Arko Corporation released its second-quarter results earlier this week. The company stated that its “net income for the quarter was $14.1 million compared to $14.5 million [in Q2 2023], with recent acquisitions and higher fuel margin partially offsetting continued declines in gallon demand and lower same-store merchandise contribution.”
According to the company, merchandise revenue was down 2.1% from Q2 2023, totaling $474.2 million.
Arko “plans to allocate capital based in part on a pilot program, currently in development, designed to improve the customer experience and value proposition, potentially including an expanded and refined offering across a larger store network, with a focus on food and an enhanced in-store experience.”
The press release stated that Arko’s “retail fuel contribution increased 1.2% to $118.0 million, driven by the combined impact of margin increases and incremental gallons from recent acquisitions, which more than offset a decline in same-store fuel gallons sold” while retail fuel margin increased to 41.6 cpg from 39.7 cpg in Q2 2023.
“This quarter, we continued to navigate a challenging macroeconomic environment alongside our customers,” said Arie Kotler, chairman, president, and chief executive officer of Arko. “We continued to see pressure on consumers as they struggle with inflation and elevated prices for everyday goods, especially in markets with a large percentage of lower-income consumers. While this negatively impacted our retail sales, our team worked hard to control same-store expenses and leverage our strong vendor partner relationships to deliver another quarter of merchandise margin growth while providing much-needed value to our customers. When combined with higher fuel margins, we exceeded our Adjusted EBITDA guidance for the second quarter.”
The company stated that it continues to enhance its food program rollout, including “expansion of a re-launched hot dog and roller grill program anchored by Nathan’s Famous as its supplier of quality, 100% all beef hot dogs, to more than 460 of its retail stores.”
Arko also elaborated on its plans to convert 40 retail locations into dealer sites. “Following the Company’s review of its retail store portfolio, a meaningful number of retail locations were identified for potential conversion, which are expected to yield greater profitability after conversion. The Company expects to have converted approximately 40 retail stores to dealer sites by the end of the third quarter of 2024, of which a small number had converted as of the end of the second quarter of 2024.”