Skip to main content
Open this photo in gallery:

A Couche-Tard convenience store in Montreal, Que., on Jan. 13.CHRISTINNE MUSCHI/Reuters

Alimentation Couche-Tard Inc. ATD-T is setting ambitious new profit targets for the next five years as the Canadian convenience store giant pushes to exploit its growing size and find new cost-saving opportunities to deliver returns in an increasingly shaky market for consumer retailing.

The Laval, Que.-based retailer, Canada’s second biggest company by revenue, outlined a new five-year strategy Wednesday that aims to boost earnings before interest, taxes, depreciation and amortization (EBITDA) to US$10-billion by fiscal 2028, up from US$5.8-billion this year. Senior leaders with the company said they intend to forge ahead with more mergers and acquisitions while generating growth from existing stores and taking shares from rivals in a highly fragmented industry.

“We’re not here to manage a drift,” Couche-Tard chief executive Brian Hannasch told analysts and investors gathered in Arizona about the company’s ambitions. “We’re not complacent. We play to win.”

Founded by chairman Alain Bouchard and three friends in 1980, Couche-Tard has ballooned in size from a regional convenience store chain to a global titan through acquisitions and organic growth. It now has 14,421 stores in 25 countries and employed 128,000 workers at last count, operating a highly decentralized business model with executives from several acquired companies joining its senior leadership ranks.

On Wednesday, those executives painted a picture of a company still hungry to get bigger and better – a retailer with an unfinished mission to consolidate a greater portion of the convenience industry and improve on how it runs its business. And they outlined a fairly detailed blueprint on how to get there.

More than $1-billion of the $4.3-billion in targeted incremental EBITDA will come from takeover opportunities, said Couche-Tard chief financial officer Filipe Da Silva, who joined the company this past June after several years at French grocer Carrefour and energy company TotalEnergies SE. Couche-Tard is now finalizing a deal to buy about 2,200 service stations from TotalEnergies for €3.1-billion in cash, one of five M&A transactions it has done in recent months.

Monica Rizk: Bullish on Alimentation Couche-Tard Inc.

After the Total deal, the company still has US$10-billion in financial firepower to do an all-cash transaction if it finds one, Mr. Da Silva said. He said the company still considers the United States as a priority market for takeovers. Couche-Tard stores make up only about 5 per cent of the U.S. convenience sector, which continues to be dominated by owners that have a single corner store. Latin America and Southeast Asia also remain attractive, in part because demand for transport fuel is still growing there, he said.

Another key piece of the company’s EBITDA goal will come from cost savings. Couche-Tard is aiming to be the lowest-cost operator in the industry and last year began thinking about how it could further improve its operations in the face of mounting challenges such as rising inflation, wage pressures and geopolitical challenges. The result is now a plan that digs deeper to achieve savings worth a combined US$1.2-billion of EBITDA and cash, according to the company.

“We had to put down a big hairy goal to make sure that our business was lean for the future and set the bedrock,” said Niall Anderton, senior vice-president of operations, who joined the company after it took over Ireland-based retailer Topaz in 2015 and is now leading the optimization effort. “I think our target is meaty.”

Couche-Tard will try to achieve that goal through specific actions, Mr. Anderton said. The company intends to leverage its global scale better, revamp its processes, and look into how it buys from suppliers among other things, he said. The retail giant signed a $380-million deal with managed IT services company CGI Inc. last month that it said will improve operational efficiency and optimize costs.

Transport fuel is another key focus for the company. Although it does not see global industry-wide gasoline volumes growing significantly in the years ahead – a function in part of gradual electric vehicle adoption – it does believe it can grab a higher share of fuel spending as market conditions change. The company has been building out its fuel capabilities in recent years under the Circle K brand and also sells fuel to business customers.

What happens inside Couche-Tard stores is also changing. The company is introducing touchless checkout in thousands of its outlets. And its fresh food and drink offerings continue to grow. The company is adding cooler space, for example, while some competitors are shrinking it. And it is expanding its private label products.

Couche-Tard’s size and scale set it apart in the highly fragmented convenience store industry in the United States, Veritas Investment Research analyst Kathleen Wong said in a note ahead of the company’s investor day. “It is more challenging for the smaller and single-store operators to deal with challenging industry issues such as declining tobacco sales, declining fuel demand and rising cost pressures.”

Report an error

Editorial code of conduct

Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 04/03/24 4:00pm EST.

SymbolName% changeLast
ATD-T
Alimentation Couche-Tard Inc.
-0.56%83.55

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe