Arko Corp. released its financial results for the first quarter ended March 31, 2025. The retailer reported a net loss of $12.7 million, compared to $0.6 million in Q1 2024.
Merchandise margin for the quarter increased to 33.2%, up from 32.5% in Q1 2024. Merchandise contribution for the quarter was down year over year, coming in at $117.6 million (from $134.9 million in Q1 2024). Arko said that “more than half of the merchandise contribution decline for the quarter was associated with the company’s accretive dealerization program.”
“Despite a pressured consumer environment, we effectively navigated ongoing macroeconomic headwinds in the first quarter,” said Chairman, President and Chief Executive Officer of ARKO Arie Kotler. “We delivered results above the midpoint of our guidance, underscoring our commitment to execution with discipline and remaining focused on what we can control. This quarter, we also faced incremental pressure from adverse weather conditions in January and February, which impacted sales and increased snow removal expenses across key regions, and from lapping of a leap day in the first quarter of the prior year.”
“We also continued to advance key elements of our transformation strategy—converting company-operated retail stores to dealer sites, advancing our NTI store rollout and enhancing customer engagement through foodservice and targeted loyalty initiatives both in-store and at the pump,” he continued.
As part of the company’s developing transformation plan, Arko converted 59 retail stores to dealer sites during the quarter. In April, the company converted 18 additional retail stores to dealer sites and plans to convert a meaningful number of additional stores throughout 2025. The company said it continues to expect that, at scale, this channel optimization will yield a cumulative annualized operating income benefit in excess of $20 million.
The company said it “advanced its store remodeling initiative, which is expected to include an expanded and refined merchandise assortment with an enhanced in-store experience and a focus on food. These remodels are designed to elevate customer experience through improved store layout and convenience. The company began construction on the first of its seven planned pilot remodels in early May 2025 and expects to begin construction on the second pilot remodel in mid-May 2025,” the retailer said.
Arko also reported that the retail fuel margin for the quarter was 37.9 cents per gallon compared to 36.4 cents per gallon the year before.