A motorcycle is parked at a Circle K gas station on June 16, 2026 in Austin, Texas.
Brandon Bell/Getty Images
Alimentation Couche-Tard, the Canadian company behind Circle K, has now posted five consecutive quarters of positive same-store merchandise sales growth in the United States — the strongest sustained recovery the chain has recorded in years — while simultaneously booking its highest US fuel margin in at least eight quarters to fund a voluntary tender offer for Żabka Group valued at $8.6 billion (PLN 32.6 billion; exchange rate as of September 2, 2026, conversions are approximate), its largest acquisition ever. The results for the 12-week period ended July 19, 2026 show a company that has successfully turned around its American convenience business and is now using that platform as a launchpad into a structurally different format of European retailing.
Adjusted diluted earnings per share came in at $0.90, up 15.4% from $0.78 in the same period a year earlier. Adjusted net earnings reached approximately $827 million, an increase of 12.2% year over year, while total revenues surged 25.1% to $21.7 billion. Adjusted EBITDA rose 10.5% to $1.78 billion, and normalized operating expense growth held at 2.7% — comfortably below the inflation level across Couche-Tard’s network of more than 17,200 locations in 27 countries.
What Is Driving the Circle K US Sales Streak?
For five straight quarters, Circle K has grown same-store merchandise sales in the United States — a metric that strips out contributions from new store openings and acquisitions to measure purely organic customer behavior. In the latest quarter, US same-store merchandise revenues rose 1.7%, led by energy drinks and alternative nicotine products (nicotine pouches and other non-combustible products) where the company says it is actively gaining market share in energy drinks.
President and CEO Alex Miller pointed specifically to category momentum in prepared remarks. “We delivered our fifth consecutive quarter of positive same-store merchandise sales growth in the U.S., supported by continued momentum in food, energy drinks and other nicotine products,” he said. These categories are significant because they carry higher and more consistent margins than traditional cigarettes, whose volume has been declining structurally across the industry due to regulatory pressure and consumer behavior shifts. That structural shift is visible in the Canada results — where same-store revenues were flat despite growth in packaged beverages and alcohol, with tobacco headwinds offsetting gains specifically cited as the offset.
The US margin picture is more nuanced than a pure win. Merchandise and service gross margin in the United States dipped 0.5 percentage points to 34.1%, reflecting deliberate pricing concessions designed to hold customer traffic in a still-cautious consumer environment. Europe moved the other way — merchandise margin there improved 0.7 percentage points to 39.6% on a favorable product mix. For a US reader: 34.1% gross margin on convenience merchandise means that for every dollar spent on packaged goods, beverages, and snacks at a US Circle K, the company keeps roughly 34 cents before operating expenses.
Circle K’s Fuel Business Hit an Eight-Quarter High — Here’s Why That Matters
While convenience merchandise captures the brand’s marketing attention, fuel profitability was the quarter’s biggest financial story. The US road transportation fuel gross margin reached 52.61 cents per gallon — a year-over-year improvement of 8.61 cents per gallon, and the best margin figure in at least eight tracked quarters. To understand why, it helps to understand how fuel retail margins actually work.
Unlike grocery retail, where a merchant buys at a wholesale price and sells at a retail markup, fuel retailing operates on a “rack-to-retail” model in which the retailer purchases at rack (wholesale fuel delivery) prices that fluctuate on roughly a 10-day lag behind crude movements. A skilled operator can capture margin by buying ahead of a price rise or selling ahead of a price drop. Couche-Tard operates a centralized fuel supply desk that monitors rack prices across its US regions and times purchases accordingly — this is the core operational advantage that produces above-average margins in favorable supply environments. The first quarter of FY2027 saw “advantageous supply conditions and strong execution,” per the company’s management, which translated to that 8.61 cent per gallon windfall.
One structural cost worth flagging for readers: electronic payment fees — the interchange costs Couche-Tard pays when customers use credit cards at fuel pumps — consumed 6.57 cents per gallon in the quarter (up from 5.34 cents per gallon a year earlier), driven primarily by higher average fuel selling prices, since interchange fees are typically calculated as a percentage of the transaction value. The US average fuel selling price in Q1 FY2027 was $4.06 per gallon, compared with $3.06 per gallon a year prior — a 33% jump that inflated both fuel revenues and the card-fee burden simultaneously.
