Couche Tard fights Marlboro with launch of Crown cigarettes in the U.S.

Convenience store operator Alimentation Couche-Tard has launched a private-label cigarette in the United States to offset the impact of lower margins foisted on it by the makers of Marlboro. The Quebec-based company said it has had trouble keeping its Crown brand on store shelves since it was introduced about five weeks ago. “We’re very, very […]

Convenience store operator Alimentation Couche-Tard has launched a private-label cigarette in the United States to offset the impact of lower margins foisted on it by the makers of Marlboro.

The Quebec-based company said it has had trouble keeping its Crown brand on store shelves since it was introduced about five weeks ago.

“We’re very, very excited with the market share we have taken so far over such a short period,” CEO Alain Bouchard said Tuesday during a conference call.

“It has exceeded our year target after five weeks, so it’s very, very exciting.”

Phillip Morris, the makers of Marlboro, instituted a policy that forced retailers to reduce markups in order to lower consumer prices.

It wasn’t immediately clear how Couche-Tard’s Crown brand cigarettes differ in price and margins from the popular name brands.

“We have a shortage of inventory after a couple of weeks after launch, so we are very happy,” Bouchard told analysts.

Bouchard said Couche-Tard benefited from its focus on increasing store traffic through promotions and an improved fresh-food offering. The chain beat analyst forecasts for the third quarter as its net earnings soared nearly 25% to US$86.8 million.

Couche-Tard’s shares hit a new all-time high before closing at C$31.91, up 49 cents, in Tuesday trading on the Toronto Stock Exchange.

The profit increase in the quarter was due to acquisitions, high merchandise sales and lower financial expenses, partly offset by higher depreciation and amortization costs and acquisition expenses.

Couche-Tard was expected to earn on average 46 cents per share on $6.1 billion of revenues in the third quarter of its fiscal year, according to analyst estimates compiled by Thomson Reuters.

Same-store merchandise sales increased by 3.4% in the United States and by 3.1% in Canada. But the U.S. sales were up 6.7% if excluding tobacco products.

Total revenues increased to $6.6 billion from $5.5 billion a year earlier.

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