Murphy USA: Rebuilding Tobacco

Source from:  CSPDailyNews.com 05/27/2017

Tobacco sales for Murphy USA took a hit—a 24% decrease in sales compared to 2015 numbers—during the company’s 2016 rebuilding phase, which included new construction, raze-and-rebuilds and “refreshed” locations, company officials reported.

Citing a “longer ramp-up period for this [tobacco] category,” Andrew Clyde, president and CEO, Murphy USA, El Dorado, Ark., said nontobacco sales were 14% higher due to larger square footage and a more standardized offer in locations built after 2015. With its raze-and-rebuilds, tobacco seems to require a similar build-up timeframe as new stores, Clyde said.

Timing may also have been an issue. Speaking during the company’s first-quarter 2017 earnings call earlier this month, Clyde said most of the new stores it built in 2016 opened late in the third and fourth quarter of the year, “which is not an opportune time for new-store openings,” Clyde said. “With stores opening during summer when traffic is heavier, [it] is much easier to attract new customers.”

Murphy USA opened five retail locations in first-quarter 2017, bringing the quarter’s-end store count to 1,406, consisting of 1,152 Murphy USA sites and 254 Murphy Express sites (with its Express locations typically larger than its average-sized stores). Murphy USA was ranked No. 5 on  CSP's 2017 Top 202 list of the largest convenience-store chains in the United States. The company has 35 stores under construction, including 17 raze-and-rebuild locations.

“We expect to have these sites back up in time for the summer driving season, along with three other raze-and-rebuild projects, which should complete in the fall,” Clyde said. “While this timing has a noticeable impact on our fuel and tobacco volumes in Q1, this approach generates the best long-run performance, which is what matters the most.”

Speaking about Murphy USA’s ongoing “refresh” program, Clyde said it is continuing “on pace.” He said 2017 would be the last year of its accelerated refresh program of around 300 stores. “At the end of the year, we will have touched 900 stores in the network, leaving roughly 100 to 150 stores that will require a full refresh in 2018, and then a much slower-pace, less capital-intensive maintenance schedule will continue after that,” he said. Enditem