Casey’s profit falls on lower fuel margin

Ankeny-based convenience store operator Casey's General Stores reported second-quarter earnings and revenue that missed analysts' expectations.

Net income for the quarter that ended Oct. 31 was $57.2 million, or $1.44 per common share, down from $79 million, or $2 per common share, in the same quarter of fiscal year 2016. Analysts surveyed by Zacks Investment Research were expecting earnings of $1.57 per share.

Second-quarter revenue was $1.92 billion, virtually unchanged from the second quarter of fiscal year 2016. Analysts surveyed by Zacks expected revenue of $1.95 billion.

Casey's said its second-quarter fuel margin was 18.6 cents per share, down from 24.7 cents per gallon in the same quarter a year ago. Terry Handley, Casey's president and CEO, said the lower fuel margin lowered second-quarter earnings by approximately 52 cents per share.

Operating expenses increased 10.2 percent, to $295.3 million, in the second quarter, primarily driven by an increase in wages due to operating more stores this year and higher wage rates.

Handley said the company remains committed to offering competitive wages and benefits.

Handley said the chain is well-positioned for future expansion, noting that the number of sites under contract for new store construction has grown to 84, which is nearly double from a year ago.

Casey's plans to build or buy 77 to 116 stores, replace 35 existing locations, and complete 100 major remodels in fiscal year 2017.

The Cedar Rapids Planning Commission on Nov. 17 approved a preliminary site-development plan for Casey's to demolish its existing 4,890-square-foot store at 3625 Edgewood Rd. SW, just north of Highway 30, and build a 7,910-square-foot facility on the current lot and an adjacent vacant lot.

Casey's will need to request a variance for reduced parking to obtain final approval for the project.

l Comments: (319) 398-8366; george.ford@thegazette.com