Dive Brief:
- CrossAmerica Partners will continue to focus on scaling the retail side of its business, CEO and President Charles Nifong said during the company’s fourth-quarter earnings call on Thursday. The company added 99 retail sites from Q4 2023 to Q4 2024, including converting 59 sites formerly run by Applegreen.
- The c-store chain’s retail gross profit in Q4 grew 9% year-over-year to $75.1 million due to the company having more stores, as well as higher merchandise margins. Same-site sales were also up 1%.
- This growth came despite “weak fuel demand and soft inside store sales” during the quarter that contributed to a mixed 2024 for the company, Nifong said. Lower fuel margins and inflationary pressures led to a 12% drop in CrossAmerica’s full-year adjusted earnings before interest, taxes, depreciation and amortization.
Dive Insight:
Nifong said that CrossAmerica will face growing pains with its increased focus on retail, noting that converting sites from dealer to retail, as with the Applegreen acquisition, would cause extra short-term volatility but would “position our portfolio to generate more profitability over the long term.”
Much of the added expense includes upgrading facilities. This includes replacing broken equipment and adding food equipment to expand on in-store offerings, said Maura Topper, CrossAmerica’s CFO.
Nifong also noted CrossAmerica’s retail earnings outperformed the broader c-store industry in Q4, especially given inflation and fuel margin headwinds.
CrossAmerica’s retail gross profits are climbing
“In that context, our retail results, particularly our same store volume and same store inside store sales, both of which outperformed the market, were solid,” he said during the call.
CrossAmerica also divested 30 properties in 2024 for $36.3 million, money it can apply to its balance sheet or spend on other stores, Nifong said.
“We expect that momentum to continue to 2025,” he added.
CrossAmerica’s approach stands in contrast to Arko and its convenience store arm GPM Investments, which last year began converting a number of its lower-performing stores to dealer sites. The company has already converted 153 stores, with another 100 on tap in Q1.
