Casey's General Stores' fiscal Q1 earnings climbed 6% to US$39.3M as revenue grew 38% to US$1.87B; company's profit margin fell to 14.2% from 17.2%, hurt by higher costs for fuel, food items

ANKENY, Iowa , September 8, 2011 () – Casey's General Stores Inc. said Wednesday that its net income climbed 6 percent in the most recent quarter, fueled by new stores.

But rising costs for some commodities crimped its profit margins and the results fell shy Wall Street expectations. The company's shares slid in extended trading.

Casey's, an Iowa-based chain of gas stations, said that net income climbed to $39.3 million, or $1.03 a share, in the first quarter, which covered May through July, up from $37.3 million, or 73 cents a share, in the same period last year.

Revenue soared 38 percent to $1.87 billion, though much of the gain came from the company adding new stores rather than driving sales at existing stores.

Analysts had been forecasting net income of $1.06 a share in the latest quarter on revenue of $1.9 billion, according to a FactSet survey.

The company's overall profit margin fell to 14.2 percent from 17.2 percent, squeezed by higher costs for fuel and ingredients like coffee and cheese

Revenue from gasoline sales increased 47 percent to $1.38 billion, or nearly three-quarters of total revenue. But that increase was driven by customers paying higher prices. And customers bought fewer gallons of gas as a result: Gallons sold at stores open at least a year, which excludes the impact of the new stores, fell 2.7 percent.

Revenue also increased in the higher-margin groceries and prepared foods, such as sub sandwiches and coffee. But CEO Robert Myers noted that profit margins in groceries had been crimped by competitive pricing of cigarettes and customers buying the larger -- and lower-margin -- packs of beer. Profit margins in prepared foods were squeezed because the company had to pay more for ingredients like cheese and coffee.

Casey's plans to keep adding stores through acquisitions and organically, and in the past year it has increased its store count by 132 to 1,665. The company kept in place its shareholder dividend of 15 cents.

The earnings report was issued after the close of trading on Wall Street. In after-hours trading, shares in Casey's General Stores slipped $1.81, or 4 percent, to $44.05. They had ended the regular session up $1.78 at $45.86.

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