Pedestrians pass a Circle K in Toronto on Jan. 18.Sammy Kogan/The Globe and Mail
Alimentation Couche-Tard Inc.’s ATD-T Circle K business is holding up in the face of rising gasoline prices, as executives with the convenience-store giant say they expect to build on recent sales momentum in the months ahead while war rages in the Middle East.
Fighting between the United States, Israel and Iran is now in its third week, causing the biggest energy supply disruption in recent history as major oil and gas producers in the Persian Gulf can’t get their product through the Strait of Hormuz. Fuel prices have climbed sharply as a result, with gasoline soaring past US$3.75 a gallon in the United States and piercing $2 a litre in parts of Canada.
But while drivers are feeling that pinch and might fill up less each time they come to Circle K, they aren’t cutting back on drinks, cigarettes and other staples during their visits, Couche-Tard chief executive officer Alex Miller said Wednesday. The situation “doesn’t necessarily mean demand destruction” and generates additional trips to Circle K locations, he said.
“Clearly, when we get over $4, up to $5 a gallon, that puts additional stress on consumers,” Mr. Miller told analysts on a call to discuss the company’s third-quarter results. “[But] I don’t think we see direct correlation between higher fuel price and in-store traffic or in-store performance. We don’t see those correlations in our data. And I can tell you thus far during this event, our in-store and our merch is performing quite well.”
After a solid trajectory of profit growth over the past two decades, Couche-Tard’s business has come under pressure more recently as belt-tightening consumers deal with higher debt levels and inflation. The company tallied same-store sales growth across all its operating regions for the third consecutive quarter with its latest earnings report, however, and it’s trying to keep that trajectory going.
Couche-Tard unveils new back-to-basics strategy to boost growth
For the three-month period ended Feb. 1, Couche-Tard, based in Laval, Que., reported a net profit of US$757-million or US$0.82 a diluted share on revenue of US$21.8-billion. On an adjusted basis, earnings came in at US$0.81 a share, slightly short of the US$0.83 consensus analyst estimate.
Investor focus, however, is squarely on what’s to come. The concern is that the war will escalate and gasoline prices will continue to climb, leading eventually to a significant change in consumer behaviour. U.S. President Donald Trump has not issued a comprehensive explanation of American goals in the conflict, resulting in rising opposition.
Mr. Miller sought Wednesday to provide reassurance. He said store traffic continues to build across the United States, his company’s main market, and that positive trends in merchandise same-store sales that were present before the Iran war started on Feb. 28, and which are driven by meal deals and other offerings, are holding.
The company’s scale as a fuel buyer and retailer – it sold 15.4 billion gallons of gasoline and diesel last year and runs that business from logistics hubs in Houston and Geneva – also gives it an advantage in sourcing and pricing, Mr. Miller said. He said times of volatility have historically “almost always been positive” on the fuel side for Couche-Tard, allowing the retailer to capture additional profit margin.
Bank of Montreal analyst Étienne Ricard said he sees Couche-Tard’s European business as more exposed in the near term as higher fuel and electricity costs could put pressure on disposable income and consumer spending. The continent is vulnerable because it must refill depleted natural gas storage volumes after high winter demand and increased exports to Ukraine, according to a recent analysis by the Atlantic Council think tank.
Mr. Miller last month unveiled a new strategy to boost revenue and profit over the next five years by focusing on the retailer’s core strengths selling fuel, nicotine and drinks, which together make up 90 per cent of its revenue and about 75 per cent of gross profit. The company also plans to lean harder into food.
Couche-Tard pulled the plug last year on an effort to buy Japan’s Seven & i, owner of the 7-Eleven chain, saying its rival failed to engage constructively in talks. The company is “highly engaged” in potential merger and acquisitions opportunities as deal activity remains brisk, Mr. Miller said.
The U.S. is generally fertile ground for takeovers. The market there is highly fragmented, with the top 10 convenience chains combined representing only 19 per cent of the total number of corner-store outlets, as of late 2025.