Stripes Convenience Stores May Soon be Changing Their Name
SAN ANGELO, TX — In April, Sunoco, the parent company of the Stripes Convenience Stores, announced it was selling a majority of its stores in the U.S. to Dallas-based 7-Eleven, Inc. But the deal to divest Sunoco of about 1100 convenience stores did not include the 207 Sunoco-owned Stripes stores located in west Texas, New Mexico, and certain locations in Oklahoma. Those stores, including those around here, would be sold in another deal, not to 7-Eleven, they said.
Sunoco’s business strategy is to divest itself of retail operations to concentrate on its wholesale fuel sales and distribution business. While the company still operates 1346 stores right now, it is the wholesale supplier of gas to 7898 stores. The deal with 7-Eleven includes a multi-year contract for Sunoco to provide fuel to convenience stores owned and operated by the 7-Eleven for the next 15 years.
Above: This map indicates the approximate locations of Stripes Convenience Stores to be sold separately and are not included in the April 6, 2017 announcement that 7-Eleven is purchasing Stripes Convenience Stores. (Graphic from Sunoco Investors teleconference)
The 207 stores left on the market posed a challenge. According to a company announcement Monday, Sunoco will not sell the west Texas Stripes after all. Instead, they have found a “commission agent” who will operate the remaining 207 locations and will also purchase wholesale fuel from Sunoco. The conversion to the new arrangement happens during the first quarter of 2018.
As part of the earlier deal on April 6 with 7-Eleven, Sunoco agreed to sell the Stripes and Laredo Taco brands to 7-Eleven. That may mean that the name “Stripes” will not adorn the plentiful convenience stores around here. Most definitely the employees will soon have a new employer, though.
Sunoco said their arrangement leases the stores and real estate it owns to the agent that will operate and manage the store locations. Sunoco will receive a stable rental income through Sunoco’s continued ownership of the real estate. The deal also captures a material portion of fuel margin less a commission to the agent. In other words, Sunoco will be the commission agent's wholesale fuel supplier. Sunoco said the agreement allows future asset sales, so Sunoco is still free to sell the store properties if it finds a suitor.
Overall, Sunoco is seeking a 50 percent reduction in operations costs, and the commission agent agreement does not change the company’s EBITA forecast announced in April.
The question is, who is the commission agent? Sunoco hasn’t named it, but did say the agent was a “proven operator.” The transition begins in January.