Arko Corp. (NASDAQ:ARKO) Q4 2022 Earnings Call Transcript

And I think the Handymark, the description about what we did in Handymark, adding almost 700 assortment, and then the we have three acquisitions. We just closed the Pride acquisition, and just start to reset those doors. And as I mentioned, 700 items were added in Handymark, I believe in Pride, the opportunity is much bigger. I think it’s more than 700 items going to be added over there, given that those are bigger stores. The same thing goes to fuel. We’re going to use our same strategy that we use in Handymark using company wide, we’re going to continue to use those strategies. And I think given our size right now, I think we’re going to be able to, deliver better and better results quarter after quarter. Given we implement our strategy over here.

And there is a lot of opportunities that again, I can sit down for five hours and talk about all of those opportunities, especially food service. I mean, we believe food service in this environment is a great opportunity for us. When I talk food service, I’m talking more about pizza, grab and go freezers. We have opportunity to add 200 freezers in additional stores. We are adding bean to cup coffee machines into the Pride Stores. We’re getting ready to close the TG acquisition and we’re going to reset those doors. So again, we have a big runaway over here ahead of us.

Unidentified Analyst: Great. Thank you so much. I appreciate it.

Arie Kotler: Appreciate the question.

Operator: Thank you. The next question is coming from Alok Patel of Stifel. Please go ahead.

Alok Patel: Hi everyone. This is Ollie Patel on the line from Mark Astrachan. I wanted to follow up regarding in short merchandise, can you talk about which categories are more or less elastic? How you think about pricing as you move through 2023 and potential benefit from higher promotional activity or just reduced pricing?

Arie Kotler: Sure, sure. First of all, I can maybe touch couple of categories that were basically, we saw a big increase or a very, very nice increase over there. I mean, the first one, of course, is candy. I mean, everybody knows that candy, countrywide candy up. So nice increasing candy. Frozen foods continue to be a big hit for us. As you know, you guys remember from the beginning of 2021, we implemented over 700 freezers into our stores, and continue to grow. I mean, this quarter, just this quarter frozen foods was up 19.2%. The same thing goes to package, sweet snacks, I mean over 14%, increase, Pack Bevs continue to grow 4.7% increase. So we believe that the big opportunity for us it’s really loyalty. And as we continue to grow, and as we continue to offer great, basically great promotions to our loyal customers, not only that, their baskets increase, I mean, they’re coming more often.

And that I think will drive our profitability inside the stores. The one thing I want to touch of course, is that remember, we started 2020, Q4 2020, our same store sales cigarettes was around 38.9%, almost 39%. And today, the concentration of cigarettes inside our box, it’s around 32.9%. This is a 6% difference, which means that we were able to increase the basket and sell 6% more of other products that their margin is probably two or three times better than the margin on cigarettes. And that’s the focus of the year. The focus is to continue to increase inside sales with high margin items, which include the foodservice item and all of the other categories I just mentioned. And we see it by the way in Q1 already, I mean, Q1, I mean, the inside sales, excluding cigarettes continue to be very, very strong, similar to what we saw in Q4 2022.