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- 13 May
PriceAdvantage customer in the news: CST Brands reports margin increase
PriceAdvantage customer CST Brands reported their earnings for their first quarter today. Here are the fuel highlights.
- Retail fuel margins before credit card fees were $0.139 per gallon, up from $0.116 per gallon for the same period in 2013. According to the weekly OPIS reports, average retail fuel margins across the US were down $0.001 per gallon compared to last year. That means CST Brands was able to beat the national average this year and gain margins. This is the goal of CST Brands according to previous financial reports, as CST Brands has shifted their fuel pricing strategy to focus on gaining retail fuel margins. CST Brands was once again successful in achieving that margin goal.
- Retail fuel volumes per site per day were 4,797 gallons compared to 5,048 gallons last year. That equates to a 4.97% decrease in gallons year over year.
Is this strategy shift to a margin emphasis working for CST Brands, given the loss of volumes? Let’s do the math. Suppose Q1 of 2014 had the same number of gallons sold in the US as Q1 of 2013. That’s a bold assumption, given that fuel volumes have been on a continual decrease for many years now, but for argument’s sake let’s use that assumption. Multiply the 2013 results of 5,048 gallons by $0.116 per gallon, and you get $585 in daily margin. Multiply the 2014 results of 4,797 gallons by $$0.139 per gallon, and you get $666 in daily margin. That’s an improvement in daily margin of $81. Multiply that by 90 days in the quarter by 1038 stores and you get an improvement of $7.57 million.
Clearly the fuel pricing strategy at CST Brands is working.
CST Brands, when they were under the Valero umbrella, worked closely with the PriceAdvantage team to develop a rich set of analysis views and reports so they could optimize their entire fuels business. Since rolling out PriceAdvantage across all their stores in 2012, CST Brands now reaps the benefit of this rich information in PriceAdvantage by implementing a winning fuel pricing strategy as proven by these quarterly results.
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