I am proud of our annual results that provide us with our sixth straight year of record earnings. Our convenience stores and service stations in North America and Europe continue to build momentum in the face of challenging market conditions. Our same-store merchandise sales on both continents improved in fiscal year 2014, gaining market share in the majority of our markets. And while fuel volumes across the industry are generally flat or slightly declining our best-performing stores grew their volumes while we continued to gain fuel market share.
The numbers speak for themselves
Since the acquisition of Statoil Fuel & Retail, we estimate that total realized annual synergies and cost savings amount to approximately $85.0 million, before income taxes. These savings were in part offset by investments related to the continued rollout of our new Enterprise Resource Planning (ERP) systems and other key strategic convenience and fuel initiatives. Our ERP replacement roll-out in Europe is now complete.
Our work in the area of costs savings and synergy identification continues. We maintain our goal for annual synergies as previously announced.
Winning on all fronts
The strong results for fiscal year 2014 can be attributed to the performance of both the convenience and fuel aspects of our business.
We saw strong growth in same-store sales from merchandise this year. Our North American operations delivered an increase in same-store merchandise revenues of 3.8% in the U.S. and 1.9% in Canada. This is attributable to effective merchandising strategies, investments in the enhancement of our service and product offerings, and pricing strategies aimed at boosting in-store traffic, as well as food service in several of our markets.
According to current NACS State of the Industry data, Couche-Tard outperformed the US market with an increase of 3.8% in same-store sales year-on-year, as opposed to the 2.4% reported in total industry merchandise sales.
Our European operations continued to perform well, helped by new and sustainable merchandising strategies. Strong food service and coffee sales have driven growth in these markets. Our European business units delivered a 1.6%increase in same-store merchandise revenues compared with the same period last year, despite a still-challenging European convenience market. Initiatives such as a “coin offer” – a permanent campaign which promises customers they can always purchase a hot dog for a coin – and the continent-spanning “XL summer” campaign promoting a longer summer, XL offers and XL service, aimed at improving price perception, a significant step-up in merchandising, and new products in fresh food all proved effective.
Food in focus
Our people can be proud of our fresh food initiatives in North America and Europe. Customers are buying food at our stores in increasing numbers, not only because of the convenience factor but also because we offer a broader menu selection and the improved quality and taste they demand.
For example, in North America, our five fresh food pilot markets are delivering very encouraging early results, which show our customers really care about food quality. In Europe, thanks to an increased focus on the category, our hot dog sales have seen double-digit growth – in a category that has been essentially flat over the last few years.
Millions of customers visit our stores and stations across North America and Europe every day. This puts Couche-Tard in a powerful position to mobilize its surrounding communities. We are proud to say there are dozens of organizations across North America and Europe that have benefitted from our corporate and customer contributions, totaling over $11.7 million, from our awareness-building activities and our employee volunteers.
Our North American business units build awareness and raise funds for an array of local community causes through powerful fund drives. This Spring, our Midwest and Great Lakes business units asked our customers to “Put Their Money Where The Miracles Are”, raising over $1.3 million in just three weeks for Children’s Miracle Network Hospitals (CMN). CMN is a care facility that provides approximately $6,500 worth of charity care every minute.
Our European group has aligned its social investments in eight countries around the theme of “youth at risk”. Less than one year into its collaboration with BRIS (“Barnens Rätt i Samhället” or “Children’s Rights in Society”), an organization that assists vulnerable children and young people with advice and support, our Swedish business unit was named their “most creative partner”.
Senior management changes
In March, we announced my decision to take on a new role as Founder and Executive Chairman of the Board of Directors with effect from the date of Couche-Tard’s 2014 shareholders’ annual meeting. At the same time, it was announced that our Chief Operating Officer, Brian Hannasch, would be promoted to the position of President and Chief Executive Officer.
After more than three decades with the same President and CEO, this change is an evolutionary one for our corporation. In my new role, I will be focusing on acquisitions and new industry opportunities while continuing to take part in results reviews and the budgeting process. I will also continue to engage in our strategic discussions and serve as a mentor and coach to our next generation of leaders.
We have an exceptional senior leadership team, and Brian Hannasch is the right person to lead it. He has been intimately involved in developing our strategy and improving our business. He has played a pivotal role in the material acquisitions we made over the last thirteen years, including our largest and most recent, Statoil Fuel & Retail in Europe. His decisive leadership, management skills and deep experience across the entire value chain of our business uniquely qualify him to step into this role.
In Fiscal 2014 we have made great progress in growing our business and we are particularly pleased with the performance of our new-to-industry sites. As has been the case in the past, we have made great progress in deleveraging our balance sheet and in this respect we are currently ahead of our plans. We will further increase our focus on new builds in the coming year, aided by our great land bank on both continents.
In my new role, I will focus on our ongoing expansion into new markets and new opportunities – at the right time and on the right terms. I look forward to continuing the Couche-Tard journey, full steam ahead with Brian at the helm and our 80,000 talented, committed, skilled and experienced people, propelling Couche-Tard to even greater heights.
Renewal is a prerequisite for success in today’s fast-moving, ever-more-competitive retail landscape. I am impressed by the ability of our people around the world to strive for continuous improvement each and every day. I thank them all for their endless energy and commitment.
President & Chief Executive Officer