Alimentation Couche-Tard Q1 FY26 slides: Merchandise growth offsets fuel challenges

Introduction & Market Context

Alimentation Couche-Tard (TSX:ATD), the parent company of Circle K, presented its Q1 FY2026 results on September 3, 2025, highlighting resilient merchandise performance across all regions despite mixed fuel volume results. The company’s stock has responded positively, rising 6.27% following the presentation, building on the 4.62% gain seen after the initial earnings announcement.

The convenience store giant continues to execute its strategic initiatives focused on food offerings and cost control, which have helped maintain growth momentum in a challenging consumer environment. With a current share price of $73.58, the stock is trading well above its 52-week low of $65.95, reflecting investor confidence in the company’s operational strategy.

Quarterly Performance Highlights

Couche-Tard reported positive same-store merchandise sales growth across all regions, with particularly strong performance in Canada (+4.1%) and Europe (+3.8%), while the U.S. showed modest growth at 0.4%. This merchandise performance helped offset challenges in fuel volumes, which declined in the U.S. (-0.9%) and Europe (-1.3%) but grew in Canada (+2.2%).

As shown in the following growth overview chart:

A standout element of Couche-Tard’s strategy has been its focus on meal promotions, which have shown remarkable sequential growth. Weekly meal deals in North America have increased dramatically from approximately 100,000 in Q2 FY25 to around 750,000 in Q1 FY26, demonstrating strong customer adoption of the company’s food offerings.

Financial Analysis

The company reported Q1 EBITDA of approximately $1.7 billion on a reported basis, representing a 5.2% year-over-year increase, while adjusted EBITDA grew 1.6% to about $1.6 billion. Diluted earnings per share came in at $0.82 on a reported basis (-1.2% y/y) and $0.78 on an adjusted basis (-6.0% y/y).

The detailed financial performance metrics are illustrated in the following chart:

Fuel margins remained healthy across regions, with particularly strong performance in Europe and other regions, which saw a 31.5% year-over-year increase to 11.41 cents per liter. The Canadian market also showed strength with an 8.4% increase to 14.21 cents per liter (CAD), while U.S. fuel margins declined 8.6% to 44.00 cents per gallon but remained at historically strong levels.

On the merchandise side, the U.S. market showed margin improvement of 0.9% year-over-year to 34.6%, while Europe and Canada both experienced slight margin contractions of 0.9% to 38.9% and 33.9%, respectively. According to the presentation, strong food execution helped lift U.S. gross margins despite these challenges.

The company has maintained strong cost discipline, keeping normalized growth expenses below inflation, which has helped preserve profitability despite some of the volume challenges in key markets.

Strategic Initiatives

Couche-Tard’s long-term strategy continues to be built around four key operational pillars designed to drive sustainable growth. These strategic priorities are visually represented in the company’s lighthouse framework:

The "Winning Offer" pillar focuses on food, beverages, and private brands, aligning with the company’s successful meal deal promotions. "Winning Fuel" addresses both B2C and B2B value propositions along with fuel supply chain optimization, which has supported the healthy margins seen this quarter.

"Winning the Customer" emphasizes loyalty programs and digital experiences, while "Winning Growth" encompasses new-to-industry sites, remodels, relocations, and M&A opportunities. This last pillar likely includes the recently completed acquisition of 270 GetGo stores mentioned in the earnings report but not specifically highlighted in the presentation slides.

These strategic pillars are underpinned by what the company calls "The Foundation," which includes customer-centricity, responsible retailing, and operational readiness, all supported by supply chain improvements, automation, and data analytics.

Forward-Looking Statements

Looking ahead, Couche-Tard appears focused on continuing to expand its food offerings and meal promotions, which have shown strong sequential growth. The company’s emphasis on cost control and margin expansion through supply chain optimization is expected to remain a priority in the coming quarters.

While the presentation doesn’t provide specific guidance figures, the strategic framework suggests continued investment in both organic growth initiatives and potential M&A opportunities. The expansion of the company’s EV charging network, which grew by 35% year-over-year according to the earnings report, also represents an important forward-looking element of the company’s fuel strategy.

CEO Alex Miller and CFO Filipe Da Silva, who presented the quarterly results, have emphasized value-driven strategies and market consolidation opportunities, particularly in North America. With the company’s stock continuing to perform well, investors appear to be responding positively to both the current results and the strategic direction outlined in the presentation.

Full presentation:

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