Total US fuel volume reached 2.31 billion gallons for the quarter, up 3.5% year over year, primarily because the 270 GetGo sites acquired in mid-2025 contributed incremental volume — same-store fuel volumes at existing US locations actually declined 1.6%, consistent with consumer demand softness at elevated pump prices.
In Canada, fuel margin improved to CA 16.79 cents per liter (approximately 12.1 cents US per liter), up CA 2.58 cents per liter (approximately 1.9 cents US) year over year, on similar supply-optimization dynamics. European fuel margins were essentially flat at US 11.34 cents per liter, with German market structural changes as a headwind.
How GetGo Changed the Earnings Picture
The acquisition of 270 GetGo Café + Market sites from Giant Eagle — completed June 28, 2025 for approximately $1.6 billion — is now a full-quarter contributor. GetGo contributed approximately $112 million in incremental merchandise revenue and approximately $59 million in incremental fuel gross profit in the quarter, accounting for acquisition-driven revenue growth beyond organic results.
The strategic rationale for GetGo was always about more than adding sites in Indiana, Maryland, Ohio, Pennsylvania, and West Virginia. GetGo carried an established food and loyalty platform — the chain operates commissary-backed fresh food programs and a loyalty app — that Circle K is studying for network-wide replication. CFO Filipe Da Silva framed the quarter as evidence that the dual strategy of operational discipline and strategic investment is working: “The first quarter demonstrates the balance we are achieving across the business, delivering adjusted EBITDA growth of 10.5% and adjusted diluted earnings per share growth of 15.4%, while maintaining normalized expense growth well below inflation.”
Balance Sheet Enters the Żabka Era From a Position of Strength
Before the Żabka transaction closes, it is worth understanding where Couche-Tard’s balance sheet sits. The leverage ratio — net interest-bearing debt divided by trailing 12-month adjusted EBITDA — improved to 1.77 times at quarter-end, down from 1.99 times at the close of fiscal year 2026. That improvement was aided by the May 2026 repayment of a EUR 750 million (approximately $876.5 million) Euro-denominated senior unsecured note that had matured after a decade in the market. Cash and cash equivalents stood at approximately $3.2 billion, with another $3.5 billion in available credit facilities — a combined liquidity position of approximately $6.7 billion entering the largest deal in company history.
The Żabka transaction, announced July 31, 2026, values Żabka at PLN 32.6 billion (approximately $8.6 billion, based on the company’s own published conversion; at the September 2, 2026 mid-market rate of approximately 0.267 USD per PLN, the figure approximates $8.7 billion — readers should note this figure will fluctuate with the zloty-dollar rate). It is structured as a voluntary tender offer through Circle K Polska, Couche-Tard’s Polish subsidiary. Shareholders representing approximately 57% of Żabka’s outstanding shares have entered hard irrevocable agreements to tender — meaning they are contractually obligated to participate, making majority control effectively assured pending regulatory clearance. The transaction is expected to close before the end of fiscal year 2027 (approximately April 2027).
What Żabka Actually Is — and Why It’s Different From Circle K
Żabka is Poland’s largest convenience retailer, operating more than 13,000 stores across Poland and Romania through an entrepreneurial franchise model, with plans to eventually reach a 7,600-store Romania expansion target under the Froo brand. Founded in 1998 in Poznań, Poland, it has grown through a franchise structure in which independent owner-operators run each location under the Żabka brand, supply contract, and digital platform.
The critical architectural difference that the acquisition announcement’s language — “expand our scale in Central and Eastern Europe” — understates is this: Żabka stores average 50–70 square meters (approximately 538–753 square feet), roughly one-quarter to one-fifth the footprint of a typical US Circle K location. These are dense-urban micro-stores, positioned in city apartment neighborhoods, transit corridors, and university districts — exactly the retail geography where Circle K’s forecourt-and-fuel model has limited reach. Żabka has also invested heavily in digital infrastructure, including AI-powered demand forecasting and its “Nano” autonomous checkout format developed with AiFi and Microsoft smart store technology.
Miller’s phrase — that Żabka would “strengthen our capabilities in food, digital engagement and supply chain” — is therefore better read as: Couche-Tard is buying a format and a technology playbook it does not currently possess, not simply adding store count. The franchise model also means Couche-Tard’s capital exposure per store is lower than in a company-owned network — and Żabka’s franchisees already generate the traffic that fuels the unit economics.
