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Casey’s Prepared Food Category Falls Short of Annual Goals in Fiscal 2017

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Jun. 9 2017, Updated 9:06 a.m. ET

Prepared Food and Fountain category

The Prepared Food business, which accounted for 13% of Casey’s General Stores’ (CASY) fiscal 4Q17 sales, recorded a 6.8% decline during the quarter. Sales comps grew 3.2% compared with the annual goal of 10.2% growth. As for the other two segments, the leap year comparison resulted in a 1.0%–1.5% negative impact on the segment’s comps.

The company missed the annual target in all four quarters of the current fiscal year. For fiscal 2017, CASY’s same-store sales grew 4.8% while total sales expanded 8.3% to $953.4 million.

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Margins also fall below target

Casey’s General Stores’ (CASY) Prepared Food and Fountain category’s average margin for fiscal 4Q17 stood at 61.7% versus the annual goal of 62.5%. It was also 20 basis points lower than its fiscal 4Q16 margins, primarily because of higher promotions and air supply costs. For fiscal 2017, the average margin was 62.3%.

Despite falling short of its targets during the year, Casey’s General Stores (CASY) remains positive about the future of this segment. 

Terry Handley, the president and CEO of CASY, noted, “Fiscal 2017 proved to be a challenging environment for the broader food service industry; however, we are encouraged about the future of this category as we continue to enhance digital engagement with our customers, roll out operational growth programs to more stores, and have locked in favorable cheese costs through December of 2017.”

Investors looking for exposure to Casey’s General Stores can invest in the ProShares S&P MidCap 400 Dividend Aristocrats ETF (REGL), which invests around 2% of its holdings in the company.

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