President’s Message


Consolidate and continue to strive

I am happy to report that this year can be summed up in a single word: PRIDE.

Three years ago, we publicly stated our goal to become the world’s preferred destination for convenience and fuel. And I am quite proud of the progress we’ve made, together, in a so short amount of time.

The combination of our strong and committed approach to organic growth and our disciplined manner in which we execute mergers and acquisitions continued to drive our success this year as it has in past years.

Our various acquisitions, the expansion of our offering, the growth of our company, the addition of key people in strategic roles, our financial discipline, the knowledge gained from our internal sharing and the solidarity of our teams in times of crisis are all accomplishments that motivate us to excel each and every day. I remind myself often how fortunate I am to have such a great group of people.

ACQUISITIONS

In the last three years, we have expanded our network with numerous acquisitions. Let me shine a light on some of them:

  • The Pantry, which operates under Kangaroo Express, Esso, Dansk Shell, Topaz, Cracker Barrel, CAPL, CST, and the last one to date, anticipated to close during the fourth quarter of fiscal 2018, Holiday Stationstores.
  • Alongside, we began the deployment of our global Circle KR brand, an endeavour that has gained momentum with more than 3,000 stores rebranded globally since 2016: 1,300 in Europe and 1,800 in North America;
  • Throughout these acquisitions, we have identified and implemented synergies and realized cost reduction opportunities by establishing processes for both controlling costs and sharing best practices across our network;

ORGANIC GROWTH

As a constantly evolving company, our successes lie on our ability to balance these acquisitions with organic growth, as it represents an important part of our development.

Our top line growth model focuses on our three pillars of Easy Visits, Fast and Friendly Service and Differentiated products for people on the go.

  • We continued to actively work to improve our top line, simultaneously driving up same-store merchandising figures and increasing fuel volumes;
  • We aim to occupy great corner locations, with modern stores that embrace current trends;
  • We strive daily to meet our customers’ needs by going beyond the offer of excellent products and services that we are known for.

Also investing in both our millennial workforce and customer base to adapt to their unique needs.

Building on the accomplishments of the past years, we will pursue the development of our key categories and food offering. We believe we must continue to build on our strengths and adapt to the market changes: innovation and technology always push us to be at the forefront.

Driving forces behind our organic growth are for example our new Foodvenience stores – food prepared on-site plus convenience – in North America and same-store road transportation fuel volumes globally driven by strong brands and execution.

In short, we display continued efforts to adapt to new markets, to provide strong operations and to deliver fast and friendly service to our customers.

All these achievements are the foundation on which we are building our company’s future. Our goal is to sustain momentum and become the world’s preferred destination for convenience and fuel.

FINANCIAL EFFICIENCY

Every acquisition is fuelled with the intention to make sure our new family members incorporate our values. As a growth-oriented company, we know every acquisition is only as good as its successful integration. To achieve this, we must be diligent and present in our stores, and pursue our ongoing quest for financial efficiency.

We seek to leverage economies of scale wherever we can, while identifying local innovations that the company can benefit from globally. This way, we learn from every acquisition and turn the individual strengths of the businesses we acquire into our own strengths globally.

Finally, as a demonstration of our ability to balance acquisitions with organic growth, despite headwinds in the broader retail sector, same-store metrics continued to expand in fiscal 2017, sustained by the growing engagement of our workforce popularity of our broader food service offering, our effective merchandising strategies as well as the roll-out of our coffee concept, Simply Great Coffee, in a growing number of stores worldwide.

GLOBAL BRAND

Two years ago, on September 22nd, 2015, we announced our decision to unite our knowledge and experience, our commitment and passion for retail, behind one powerful global brand: Circle K and Couche-Tard in Québec.

This is much more than a signage exercise. Our new Circle KR brand positions us better than ever to reap the benefits of worldwide best practice sharing. Together with our call to action, and the three operational pillars that support it – fast and friendly service, products for people on the go and easy visits – the brand platform establishes a strong framework that we want our customers to associate us with for many years to come.

During fiscal 2017, our continued efforts to roll out our brand and increase awareness allowed for more and more customers to discover the Circle K experience:

  • In Scandinavia, raising up to the challenge, we successfully transitioned from the well-established Statoil brand without affecting customer traffic in stores;
  • We also rebranded our first official sites in Poland and in the Baltics (Estonia, Latvia and Lithuania). Like Scandinavia, the teams have done a great job and we continue to grow in our new CK branded locations.
  • We have also launched the brand in Canada and continue rebranding sites in the US with an overall goal to add 1694 sites this year (*excluding Québec East and Québec West).

LOOKING AHEAD 

In fiscal 2018, drawing on our experience previous integrations, we will focus our efforts on carrying out the CST integration and on closing the agreement with Holiday.  These networks provide great opportunities to learn and improved the overall network.

Like I said before, our organic growth is an important part of our development, therefore, this year, we will pursue accelerating development of our key categories and food offering. In our quest to become the world’s preferred destination for convenience and fuel, we will strive to act even more local to our customers, to offer products that customer take a more active interest in, all the while delivering fast and friendly service.

At Couche-Tard and Circle K, we thrive on selling people-time. In accordance with this, we will pursue our efforts to create store experiences with customers in mind, as well as products for people on the go. Our experience with Foodvenience stores is thus far proving to be a successful innovation on which to build in the future.

