In Arko’s recent third quarter statement, the retailer shared the following results:
- Net income was $9.7 million, down from $21.5 million a year ago.
- Retail fuel margin was 41.3 cents per gallon, up a penny.
- Merchandise margin ticked up slightly to 32.8%, compared to 31.7% a year ago.
“As our customers continue to face macroeconomic pressure related to inflation and elevated prices for everyday goods, we continue to focus on delivering essential value to our customers,” said Arie Kotler, chairman, president, and CEO of Arko.
Arko has “expanded its pipeline to eight NTI (new to industry) stores, including two Dunkin’ locations. During the quarter, the Company opened a NTI Handy Mart store in Newport, North Carolina. The Company expects to open three more NTI stores later this year, with the balance over the course of 2025.”
The company converted 51 retail stores to dealer sites in the nine months ended on September 30, 2024. The company expects to convert another approximately 100 retail stores by the end of the fourth quarter of 2024.
Arko says that such conversions are part of its channel optimization strategy, which is “expected to yield a cumulative annualized benefit to combined wholesale segment and retail segment Operating Income of approximately $15 million to $20 million.”
“Our focus on operational excellence, improving customer offerings, and strengthening store-level performance remains a top priority. We believe that we are well-positioned to manage near-term macroeconomic challenges, and we remain confident in Arko’s long-term potential for sustained growth. We believe the improvements in our operations and investments in our stores will guide us through the current environment and build the foundation for our multiyear transformation,” said Kotler.
Arko stated that convenience store operating expenses decreased $3.1 million, or 1.5% in Q3, as compared to the prior year period, “primarily due to a decrease in same store expenses of $2.8 million, or 1.4%, and a decrease from underperforming retail stores that were closed or converted to dealers. This decline in same store expenses was primarily related to lower personnel costs and lower credit card fees.”
In June, Bloomberg interviewed Kotler as part of an article about the overall state of the economy.