Circle K parent Alimentation Couche-Tard is feeling the squeeze from a shift in American consumer snacking habits, as Chief Executive Alex Miller says that weight-loss drugs are curbing customer appetite for popular impulse snacks.
Fewer Americans are heading down the chips and candy aisle of convenience stores, and it is weighing on Couche-Tard's sales. The Canadian convenience store operator on Tuesday reported U.S. same-store merchandise sales growth of 1.7% for its fiscal first quarter, missing its target of 2% to 3%. Miller says GLP-1 weight loss drugs such as Ozempic and Wegovy are curbing customer desire for traditional purchases at its stores.
"I certainly think GLP-1 drugs are having an impact on those categories and we did see, they were softer in this quarter than they were the previous quarter," he said in an earnings call Wednesday, noting weakness in high-carbohydrate, high-sugar staples like confectionery and salty snacks.
Whether the decline represents a temporary blip or a permanent trend, Miller was unsure. "Is that transitory or not? Candidly… I don't know," he said.
Shares traded 3% lower Wednesday at 81.70 Canadian dollars ($58.79).
Still Couche-Tard isn't waiting around to find out. Miller said the company is already taking steps to address the shift, reallocating more shelf space away from sweets and sodas for more protein-focused snacks and functional bars.
The changes complement Couche-Tard's fresh food offerings push, a category that grew to account for 13.2% of its total merchandise sales in the fiscal first quarter.
Late on Tuesday, Couche-Tard reported a 25% rise in first-quarter revenue to $21.7 billion, topping Wall Street's estimate of $20.86 billion, according to FactSet. In total, merchandise and service revenue, meanwhile, rose 4.1%, primarily due to a boost from acquisitions.
Profit came to $828.5 million, or 90 cents a share, compared with $782.5 million, or 82 cents a share, a year earlier. Adjusted earnings of 90 cents a share topped expectations of 89 cents a share.
In late July, Couche-Tard announced its plans to acquire Poland's largest convenience retailer Zabka for about $8.7 billion after abandoning the dream of a $47 billion takeover of Seven & i, the Japanese owner of 7-Eleven, last year.