Dive Brief:

• Casey’s General Stores announced on Monday that it is acquiring 49 convenience stores from Circle K Stores in Oklahoma for $39 million in an all-cash transaction. The deal is expected to close in the fiscal quarter ending on July 31.
• Alimentation Couche-Tard, the Canadian company that owns Circle K, has hired a real estate advisory firm to help it sell 306 additional convenience stores in the United States and Canada.
• The acquisition by Casey's of the stores follows recent efforts by the company to refresh its brand, ramp up its private label and expand its grocery selection.

Dive Insight:

Casey’s, one of the largest convenience store retailers in the U.S. with more than 2,200 locations across 16 states, has undergone a makeover in recent months.    

Last year, it debuted its first rewards program, expanded delivery through a partnership with DoorDash and brought on restaurant industry veteran Michelle Wickham to head foodservice. In October, the company revamped its brand, dropping “General Stores” from its logo.

Casey's will service the stores it is acquiring from its new distribution center in Joplin, Missouri —  the chain's third.

Chris Jones, Casey’s chief marketing officer, told the National Association of Convenience Stores last spring that the c-store chain has been growing its grocery SKUs to meet e-commerce demand and plans to increase its private label offerings in early 2021 to boost its grocery assortment.

Grocery sales have improved since Casey’s large-scale rearrangement of products across its store footprint, which took place at the end of last year, President and CEO Darren Rebelez said during the third-quarter earnings call. The store reset aimed to improve traffic flow, increase vertical shelf space for more products and allow for an easier rollout of the private label program, Rebelez said. 

Grocery and other merchandise sales bumped up by $42 million, while sales of prepared food and fountain drinks fell by roughly $10 million in Q3, which ended on Jan. 31, Chief Financial Officer Steve Bramlage said during the earnings call. Grocery and other merchandise margins are seeing customer demand for larger pack sizes, Bramlage said, noting that beer, along with tobacco, are performing better than expected. 

Casey’s private label program is outperforming its initial targets and it accounted for 2.5% of grocery and general merchandising sales throughout Q3, Rebelez said. “The Casey's brand has already grown to be the number one guest choice in bags jerky, packaged bakery, and nuts and seeds, an amazing accomplishment in such a short amount of time and shows the power our brand holds beyond our traditional prepared food program,” Rebelez said. 

Looking ahead, Casey’s is continuing its growth. In addition to its DoorDash collaboration, the c-store chain is looking to start a pilot with Uber Eats in the first quarter of the next fiscal year, Rebelez said. 

The chain is also planning to open its first non-fuel convenience store in Des Moines, Iowa, the Des Moines Register reported in the fall.