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Murphy USA to Shift Merchandise Mix in Large-Format Stores

EL DORADO, Ark. -- Murphy USA Inc.'s in-store merchandise mix will shift in the future as the retailer continues to build large-format 1,200-square-foot convenience stores, President and CEO Andrew Clyde stated during the company's 2013 fourth-quarter earnings call today.

Currently, 50 stores are operating under the large format. Clyde did not say what specific changes will be made to these stores, but he did point out that sales results for large-format stores that were built before 2013 have met corporate expectations.

These stores are averaging 310,000 gallons of fuel per month, with merchandise sales averaging $175,000 to $180,000 per location, the CEO said. Merchandise margins at these larger stores range between 16 percent and 17 percent.

Murphy USA has and will continue to be on an aggressive growth path. The retailer, which operates locations primarily in the parking lots of Walmart stores under the Murphy USA and Murphy Express banners, added 18 stores in its fourth quarter ended Dec. 31. Through mid-February, the El Dorado, Ark.-based company added another five stores, with 15 more currently under construction.

With the addition of the five new c-stores, Murphy now operates 1,208 locations.

"Our goal is to build 15 to 20 stores per quarter," Clyde said during today’s earnings call.

Looking specifically at its performance in the fourth quarter, Murphy USA -- which was spun off from parent Murphy Oil Corp. on Sept. 3 -- saw merchandise sales decline by $3 million to $533.8 million. Merchandise margins increased slightly to 13.3 percent.

Clyde blamed declining cigarette sales for the merchandise sales decrease. However, he spoke glowingly regarding non-tobacco sales in the chain’s stores. "We're excited about non-tobacco products," he said. "Beverage sales were especially strong, rising 5.4 percent year over year."

The chief exec remarked that a promotion that gave consumers 10 cents off per gallon of fuel when purchasing three Coca-Cola products was especially successful. "We have since signed similar deals with Pepsi and Dr Pepper," he reported.

Not as positive were fuel volumes, which dropped 6.2 percent compared to the same time period a year ago. The expiration of a fuel saver program with Walmart and the fact that consumers are traveling less due to a still-weak economy were the main reasons Clyde noted for the decline.

Companywide, Murphy USA earned net income of $93.6 million for its most recent quarter, compared to $19 million during the same quarter in 2012. The sale of the company's Hankinson, N.D., plant was a main contributor to earnings in the latest quarter.

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