Retail

Grocery Tracker: 7-Eleven Eyes 10K U.S. Stores

Things are looking up for three of the four grocery stocks we track as winter finally begins to turn to spring—though growth has come to some significantly more than others.

Costco (COST) stock is on the up-and-up after sinking from its record high in the beginning of March (the sole outlier in this case among the stocks we track). This past week, the big box retailer’s shares got a boost upon the bell on Thursday morning, with prices up early—3 percent in the first hour of trading—to $171.45. Things cooled off into Friday, with COST trading at $169.96, down 0.03 percent from Thursday’s close, though trending upward toward the afternoon.

Whole Foods (WFM) stock has also seen some growth in April, rising 9.4 percent from a low on March 27 to hit $31.26 on Friday morning trading, trending upward. This despite the recent data indicating Kroger has eaten up as many as 14 million of Whole Food’s customers in the past year and a half as the former boosted its organic options. Investor optimism in spite of the news perhaps indicates faith in the cost-cutting measures Whole Foods has pursued, along with boosting its less-expensive 365 brand. WFM is up 1.2 percent in 2017.

Likewise, Kroger (KR) shares have seen marginal upward motion into April, though less consistent than the other two U.S.-based brands, and less dramatic than Whole Foods’ rise. Friday morning trading saw KR stock up 0.75 percent to $29.73. Despite the uptick, KR shares are still significantly down for 2017. Since the ball dropped, Kroger has lost over 13 percent of its share value.

International food retail group Ahold Delhaize (AD), meanwhile, continues its downward trajectory first seen at the end of February. AD shares fell another three percent in the first full week of trading in April, down to €19.33 on Friday afternoon local time. This latest downward trend puts AD at a 1.95 percent loss for YTD2017, though the median 12-month outlook suggests significant growth on the order of 20+ percent is still in the cards.

Convenience store chain 7-Eleven’s holding company Seven & I recently announced a major physical store grab for its U.S. Division. The company acquired 1,108 gas stations and retail convenience stores in 18 states currently operated by Sunoco. The sale includes the Stripes brand, a food-focused convenience store chain popular in Texas, Louisiana, New Mexico and Oklahoma.

The deal, worth $3.3 billion dollars, comes as part of a stated goal by 7-Eleven to operate 10,000 locations in the U.S. by 2020. As part of the acquisition, 7-Eleven has agreed to purchase gasoline for the sites from Sunoco for 15 years.

As of today, 7-Eleven operates 8,707 stores in the U.S. and Canada. This acquisition, one of the largest in the company’s history, will bring the convenience chain’s locations to 9,815 in those markets.

“This acquisition supports our growth strategy in key geographic areas including Florida, mid-Atlantic states, Northeast states, and Central Texas,” said Joe DePinto, President and Chief Executive Officer of 7-Eleven Inc. “It also provides 7-Eleven entry into Houston, the 4th largest city in the United States, and a strong presence in Corpus Christi and across South Texas.

The convenience market is an interesting segment of the broader food retail space, as stores often also rely on retail gasoline for revenue. While the grocery space has seen some challenges as of late, in the past few years, success for convenience retailers has actually grown to depend more on a particular location’s food focus.

The National Association of Convenience recently reported that non-gasoline sales at U.S. units saw 3.2 percent growth to $233 billion across fiscal 2016. The growth was largely led by a 21.7 percent rise in sales in the broader ‘food service’ category. Declining per-gallon gasoline prices, on the other hand, led to a 9.2 percent decline in sales overall despite volume gains.

And while some of the world’s largest technology and eCommerce companies work tirelessly to bring commercial drone delivery to the world, 7-Eleven already has a test commercial drone delivery service up and running.

As of the end of 2016, some 77 orders placed in a month in Reno, Nevada, have received doorstep drone delivery treatment. The test deliveries had been limited to a dozen select customers living within a mile of a single store. Even so, 7-Eleven and drone maker partner Flirtey’s service marks the first regular commercial drone delivery service to fly in the U.S.

The average drone delivery time was under 10 minutes after the order was initially placed at 7-Eleven. So far, customers have reportedly ordered food, beverages and over-the-counter medications for drone delivery.

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