Convenience Store Sales, Profits Showed Gains in 2008, According to NACS

CHICAGO, April 7 /PRNewswire-USNewswire/ -- An otherwise tough year for
convenience stores was balanced out by strong retail fuel margins from the
unprecedented drop in wholesale fuels prices during the fourth quarter of
2008, according to data released this morning by NACS.

(Logo: http://www.newscom.com/cgi-bin/prnh/20070410/DCNACSLOGO)

Overall convenience store industry profits rose 54 percent in 2008 to reach
$5.2 billion, reversing a two-year decline where profits dropped 42 percent
over that period. Industry sales jumped 8.1 percent to reach $624.1 billion,
with both motor fuels sales (up 10.1 percent to $450.2 billion) and in-store
sales (up 3.2 percent to $173.9 billion) showing growth.

The growth of in-store sales defied the overall trend in U.S. retail sales,
which fell 0.6 percent based on U.S. Department of Commerce data. It also came
despite a rare decline in the number of convenience stores. For only the third
time in the past 15 years, the industry store count dropped - 1.0 percent to
144,875 - as many stores closed because of the punishing economic conditions
and record-low motor fuels margins the industry faced during the first three
quarters of 2008.

The convenience store industry sells an estimated 80 percent of the fuels
purchased in the United States, and motor fuels sales continue to dominate
industry revenues, accounting for 74.5 percent of all sales dollars, in
examining same-firm sales data. However, overall fuel gallons sold declined
2.4 percent. Meanwhile because of low gross margins on fuel (5.7 percent),
only 31.7 percent of all profit dollars came from fuels sales.

Credit card fees continue to be the industry's top pain point, surging another
10.5 percent in 2008 to reach a record $8.4 billion - nearly three times the
level just five years ago.

Although unemployment levels nationwide were souring in 2008, there was good
news with respect to the convenience store industry's employment figures. The
industry saw a modest 0.8 percent gain in number of employees, which rose to
1.73 million. Annual turnover numbers were even more impressive. For non
managers, annual turnover was down to 109.0 percent; turnover for managers was
down to 29.0 percent.

There were several significant differences between the industry's top
performers and bottom performers. Top quartile performers sold more than twice
as much motor fuels as the bottom quartile (187,932 versus 84,369 gallons per
month). The top quartile performers significantly outperformed the bottom
quartile inside the store as well - with merchandise sales of $124,797 versus
$75,753 per store per month. As a result, top quartile stores showed an
average monthly pretax profit of $13,173 per month, while the bottom quartile
lost $3,626 per month.

Once again, cigarettes dominated in-store sales, accounting for nearly one in
every three dollars spent in stores, but cigarette gross margins continued to
plummet, falling to 15.3 percent. These low cigarette margins dropped the
category to third in terms of gross margin contribution. Meanwhile,
foodservice - which includes dispensed beverages and food prepared on site -
continues to show strong growth, accounting for nearly one in four in-store
profit dollars.

Nearly 75 percent of in-store sales were from the top five categories:
1. Cigarettes (32.7 percent of in-store sales)
2. Packaged beverages (14.1 percent)
3. Foodservice (13.9 percent)
4. Beer (10.2 percent)
5. Other tobacco products (3.9 percent)

Nearly 70 percent of gross margin dollars were from the top five categories:
1. Foodservice (23.9 percent of gross margin dollars)
2. Packaged beverages (16.6 percent)
3. Cigarettes (16.0 percent)
4. Beer (6.9 percent)
5. Candy (4.8 percent)

The industry's 2008 metrics are based on the NACS State of the Industry survey
powered by CSX, the industry's largest purpose-designed business development
tool, and based on data from 156 firms representing more than 20,000 stores.
Complete data tables and analysis will be released in June in the NACS State
of the Industry Report of 2008 Data.

Founded in 1961 as the National Association of Convenience Stores, NACS is the
international association for convenience and petroleum retailing,
representing more than 2,200 retail and 1,800 supplier member companies. The
U.S. convenience store industry, with nearly 145,000 stores across the
country, posted $624 billion in total sales in 2008, with $450 billion in
motor fuels sales.

SOURCE National Association of Convenience Stores

Jeff Lenard of NACS, +1-703-518-4272, jlenard@nacsonline.com