Couche-Tard hopes vaccine mandates will mitigate effect of Delta variant

·4 min read

Alimentation Couche-Tard Inc. hopes that its promotion of COVID-19 vaccines for employees will help the convenience store retailer to mitigate some of the challenges from the Delta variant.

The Quebec-based company said office workers must get vaccinated or test negative within the past 72 hours. Those attending meetings must be vaccinated.

It has also pushed education about vaccines that have allowed its overall vaccination rates to be above the general population in most of its markets.

But the company has stopped short of requiring in-store employees to be vaccinated, but does not rule out doing so in the future.

“The situation is changing so quickly. I can't say we never will," CEO Brian Hannasch said in an interview after the company's annual meeting.

Earlier, Hannasch told analysts during a conference call about first-quarter results that he was optimistic for much of the quarter that the pandemic was waning.

"Yet now we're once again carefully watching the spread of the virus, and again, reinforcing health and safety measures in our stores, as well as promoting vaccinations to protect our team members and our customers."

He said the renewed situation continues to impact its supply chain and has magnified the most difficult staffing environment he's seen in his career, particularly in southern U.S. states such as Texas, Florida and the Carolinas.

Hannasch said the company is working hard to maintain staffing levels by focusing on online hiring and using a centralized recruiting process to fill 20,000 open positions.

"We've also put in place retention bonuses and focused on better training and onboarding, making sure that those who want to come in the door, understand the job and are able to do it."

He expects the variant will delay many employer return-to-work plans that will hurt its morning commute business.

While traffic patterns are improving, Hannasch said he remains cautious as the variant is impacting many of its U.S. markets while Canada and Europe are not experiencing the same pressure.

Hannasch added that hurricane Ida, which battered Louisiana and Gulf Coast states, has forced the closure of many stores. About 50 remained shut because of a lack of power while others have reopened to support the communities in need.

Analyst Derek Dley of Canaccord Genuity said the company's cautious near-term outlook reflected the acceleration of the Delta variant and cost inflation amid labour shortages.

"This is similar to what we have been hearing from other retailers and appears to be a challenge across the retail landscape. This, coupled with cost pressures related to both commodity price increases and wage inflation, is likely to challenge margins modestly over the near term."

Company co-founder and executive chairman Alain Bouchard told shareholders that it produced record results in the past year despite facing the COVID-19 pandemic and remains on track with its strategic growth plans.

"As we hear in the news, variants of the virus are still haunting our global family. Despite it all, however, we recognize the great promise of the vaccines for our lives and businesses and to a return to normal," he said.

The retailer beat expectations even though its net profit slipped in the first quarter of its financial year despite a 40 per cent increase in revenues.

It reported after markets closed on Tuesday that it earned US$764.4 million or 71 cents per diluted share, compared with US$777.1 million or 70 cents per share a year earlier.

Adjusted earnings fell 4.7 per cent to US$758 million from US$795 million in the first quarter of 2020. On a per-share basis they were unchanged at 71 cents.

Revenue for the three months ended July 18 were US$13.58 billion, up from US$9.71 billion in the prior-year period.

Couche-Tard, which operates Circle K in Canada, the U.S. and Europe as well as in other countries, was expected to earn 65 cents per share in adjusted profits on US$13.27 billion of revenues, according to financial data firm Refinitiv.

— With files from Stéphane Rolland in Montreal.

This report by The Canadian Press was first published Sept. 1, 2021.

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Ross Marowits, The Canadian Press

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