Yahoo Finance Couche-Tard: Stock falls, CEO calls U.S. consumer weakness 'transitory'
Alimentation Couche-Tard (ATD.TO) shares fell on Thursday as the gas station and convenience store giant’s CEO repeated a warning about U.S. consumer weakness.
Quebec-based Couche-Tard says it has more than 16,700 stores in 29 countries and territories. The United States is its largest region, with more than 7,000 sites. The company’s brands include Circle K and Ingo.
After the closing bell on Wednesday, Couche-Tard reported net earnings fell more than 15 per cent year-over-year in its third quarter. Toronto-listed shares fell at the start of trading on Thursday, losing as much as eight per cent.
Speaking on a conference call with analysts, president and CEO Brian Hannasch pointed to “near-term headwinds, particularly in the U.S.,” where fuel margins and merchandise sales fell.
Hannasch referred to consumer “belt-tightening” last November, when Couche-Tard last reported quarterly results.
“Fuel demand was certainly impacted by economic uncertainty, typically in diesel, which was significantly weaker than gasoline,” he said on Thursday. “On the convenience side specifically, it's really that lower-income consumer that we're seeing strained today.”
In response, Couche-Tard says it's growing its selection of private-label options, rolling out its loyalty program and offering recurring Fuel Day promotions.
Hannasch has called the company “recession resistant.” On Thursday, he described the current consumer weakness as “transitory,” and unlikely to persist over multiple years.
RBC Capital Markets analyst Irene Nattel called Couche-Tard’s third-quarter results an “unusual miss.” In a note to clients, she reiterated an “outperform” rating and a $94 per share price target on the company’s Toronto-listed stock.
"Despite the lacklustre fiscal third-quarter print, we remain constructive on ATD as a name to own in 2024," Nattel wrote.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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