WHAT’S NEXT?

We will keep our focus on Customers On-the-Go

In addition to acquiring new sites and enhancing existing ones, the sustainable growth of our business relies on our ability to react to pressures and opportunities from our customers, suppliers, partners in the wider markets in which we operate. In sales, we focus on key categories including food, coffee, cold beverages, fuel and car wash for customers-on-the go.

However, ever-changing demands mean we must always seek and offer new and improved products and services. With innovation in mind and the benefits of international acquisitions, we have prevailed in offering top of the line products. In saying this I am thinking for example of the new bake-on-site pastries in Québec and our European markets, the Cantina and Re.Stores in Europe, the Foodvenience stores, our private label healthy choices for people on the go or the Simply Great Coffee.

SIMPLY GREAT COFFEE

I am so proud of our Simply Great Coffee!

It is now available in over 2,700 stores globally.

With this product we are delivering quality black coffee, expressos, lattés and cappuccinos as well as rich hot chocolate to our customers. Our focus on taste has led to Simply Great Coffee being awarded “Best in Test” in four countries in Europe in 2016.

The program is generating positive results being one of the main drivers of organic merchandise sales, with continuous double-digit unit growth.

Bakery

At the end of fiscal 2017, we had over 4,500 stores in North America and 2000 stores in Europe serving freshly delivered or baked-on-site donuts, pastries, muffins, croissants and cookies. In 2018, we plan on adding another 500 made-on-site bakery stores to the Canadian market and opening up daily delivery in additional stores within our Southeast and Gulf Coast markets.

Our goal: become a one-stop shop that offers fast and friendly service along with quality products for our clients in need of a breakfast on the go.

Cold Beverages

Polar PopR & FrosterR are the foundation of our cold dispensed program, with a loyal fan base that continues to grow. As consumers’ preferences and needs are changing, we are evolving the offer to build on our brands already in a strong position.

Last year, new equipment and an expanded portfolio were implemented in 750 stores across the network, and in fiscal 2018, over 2,000 stores will receive capital investments to further improve our cold dispensed offers to solidify our position as a preferred destination for consumers.

CAR WASH AND FUEL

CAR WASH

Car Wash is an important business with over 2400 locations and we are committed to improving our offers and environmental footprint at the same time.

In an effort to save water and the environment, Couche-Tard entered into a global agreement with the world’s largest manufacturer of car washes in 2016.

It includes co-operation in developing even more efficient car washes in terms of both quality and energy.

We work with our suppliers and vendors to continue to make strides in reducing our water consumption along with meeting our customers’ need for a quality wash.

Examples of this include:

North America:

  • We are replacing touchless equipment with brush equipment that can reduce water consumption by as much as 50%.
  • Globally, we are installing equipment that recaptures much of the water for reuse with reclaim and recapture systems.

Scandinavia:

  • Many of our car wash locations use detergents and conditioning chemicals certified to meet the Nordic Ecolabel or “Swan” environmental standards.

FUEL

We continue to focus on growing our fuel market share in our core markets by offering brands, products and experiences that customers value.

In fiscal 2017, same-store road transportation fuel volumes contributed to drive our organic growth, namely in the United States.

Our branded and premium fuels, milesR and milesPLUSR, are more and more present in our different sites. So far, in total, across Europe and the United States, we have close to 1,500 sites with milesR and more than 700 sites are planned for 2018 throughout our network. In addition, by the end of 2018, we hope to offer milesPLUSR in a little over 1,000 sites in Europe.

Furthermore, for the first time in fiscal 2017, Circle K brought HVO100 – a climate-smart alternative to “fossil diesel” – to private cars in Sweden. HVO100 reduces carbon dioxide emissions by up to 90% compared with standard diesel.

Finally payment will be a bigger part of the consumer experience and we will begin piloting mobile payment in the coming year.

OUR PEOPLE

One of my personal objectives over the past three years has been to foster engagement among the company’s employees, regardless of their role. We recognize autonomy, acknowledge empowerment and emphasize leadership and the opportunities to grow with our company. We strongly encourage our teams to stand out and become leaders in the industry of today and tomorrow.

I am also convinced that building a sense of belonging within Couche-Tard’s employees has always been at the cornerstone of our success. Without the dedication of our teams and of all the people who are part of the amazing adventure that is Couche-Tard, we would not be where we are today. I strongly believe that our strength lies in our staff’s growth and development.

In a company where we take pride in the fact that the majority of our people come up from within, we believe having diversity in leadership roles can also serve as an incentive for their peers. We are proud to have welcomed to our management team two outstanding women executives whose diversified perspectives and visions provide us with a competitive advantage.

Without the dedication of our teams and of all our people, we would not be where we are today. I strongly believe that our strength lies in our staff’s growth and development.

In informing, respecting and creating engagement opportunities for our employees, we will be achieve our objective to stand out with the quality of our products and the customer experience. Making sure employee engagement is at its highest, aiming to achieve a lower turnover will, in turn, generate better services for our customers. After all, what we are looking to accomplish is “making it easy, so folks can take it easy”!

 

Brian Hannasch

President & Chief Executive Officer