Viva Energy reports convenience sales decline in third quarter
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Viva Energy’s Convenience and Mobility (C&M) division has experienced a decrease in both convenience sales and fuel volumes in the third quarter. This shrinkage is attributed to the ongoing challenges within the retail fuel industry, as well as a reduction in the number of operational stores.
Fall in Convenience Sales
The company has reported a 12.5% drop in convenience sales, slipping down to $392 million from $448 million compared to the same period last year. However, excluding tobacco sales, the figures remained stable. Tobacco sales, on another note, witnessed a 15% dip year on year, consistent with the overall declining trend for the product category. However, the tobacco sales remained consistent on a month-to-month basis for this quarter.
Margin Increase and Cost Reductions
Despite the drop in sales, the convenience gross margin saw an increase to 41%, a rise of 3.5 percentage points. This increase was primarily driven by alterations in the product mix, range, and pricing. Consequently, the company assured that it remains on target to achieve $35 million in cost reductions and synergies during the second half of the fiscal year, achieved through system and organization consolidation.
“The company has opened 21 new On The Run (OTR) stores this year, with an additional 15 currently under construction, expected to be completed by the end of the year.”
Store Openings and Future Plans
The company has opened 21 new On The Run (OTR) stores this year, with an additional 15 currently under construction, expected to be completed by the end of the year. Six conversions of Liberty Convenience are also planned for the fourth quarter, with a few openings rescheduled to January to better match seasonal demand.
C&M also plans to expand its Scan Pump Save app across its express network during the fourth quarter, aiming to provide customers with a unified digital experience and the ability to pay at the pump at company-controlled sites.
Leadership Changes
In related news, Jennifer Gray has been appointed as the interim CEO of the C&M division. As the company begins the search for a permanent CEO, Gray will be supported by independent non-executive director John Joyce. Her primary focus will be to drive top-line growth, capture synergies and cost reductions, and leverage common systems to improve operational performance.
Questions & Answers
Q.What caused the decline in Viva Energy’s convenience sales and fuel volumes?
What caused the decline in Viva Energy’s convenience sales and fuel volumes?
The decrease in both convenience sales and fuel volumes is attributed to the ongoing challenges within the retail fuel industry and a reduction in the number of operational stores.
Q.What is the key cause of the increase in the convenience gross margin?
What is the key cause of the increase in the convenience gross margin?
The increase in convenience gross margin was primarily driven by alterations in the product mix, range, and pricing.
Q.What is the future plan of the C&M division regarding the Scan Pump Save app?
What is the future plan of the C&M division regarding the Scan Pump Save app?
C&M plans to expand its Scan Pump Save app across its express network during the fourth quarter to provide customers with a unified digital experience and the ability to pay at the pump at company-controlled sites.