Valvoline Retail Services Sales Up 36%; Same-Store Sales Up Nearly 25%

Sales from Valvoline’s Retail Services segment (its quick-lube business) rose 36.2% to $346 million in the fiscal first quarter ended Dec. 31, 2021 with company-operated shop sales coming in at $243 million (up 36.5%) and franchised shop sales reaching $103 million (up 35.5%). Notably, the company’s Retail Services sales were nearly 60% higher than the pre-pandemic first quarter of fiscal 2020.

Meanwhile, system-wide store sales increased 30.9% to $551 million, attributable to a combination of same-store sales and unit growth.

System-wide same-store sales rose 24.7% on top of 6.0% growth a year ago, led by transactions along with a solid contribution from average ticket. A closer look shows that same-store sales for company-operated shops increased 22.1% on top of a 6.1% gain a year ago, while franchised shop same-store sales grew 26.8% on top of 6.0% growth a year ago.

Looking ahead, management expects Retail Services same-store sales to moderate as the segment goes up against strong comparisons from the prior year, which started in the fiscal second quarter.

Retail Services operating income rose 44.6% to $81 million while segment adjusted EBITDA increased 40.0% to $98 million. Retail Services adjusted EBITDA margin climbed from 27.6% to 28.3% on a year-over-year basis.

As a reminder, among management’s key business and growth strategies for fiscal 2022 are separating Valvoline’s two business segments (Retail Services and Global Products) and “aggressively growing” Retail Services through organic service center expansion, acquisitions and franchisee growth.

Regarding separation, CEO Sam Mitchell stated on Feb. 8 that Valvoline is making progress and management expects to have more information to share in the coming months. Consummation of the separation will be subject to final approval by Valvoline’s board of directors, and no timetable has been established for completion of the separation.

On the expansion front, the company acquired 12 shops via single- and multi-unit transactions for an aggregate purchase price of $14 million during the quarter ended Dec. 31, 2021. The acquisitions increased the number of company-operated service centers and contributed to growing the Retail Services system to more than 1,600 shops system-wide.

There were 102 net new stores added to the Valvoline system in calendar-year 2021. Management anticipates ending fiscal 2022 with more than 1,700 shops.    — Marc Vincent

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