The rising cost of living may have contributed to an upsurge in cigarette smuggling in Canada, Food Couche-Tard suspects.
The management of the operator of convenience stores and service stations made this assumption on Wednesday during a conference call on its most recent quarterly results. “In Canada, we felt pressure on the side of our cigarette sales, reports the chief financial officer, Claude Tessier. There seems to be a transfer to the black market. »
President and CEO Brian Hannasch sees other changes in consumer habits. On average, motorists in the United States put less gas in their tank per visit. “This is a sign that the pressure is mounting on consumers. We are lucky to see unemployment at a historic low, which means that the consumer is still in better shape than in 2008-2009 [lors de la crise financière]. »
The manager claims to be satisfied with the traffic, but he observes that consumers are changing their consumption habits by buying brands at low prices. “We see consumers switching from high-end beer to low-priced beer. »
Mr. Hannasch believes that the development of its private label offering has also paid off, while sales in this category have increased “strongly in the double decimal range” in the United States. “We’ve done a lot of work with private labels over the past three years and we’ve seen a lot of growth. This allowed us to make a greater profit per item sold. »
Increase in expenses
The Laval company announced, the day before the markets closed, results slightly better than expected in the fourth quarter, while fuel margins in the United States offset the effect of higher expenses and lower margins in Europe.
During the conference call, management was asked about the company’s operating expense increase of 19% in the fourth quarter (ended April 24) and 14.3% for the exercise. Mr. Tessier explained that the increase was attributable to three factors. He said the comparison to last year, when spending fell in the wake of tougher lockdowns, was difficult. Inflation also exerted pressure on costs and payroll. Finally, the company made investments to encourage sales growth.
On the workforce, Hannasch said the company sees “light at the end of the tunnel” as it has managed to hire more employees than it has lost in recent years. weeks. The increase in the number of employees suggests a reduction in the use of overtime at a higher hourly rate.
Couche-Tard recorded a profit of US$477.7 million in the fourth quarter, down 15.3%. Revenues, for their part, increased by 34%, reaching US$16.4 billion from US$12.2 billion. Adjusted diluted earnings per share were 55 cents, compared to 52 cents for the same period last year.