What This Means for Readers Watching Circle K or Couche-Tard
Couche-Tard enters fiscal year 2027 with its US same-store sales trend intact, its fuel business performing at historically strong margins, and its balance sheet leveraged at 1.77 times — before absorbing a transaction that will likely push leverage toward 3 times or higher. The test for fiscal 2028 will be how quickly the company can deleverage using its substantial free cash flow while simultaneously integrating a structurally different retail format in a market where its consumer brand does not yet exist.
The Board of Directors declared a quarterly dividend record date of September 11, 2026 for the CA 21.5 cents per share dividend (approximately 15.5 cents US per share, at the September 2, 2026 mid-market rate of 0.7195 USD per CAD), payable September 25, 2026. Share repurchases in the quarter were modest — 0.4 million shares for $26 million — consistent with capital preservation ahead of the Żabka close.
At the close of the quarter, the network included 14,509 total sites under the Couche-Tard and Circle K banners, plus 2,711 Circle K-branded licensed sites, confirming Couche-Tard’s 17,220 global locations across 27 countries. Once Żabka’s 13,000-plus stores are consolidated, the combined network will approach 30,000 locations — placing Couche-Tard in a direct size contest with 7-Eleven for global convenience retail leadership.
Exchange rates as of September 2, 2026; conversions are approximate. Adjusted EPS, adjusted EBITDA, and normalized expense growth are non-IFRS measures.
Frequently Asked QuestionsWhat drove Circle K’s five-quarter US same-store sales streak?
Energy drinks and alternative nicotine products — primarily nicotine pouches and other non-combustible products — are the two categories most cited by management as the drivers of the streak. These categories carry better and more predictable margins than traditional tobacco, which is in long-term structural decline due to regulation and shifting consumer preference. Circle K is also investing in fresh food programs originally developed through the GetGo acquisition, including commissary-backed meal deals at $3, $4, and $5 price points. The deliberate pricing investments that have slightly compressed US merchandise gross margins (down 0.5 percentage points to 34.1%) are intended to hold customer traffic during what management describes as a “selective spending environment.”
Why is a convenience store chain buying Poland’s Żabka, and what makes it a good fit?
Żabka is not simply a geographic expansion — it represents an entry into a structurally different retail format. Circle K’s US and Canadian stores average roughly 2,500–3,500 square feet and are typically co-located with fuel forecourts in suburban or highway settings. Żabka’s stores average 50–70 square meters (538–753 square feet) and operate as dense-urban micro-stores in apartment neighborhoods, transit corridors, and university districts. Żabka also brings digital capabilities — AI-driven demand forecasting, mobile loyalty integration, and autonomous checkout technology — that Couche-Tard has specifically named as capabilities it wants to develop network-wide. The franchise model means each store is run by an independent owner-operator, reducing Couche-Tard’s per-unit capital requirement while benefiting from the brand and supply contract.
How much debt is Couche-Tard taking on for the Żabka deal, and can it handle it?
Entering the transaction, Couche-Tard’s leverage ratio (net debt divided by trailing EBITDA) was 1.77 times — low for a company of this scale and well below typical investment-grade covenant levels of 3.5 times or higher. The Żabka deal at approximately $8.6–8.7 billion (depending on exchange rates at settlement) will significantly increase debt, likely pushing the ratio toward 3 times or above. However, the company generates substantial free cash flow — trailing adjusted EBITDA of $6.9 billion provides meaningful deleveraging capacity — and the franchise structure of Żabka means ongoing capital intensity is lower than a company-owned format would require. Management has confirmed the transaction will be financed through available cash and new and existing credit facilities.
What is the earnings call outlook, and is there analyst guidance available?
Couche-Tard hosted its analyst webcast for Q1 FY2027 on September 2, 2026, at 8:00 AM ET, featuring CEO Alex Miller and CFO Filipe Da Silva. The company has not published formal forward earnings guidance; management’s commentary focused on the continuation of the Core + More strategy and confidence in the Żabka transaction timeline. The company has stated it expects to close the Żabka deal before the end of fiscal year 2027, which runs through approximately April 2027. A full earnings call transcript is available via Investing.com.