Alimentation Couche-Tard reported stronger-than-expected fourth-quarter results, with revenue rising 20 per cent and earnings topping analyst estimates. Higher fuel prices and elevated fuel margins helped offset softer fuel demand in key international markets, while convenience store operations continued to show strength.
BNN Bloomberg spoke with Mark Carden, equity research analyst, food retail and distribution at UBS, who said the quarter highlighted record fuel profitability, improving food-service performance and continued momentum in key convenience store categories, including energy drinks and nicotine alternatives.
Key Takeaways
- Strong fuel margins helped drive the earnings beat, with U.S. fuel profitability reaching record levels amid volatile fuel pricing.
- Convenience store sales remained resilient, supported by growth in prepared food offerings, energy drinks and nicotine alternatives.
- Fuel volumes declined in the United States and Europe as higher pump prices weighed on demand, while Canadian volumes increased.
- Management’s focus on operational improvements, loyalty programs and supply-chain control is supporting growth without relying solely on acquisitions.
- Consumer spending trends remain a key risk, particularly if lower- and middle-income households continue to reduce discretionary purchases.
Read the full transcript below:
ROGER: One of the winners today is Canadian retailer Alimentation Couche-Tard. The stock is surging after the company beat fourth-quarter earnings and revenue estimates, up more than 10 per cent. Quarterly revenue jumped 20 per cent, helped by higher average fuel selling prices despite softer demand in the U.S. and Europe. For more on the outlook for the stock, joining me is Mark Carden, equity research analyst, food retail and distribution, at UBS. Mark, thanks very much for joining us.
MARK: Happy to be here, Roger.
ROGER: Pretty good report card, I’d say.
MARK: Yes. There was strength across the board for these guys. A few things jumped out.
Number one, fuel profitability came in quite strong for Couche-Tard. What’s interesting is that typically when fuel prices go up, margins go down because of retail and wholesale price dynamics. What happened this time, though, is that prices didn’t move in a straight line. They were a little more volatile, and in those kinds of environments Couche-Tard is able to squeeze out more profitability and put together some of the strongest fuel profits we’ve seen in quite some time, north of 50 cents per gallon.
The second thing that jumps out is its fresh food initiative. Historically, Couche-Tard has been a little weaker in prepared foods relative to companies such as Wawa or Casey’s, which tend to excel in that category. While there’s still work to be done, it has seen some really good progress with its $3, $4 and $5 meal bundles.
In this category alone, it saw more than 10 per cent same-store sales growth in the U.S., and the program is exceeding expectations in Canada. This isn’t necessarily the fanciest food available, but it’s a good enough offering to keep people from having to go to a quick-service restaurant such as Dunkin’ afterward to buy a meal before work.
Another area where it continues to execute quite well is in some of its core categories. Think energy drinks. That’s a category where sales are up more than 15 per cent on a same-store basis in the U.S. and up double digits in Canada. The company is also continuing to see momentum in other nicotine categories, including pouches and other non-combustible products.
ROGER: Let’s go back to fuel for a second. Volumes were up in Canada but down in Europe and the U.S. Any concerns about that, or do you see that as a return to normal if fuel prices and oil prices come down?
MARK: Some of it comes down to customer behaviour when fuel prices rise because fuel takes up a larger share of household spending.
What we saw this quarter is that customers would often cap the amount of money they put into the tank. They might spend $20 or $30 at the pump, and that can actually drive more trips into the store. As a result, Couche-Tard can boost in-store sales even if customers are ultimately buying fewer gallons of fuel.
The other offset is that from a revenue standpoint they’re benefiting from higher fuel prices. Typically, though, when fuel prices rise as significantly as we’ve seen, there is usually some temporary pullback in demand.
ROGER: With food sales and merchandise sales, is the growth mainly due to marketing, product quality or tighter cost controls?
MARK: It’s a combination.
On the $3 offering, customers can get a basic food item and a drink. Some of the $4 bundles include an energy drink, which is quite popular with customers. For $5, customers can get two slices of pizza.
The advertising has helped, but they’ve also improved the quality of the product and customers are responding. It’s really simple execution.
ROGER: With energy drinks, we’re starting to hear discussion around restrictions for children. Any concerns about that affecting sales?
MARK: We haven’t heard significant concerns yet, but it’s something we’re continuing to monitor.
ROGER: Looking ahead, do you see this momentum continuing?
MARK: I do.
One thing that really stands out is that the company outlined at its investor day in February that it wants to simplify its operations. It doesn’t have to rely on mergers and acquisitions to achieve its long-term growth targets, which is something it relied on more heavily in the past.
The company continues to make progress in food, it’s doing a nice job with loyalty programs and bringing more customers into its ecosystem, and it’s creating more control over its supply chain.
One interesting development is that it’s doing more self-distribution, which can help with inventory management and profitability.
ROGER: You mentioned mergers and acquisitions. The proposed 7-Eleven deal didn’t come together. Does that mean they’re on the sidelines for a while, or will they continue looking?
MARK: I think they’ll continue looking.
Management said the acquisition pipeline remains robust, and there are opportunities of all sizes that they can pursue.
One of the interesting things about the convenience-store industry in the U.S. is that roughly 60 per cent of convenience stores are single-store operators. The industry remains highly fragmented, and there are a lot of potential opportunities over time.
ROGER: Would you like to see them focus on smaller acquisitions or pursue another larger transaction?
MARK: I think mid-sized acquisitions are probably where investors would like to see management focus. But if the right opportunity emerges involving a larger player, I would expect them to remain open to it.
They’ve proven over the years that they’re opportunistic buyers, and I wouldn’t expect that to change.
ROGER: You sound fairly optimistic. What potential headwinds are you watching?
MARK: It really comes down to the consumer environment.
We’re still seeing a K-shaped economy, and if lower-income and potentially middle-income consumers continue to pull back on spending, retailers will need to offset that pressure. That’s a challenge across the retail sector, and Couche-Tard isn’t alone.
ROGER: We’ll leave it there. Mark, thanks as always for joining us.
MARK: Thank you very much.
ROGER: Mark Carden, equity research analyst, food retail and distribution, at UBS.
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This BNN Bloomberg summary and transcript of the June 23, 2026 interview with Mark Carden are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
