Canadian convenience-store giant Alimentation Couche-Tard Inc. is launching a sweeping rebranding exercise that will see its Circle K moniker quarterback its future growth internationally.
The change came as the company withdrew a special proposal to extend the control of its four founders after narrowly failing to win enough support from shareholders. The founders may yet pitch the proposal again, executive chairman Alain Bouchard said.
The Laval, Que.-based chain – which has become one of Canada's largest companies, with a market capitalization topping $35-billion – is consolidating four of its brands under the popular Circle K name, currently its largest brand, with a wide footprint in the United States, Asia, South America and the Middle East.
Revamped Circle K logos will soon start appearing on storefronts now carrying the Statoil name in Scandinavia, Mac's in Ontario and western Canada and Kangaroo Express in the United States, the company said. Couche-Tard, the company's founding brand, will remain in Quebec because of the specifics of that market, the company said.
"Absolutely we think it's about accelerating" our expansion with one global brand, Couche-Tard chief executive officer Brian Hannasch said in an interview before the company's annual meeting. "When we buy a company today, it doesn't move the needle like it used to just because of our scale. [So this is about] making sure that we're aligned and growing absolutely the best we can organically with the network we have. So it's a dual strategy of continuing to grow the way we've grown but also trying to do more with what we have."
At the meeting, the company withdrew a proposal that would have lengthened its four founders' voting control of the retailer after proxies indicated that the idea would not win the required two-thirds support from Class B shareholders.
The founders were seeking a longer mandate in order to continue playing a strategic role in growing the company and help thwart any hostile takeover attempt. Four founders, including Mr. Bouchard, control the company through multiple voting shares but have only about 22 per cent equity.
"It's a shock for me to get that answer" from our investors, Mr. Bouchard said as the spokesman for the group. Appearing somewhat dejected, he said he feels that there was not enough time to properly explain the proposal, hatched this past spring. He said the group might make another attempt to win support for its idea at a special meeting or at next year's shareholders meeting.
Couche-Tard's largest investors include Fidelity, the Caisse de dépot et placement du Québec and Metro Inc. The Caisse, which has flexed its muscle on dual class share investments this year, was not an obstacle, Mr. Bouchard said.
Built by Mr. Bouchard from a single store in Saint-Jérôme in 1980, Couche-Tard now employs more than 100,000 people working in nearly 15,000 stores worldwide, including independent operators. In 2014, Mr. Bouchard articulated a goal of doubling the store count to about 25,000 – a target that remains in place, Mr. Hannasch said.
With the acquisition of Norwegian oil giant Statoil ASA's retail operation in 2012, Couche-Tard would have been forced to cede its usage of the Statoil name by 2018, company executives said. This rebranding speeds up that schedule.
Mac's banners will start coming down in May, 2017, after makeovers at stores in the United States – including the existing Circle K chain – and Europe, starting in January of next year. Management said there will be opportunities for cost savings with the rebranding, but did not give any specifics. The company will be able to leverage some products such as coffee globally across its stores, Mr. Hannasch said.
The Mac's name goes back more than 50 years. Known as Mac's Milk, the retailer was founded in 1962 by Kenneth and Carl McGowen. In 1999, as part of the Silcorp Ltd. chain, it was acquired by Couche-Tard.
Circle K is already Couche-Tard's largest and most international brand, used in 14 countries. The brand is the best-positioned banner for entry into new markets, the company said. The Circle K chain in the United States was acquired in 2003 from ConocoPhillips Co.
Gathering several distinct names under a single brand is not unusual in retailing. When Canadian Tire bought Forzani Group Ltd. in 2011, it streamlined a number of brands under the Sport Chek, Sports Experts and Atmosphere banners. On the other hand, some companies – notably Gap Inc. – have a number of retail brands that each have different images and speak to different customers.
In the case of convenience stores, name consolidation, as opposed to having a scattered portfolio of brands, might make sense as there is not much differentiating stores that cater to basically the same people. Couche-Tard management said it did market research before making its decision.
With a report from Susan Krashinsky