Alimentation Couche-Tard Inc. reported higher earnings and sharply higher revenue in the first quarter of fiscal 2027, while merchandise sales at its Canadian convenience stores were flat amid continued pressure in tobacco-related categories.
The Laval, Quebec-based owner of Circle K and Couche-Tard reported revenue of US$21.7 billion for the 12-week period ended July 19, up 25.1% from a year earlier. Net earnings attributable to shareholders reached US$828.5 million, compared with US$782.5 million, while adjusted net earnings rose 12.2% to approximately US$827 million. Adjusted diluted earnings per share increased 15.4% to US$0.90.
Higher fuel prices accounted for much of the revenue increase. Couche-Tard said higher average road transportation fuel selling prices, acquisitions and organic growth in its convenience operations contributed to the gain, partly offset by softer fuel demand. Foreign exchange added approximately US$64 million to reported revenue.
Canadian Convenience Sales Remain Soft
Same-store merchandise revenue was flat in Canada during the quarter, compared with growth of 1.7% in the United States and 1.2% in Europe and other regions. Consolidated same-store merchandise revenue increased 1.6%.
The Canadian result follows a marked slowdown over the past year. Same-store merchandise revenue increased 5.4% in the second quarter of fiscal 2026 before growth slowed to 0.3% in the third quarter and turned negative at 0.9% in the fourth quarter. In the first quarter of fiscal 2026, Canadian same-store merchandise revenue had increased 4.1%.
The category performance indicates that the slowdown is not uniform across the store. Couche-Tard said packaged beverages and alcohol grew in Canada during the latest quarter, but those gains were offset by the impact of regulations and competition on tobacco.
Tobacco-related pressures had also weighed on Canadian results in preceding quarters. In the fourth quarter, Couche-Tard attributed the 0.9% same-store merchandise decline partly to tobacco industry challenges, while alcohol remained a stronger-performing category.
Total Canadian merchandise and service revenue declined 2.6% to US$599.9 million during the quarter. Merchandise and service gross margin fell 0.6 percentage points to 33.3%.
Couche-Tard said the margin decline in Canada and the U.S. reflected category mix and deliberate pricing decisions aimed at supporting customer value. Chief Financial Officer Filipe Da Silva said the company continues to invest in value and traffic-driving initiatives while advancing its broader strategic priorities.
Canadian Fuel Volumes Move Higher
Fuel produced a stronger Canadian result during the quarter. Same-store road transportation fuel volumes increased 1.1% in Canada, while volumes declined 1.6% in the United States and 4.3% in Europe and other regions.
Couche-Tard said Canadian volumes benefited from promotional activity and market growth, while high retail prices contributed to weaker demand in the U.S. and Europe.
Canadian road transportation fuel gross margin reached 16.79 Canadian cents per litre, up 2.58 cents from the comparable quarter last year. Higher fuel margins were among the main contributors to Couche-Tard’s adjusted earnings growth, alongside acquisitions, organic convenience growth and share repurchases.
The Canadian fuel business has been comparatively resilient in recent quarters. Same-store fuel volumes increased 4.2% in Canada in the third quarter of fiscal 2026 and 2.0% in the fourth quarter, while both the U.S. and Europe recorded declines during those periods.
Fuel Prices Drive Much of Revenue Increase
Road transportation fuel revenue reached US$16.7 billion during the first quarter, an increase of approximately US$4.1 billion from a year earlier. Couche-Tard said approximately US$3.9 billion of that increase resulted from higher average fuel selling prices.
Acquisitions contributed about US$436 million to fuel revenue growth, with those gains partly offset by softer demand.
Merchandise and service revenue grew at a much slower rate, increasing 4.1% to US$4.9 billion. Acquisitions contributed approximately US$112 million to the increase, along with organic growth in the convenience business.
The fuel-price impact puts Couche-Tard’s 25.1% increase in total revenue into perspective. Higher retail fuel prices added billions of dollars to reported sales, while consolidated same-store merchandise revenue increased 1.6%.
President and CEO Alex Miller said Couche-Tard was encouraged by the start of fiscal 2027 and pointed to the company’s fifth consecutive quarter of positive same-store merchandise growth in the U.S. He also highlighted continued momentum in food, energy drinks and other nicotine products, along with the profitability of the fuel business.
Couche-Tard Continues Store Investment
Couche-Tard continued to invest in its physical network during the quarter, acquiring two company-operated stores, constructing 12 locations and completing eight relocations or reconstructions. Another 42 stores were under construction as of July 19.
Those figures cover the company’s global network. Couche-Tard operates in 27 countries and territories with more than 17,200 stores, approximately 13,100 of which sell road transportation fuel. Its principal retail banners include Circle K and Couche-Tard.
Canada remains one of Couche-Tard’s largest markets, with more than 2,000 locations across the country.
Żabka Acquisition Would Expand European Footprint
Couche-Tard is also pursuing a major expansion in Central and Eastern Europe through its proposed acquisition of Żabka Group.
The company announced after the quarter that it plans to acquire the Polish convenience retailer, which operates more than 13,000 stores across Poland and Romania. Shareholders representing approximately 57% of Żabka’s outstanding shares have entered into agreements to tender their holdings into the offer.
The proposed transaction values Żabka at approximately US$8.6 billion and is expected to close before the end of Couche-Tard’s fiscal 2027, subject to regulatory approvals and other conditions. Miller said the acquisition would strengthen Couche-Tard’s capabilities in food, digital engagement and supply chain while expanding its scale in Central and Eastern Europe.
Canadian Merchandise Growth Remains a Watch Point
Couche-Tard enters fiscal 2027 with higher earnings and strong fuel profitability, while its Canadian convenience business continues to show slower merchandise growth than it did a year ago.
The latest quarter provides some indication of where that pressure is concentrated. Packaged beverages and alcohol continued to grow, while tobacco-related regulatory and competitive pressures held back the overall Canadian same-store result. Fuel volumes remained positive in Canada despite declines in Couche-Tard’s U.S. and European operations.
Management is scheduled to discuss the results with analysts during Couche-Tard’s earnings webcast on September 2 at 8 a.m. EDT, and Retail Insider will report on the discussion.
