Alimentation Couche-Tard Inc. (TSX: ATD) reported second quarter fiscal 2026 results marked by earnings resilience, margin expansion, and sustained investment in growth initiatives across North America and Europe. For the 12-week period ended October 12, 2025, the global convenience and fuel retailer posted net earnings attributable to shareholders of $740.6 million, up from $708.8 million a year ago. Diluted earnings per share improved to $0.79, while adjusted diluted EPS reached $0.78, representing a 5.4 percent year-on-year increase.
The Laval-based company delivered total revenues of $17.87 billion during the quarter, reflecting a 2.6 percent gain over the comparable period of fiscal 2025. Merchandise and service revenues rose by 6.6 percent to $4.68 billion, while road transportation fuel revenues climbed modestly by 1.3 percent to $13.05 billion. Earnings growth was attributed to strategic acquisitions, including GetGo, improved fuel and merchandise gross margins, and disciplined cost execution, despite softer fuel volumes in the United States and Europe.
How are foodservice and category mix contributing to same-store sales gains?
Same-store merchandise revenues increased across all regions, highlighting the strength of Couche-Tard’s in-store execution and product mix strategy. In Canada, same-store merchandise revenue grew by 5.4 percent, supported by growth in alcohol and packaged beverages. The United States saw a 1.2 percent gain, with strong contributions from Meal Deal promotions and other nicotine products. In Europe and other regions, same-store merchandise revenues improved by 0.5 percent, with E-Mobility momentum in Scandinavia and a more favorable mix offsetting regulatory pressures in tobacco categories.
Gross profit from merchandise and service sales rose 9.2 percent to $1.66 billion. Gross margins expanded across all regions: 34.7 percent in the United States, 38.9 percent in Europe and other regions, and 34.2 percent in Canada. Management highlighted promotional execution, strong food performance, and reduced exposure to cigarettes as contributors to margin uplift.
What role did GetGo and network expansion play in second quarter results?
Second quarter fiscal 2026 marked the first full quarter of contribution from the acquired GetGo locations in the United States. The acquisition supported broader food and convenience offerings and opened up new cross-selling opportunities. However, GetGo also introduced a temporary drag on reported revenue due to regulatory divestiture requirements in certain jurisdictions.
Beyond acquisitions, Couche-Tard continued expanding its retail network. During the quarter, the company acquired 14 company-operated stores, including seven under the Texaco brand in Ireland. It also built 19 new stores and relocated or reconstructed three others. As of October 12, 2025, the company operated 17,270 sites globally, including 2,633 licensed Circle K-branded locations. Seventy-three stores were under construction at quarter-end, signaling a continued push into high-density urban corridors and underserved geographies.
How did fuel volume and margin dynamics evolve across key markets?
Road transportation fuel gross profit increased by 6.7 percent to $1.69 billion, despite regional variations in volume. In Canada, same-store fuel volumes rose by 1.1 percent and margins expanded to CA 15.07 cents per liter, up from CA 13.35 cents. In Europe and other regions, fuel volumes declined 1.8 percent, but gross margin per liter rose to US 11.51 cents. The United States saw a 0.6 percent volume decline, with gross margin softening slightly to 45.86 cents per gallon.
Couche-Tard attributed the margin resilience to ongoing supply chain optimization and local pricing agility. Retail-level execution, particularly in fuel pricing and loyalty promotions, remained a key pillar in preserving margin even in markets experiencing demand softness.
How did Couche-Tard manage operating expenses amid inflation and growth investments?
Operating, selling, general and administrative expenses increased by 8.3 percent year-over-year to $1.79 billion. However, normalized growth—excluding the impact of foreign exchange, acquisition-related costs, and disposals—was contained at 3.4 percent, reflecting Couche-Tard’s ongoing cost discipline.
Inflationary pressures and strategic investments to support the acceleration of the company’s foodservice program contributed to higher spending. Nonetheless, adjusted EBITDA grew by 7.5 percent to $1.63 billion, reflecting operating leverage from improved margins and scale benefits from recent acquisitions.
Depreciation and amortization expenses rose by 14.2 percent to $534.1 million, largely due to investment in store modernization and digital infrastructure, as well as the amortization of acquired assets.
What does the balance sheet and capital allocation strategy signal about future direction?
Couche-Tard continued to demonstrate a balanced capital deployment approach. During the second quarter, the company repurchased 16.6 million shares for approximately $886.7 million under its renewed buyback authorization, which allows for repurchases of up to 77.1 million shares by July 2026. Post-quarter, an additional 6.1 million shares were repurchased for $306.3 million.
In September 2025, Couche-Tard completed a $1.7 billion dual-currency debt offering, consisting of $1.2 billion in U.S. notes and CA$500 million in Canadian notes. The proceeds were used to reduce commercial paper liabilities and enhance liquidity flexibility.
As of October 12, 2025, Couche-Tard reported total assets of $40.62 billion and net interest-bearing debt of $13.50 billion. The company’s leverage ratio stood at 2.21, up from 1.96, and net interest-bearing debt to total capitalization increased to 0.47 from 0.44. Return on equity remained healthy at 17.7 percent, while return on capital employed was 11.9 percent.
What does Couche-Tard’s Q2 FY26 performance tell us about investor sentiment and outlook?
Alimentation Couche-Tard’s stock performance in the days following its earnings announcement reflected cautious optimism among investors. Despite modest declines in U.S. and European fuel volumes, the company’s ability to expand margins, deliver adjusted earnings growth, and reinvest in high-return initiatives supported positive sentiment.
Analysts covering the stock view Couche-Tard’s strategic roadmap as fundamentally sound. The continued integration of foodservice, expansion of the store base, and agile capital allocation are expected to support longer-term earnings resilience. However, external risks related to fuel demand, regulatory headwinds in nicotine categories, and macroeconomic pressures remain on watchlists.
Couche-Tard’s dividend was also raised by 10.3 percent during the quarter to CA 21.5 cents per share, signaling confidence in free cash flow durability. The dividend is payable on December 17, 2025, to shareholders of record as of December 3, 2025.
Looking ahead, analysts expect the company to maintain momentum through continued investment in network development, private label expansion, and omnichannel engagement, while balancing shareholder returns and leverage metrics.
What are the key takeaways from Alimentation Couche-Tard’s Q2 FY26 earnings?
- Net earnings attributable to shareholders rose to $740.6 million, up 4.5% year-over-year
- Adjusted diluted earnings per share increased to $0.78, a 5.4% improvement over Q2 FY25
- Total revenue grew 2.6% to $17.87 billion, with merchandise and service revenue up 6.6%
- Same-store merchandise revenues rose 5.4% in Canada, 1.2% in the U.S., and 0.5% in Europe
- Road transportation fuel gross profit climbed 6.7% to $1.69 billion, despite volume softness
- Fuel margins remained strong: 45.86¢/gal (U.S.), 11.51¢/L (Europe), and CA 15.07¢/L (Canada)
- $1.6 billion in debt was issued in U.S. and Canadian notes to refinance commercial paper
- $886.7 million in shares repurchased in Q2 under the renewed buyback program
- Quarterly dividend increased by 10.3% to CA 21.5¢ per share, payable on December 17, 2025
- Store network expanded to 17,270 sites, with 73 new builds under construction
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