Skip to content

Hurricanes and floods have prepared Alimentation Couche-Tard for COVID-19: CEO

cpt18152886

Alimentation Couche-Tard Inc. says its experience adjusting to hurricanes and floods positions it well to meet the challenges from COVID-19.

Communities where its Circle K stores are located rely on the convenience store chain for fuel, emergency items and staples, CEO Brian Hannasch told analysts Wednesday.

"So when we've experienced these types of situations in the past, if you think about hurricanes, floods, etc., our industry has played a key role in helping our communities get through these situations, and we'll attempt to do the same here."

The international retailer said there has been some softening of business in Norway after its borders were closed last week but there's been little impact so far in the United States and Canada where similar restrictions were not yet put in place.

"One of the benefits of being global is we're able to share information and best practises and learnings across our business units and apply the lessons we learn in Europe to our North American businesses," he told analysts.

Hannasch said there is higher demand for some items such as water, tobacco products and beer as customers stock up but no material issues with its supply chain.

The Quebec-based company said it has contingency plans if stores are forced to close, reduce hours or face labour shortages.

"So right now, we expect to remain open. However, we do have plans where we've identified sites that we would close and transfer employees to make sure that we keep our most strategic sites open in the event of running short of available team members," he said.

"We also are looking at opening hours and reducing evening shifts if we need to."

He noted that communities facing restrictions allow for exemptions for grocery, fuel and drugs.

Derek Dley of Canaccord Genuity said he believes Couche-Tard can weather the virus storm.

"The company’s decentralized business model has handled a number of local crises in the past and we believe it is well-equipped to do so again," he wrote in a report.

Hannasch told analysts that the retailer also has the financial flexibility to withstand any pressures and also take advantage of acquisition opportunities that may arise from struggling competitors.

"If I look back over the years, I would say some of our best opportunities have come after a difficult period," he said.

The chief executive added that it's normal for store sales prices to fall as some owners don't have the balance sheet flexibility.

"So as always, our approach has been to maintain a clean balance sheet and be able to get through these difficult times in good condition and take advantage of opportunities that may arise."

Couche-Tard said it has US$1.8 billion of cash on the balance sheet plus US$2.5 billion of available credit.

The company also says it is conducting due diligence on its bid for Australia's Caltex convenience store network.

The comments came after the company boosted its quarterly dividend 12 per cent to seven cents per share while reporting Tuesday that it earned US$659.9 million or 59 cents per diluted share in the third quarter. That's up from US$612.1 million or 54 cents per share a year earlier.

Alimentation Couche-Tard was one of the best performers on a losing day on the Toronto Stock Market as its shares gained 90 cents, or 2.7 per cent, to $33.97

This report by The Canadian Press was first published March 18, 2020.

Companies in this story: (TSX:ATD.B)

Ross Marowits, The Canadian Press


Looking for National Business News?

VillageReport.ca viewed on a mobile phone

Check out Village Report - the news that matters most to Canada, updated throughout the day.  Or, subscribe to Village Report's free daily newsletter: a compilation of the news you need to know, sent to your inbox at 6AM.

Subscribe