Casey’s General Stores Inc.’s fiscal second-quarter, ended Oct. 31, saw profit grow 23% on higher margins, while commodity costs and gasoline prices declined compared to last year, the Wall Street Journal reported.
Casey’s reported a profit of $33.6 million, or 66 cents a share, up from $27.3 million, or 54 cents a share, a year earlier.
Robert Myers, Chief Executive for Casey’s, said strong margins in all three categories of the company’s business helped drive the increased profit. Sales in prepared food and grocery segments, especially, have been pulling in strong sales during the recession as customers find alternatives to higher-priced restaurants. Grocery and other merchandise had a 1.9% increase, while for the prepared-food and fountain business, same-store sales grew 3.4%.
The chain’s revenue, however, did not reach Wall Street’s predictions, instead dropping by 17% to $1.15 billion. As a result, shares fell by 8.8% to $28.36 after the second quarter results were released. Still, the stock has gained nearly three-quarters from its four-year low in March.
The chain’s gross margin rose to 17.9% from 13.7%, and margins grew in each category.
Same-store gasoline sales by the gallon declined 0.7% because of bad weather, Myers told the Wall Street Journal. He pointed out the gasoline margins were above Casey’s goal because “the retail price environment continues to be responsive to wholesale movements.”
In the first half of its fiscal year ending next April, Casey’s acquired four stores and built seven. The company still plans to expand its total number of stores by 4% in the current fiscal year.