with all its new stores? – RetailWire
DISCUSSION QUESTIONS: Given criticisms by investors that Casey’s General Stores has not effectively managed expansion well thus far, is acquiring 783 more stores a wise move? Will an expanded footprint improve Casey’s position competing against convenience store powers such as Couche-Tard and 7-Eleven?