Alimentation Couche-Tard (TSE:ATD) reported first-quarter fiscal 2027 results marked by higher adjusted earnings, continued loyalty-program growth and stronger food sales, while management said selective consumer spending continued to pressure certain traditional convenience-store categories.
President and Chief Executive Officer Alex Miller said the company was encouraged by its start to the fiscal year, pointing to customer engagement from promotional events, food offerings and loyalty initiatives. Merchandise same-store sales increased 1.6% across the network, including 1.7% growth in the United States, representing the company’s fifth consecutive quarter of positive same-store sales growth.
Earnings Growth and Margin Performance
Chief Financial Officer Filipe Da Silva said adjusted EBITDA rose 10.5% and adjusted diluted earnings per share increased 15.4% during the quarter. On an FX-adjusted basis, adjusted EBITDA increased about $165 million, or 10.2% from the prior-year period, driven by improved road transportation fuel gross margins and contributions from acquisitions.
Net earnings attributable to shareholders totaled $829 million, or $0.90 per diluted share. Adjusted net earnings were approximately $827 million, also $0.90 per adjusted diluted share.
Merchandise and service revenue rose approximately $186 million, or 4%, supported by about $112 million from acquisitions and organic store performance. Merchandise and service gross profit increased about $52 million, or 3.1%.
Margins varied by region. U.S. merchandise margin declined 50 basis points to 34.1%, reflecting changes in category mix, promotional activity in certain food categories and pricing decisions intended to maintain customer value. Canadian merchandise margin decreased 60 basis points to 33.3%, while margin in Europe and other regions rose 70 basis points to 39.6% on favorable mix and growth in higher-margin categories and services.
Da Silva said the company evaluates performance primarily through gross-profit dollars rather than quarterly margin rates. He also said early results from the company’s distribution-center network showed improved availability and service levels compared with its traditional wholesale model, with sourcing and procurement opportunities expected to contribute more meaningfully to margin expansion over time.
Normalized expenses increased 2.7% year over year, below the company’s weighted average inflation rate. Store labor hours per location declined 1.1%, while overtime trends in North America improved, according to Da Silva.
Consumer Spending and Category Trends
Management described consumers as increasingly deliberate in their spending decisions amid elevated living costs and fuel prices. Miller said packaged carbonated soft drinks, salty snacks and packaged sweets remained softer than historical levels. He said same-store merchandising performance excluding those categories would have been around the midpoint of Couche-Tard’s same-store sales growth algorithm.
At the same time, the company reported growth in functional, protein-rich and better-for-you products. Miller said teams were reallocating shelf space, revising assortments and adjusting promotions to reflect changing customer demand.
Energy drinks were a notable source of growth, with double-digit U.S. sales growth and approximately 70% of the thirst category’s gains. Protein beverages and enhanced hydration products also grew. In nicotine, U.S. other-nicotine products posted double-digit same-store sales growth, led by pouches, while cigarette same-store sales rose for the third consecutive quarter.
Fuel volumes were mixed. U.S. same-store fuel volumes declined 1.6% and European volumes fell 4.3%, while Canadian volumes increased 1.1%, extending Canada’s positive trend to eight consecutive quarters. Miller said every North American business unit recorded positive forecourt traffic, even as customers purchased fewer gallons on average.
Road transportation fuel gross margin was $0.5261 per gallon in the U.S., CAD 0.1679 per liter in Canada and EUR 0.1134 per liter in Europe and other regions. Management said market volatility and favorable supply conditions helped results, alongside investments in sourcing, logistics, supply optimization and trading.
Food, Loyalty and Network Expansion
Food represented 13.2% of merchandise sales, according to the company’s latest annual report. Couche-Tard sold nearly 14 million meal-deal bundles during the quarter, nearly 20% more than a year earlier.
The company said its Flamin’ Hot Boneless Wings product, launched in the U.S. with PepsiCo and Frito-Lay, was selling more than 40,000 units a week following its rollout across the fresh-food network. Miller said the product was helping drive larger food baskets, while customers were also trading up to higher-value prepared-food offerings.
Food sales grew 5.2% in the U.S., while hot-food sales rose more than 11%, Miller said in response to analyst questions. Food grew 4.3% in Canada and 3.6% in Europe.
In the U.S., Inner Circle added more than 1 million members during the quarter, bringing total membership to nearly 16 million. Nearly one in three transactions came from a loyalty member, while traffic attributable to Inner Circle increased 30% year over year. The company recently launched Inner Circle 2.0, which expands rewards, personalized offers and challenges. In Europe, Extra 2.0 drove a 13% increase in traffic across legacy markets.
Couche-Tard added 26 sites in North America and Europe during the quarter and had approximately 42 stores under construction. Management expects to open more than 100 stores in fiscal 2027 and remains on track toward its long-term target of 750 new stores by 2030. New stores have food sales 120% above the network average, with merchandise sales and basket size 20% higher, Miller said.
Żabka Deal, Capital Position and Outlook
The company also highlighted its agreement to acquire a controlling stake in Żabka Group, a convenience retailer operating in Central and Eastern Europe. Miller said the transaction would add food, digital, private-brand, supply-chain, loyalty and personalization capabilities. Closing is expected by the end of the calendar year.
Da Silva said share repurchases are paused as the company prepares for the transaction. At quarter-end, leverage was 1.77 times, compared with 1.99 times at the end of fiscal 2026, and the company had about $3 billion in cash plus $3.5 billion available through credit facilities. Management expects leverage to move modestly above its stated 2-to-2.5-times comfortable range at closing.
The board declared a quarterly dividend of CAD 0.215 per share, payable Sept. 25, 2026, to shareholders of record Sept. 11, 2026.
Looking into the second quarter, Miller said early sales trends were similar to first-quarter levels, though the company had seen acceleration in recent weeks. He said management saw a path toward sequential improvement despite ongoing uncertainty in the consumer environment.
About Alimentation Couche-Tard (TSE:ATD)
Alimentation Couche-Tard Inc operates a network of convenience stores across North America, Ireland, Scandinavia, Poland, the Baltics, and Russia. The company primarily generates income through the sale of tobacco products, groceries, beverages, fresh food, quick service restaurants, car wash services, other retail products and services, road transportation fuel, stationary energy, marine fuel, and chemicals. In addition, the company operates more stores under the Circle K banner in other countries such as China, Egypt, and Malaysia.
