Valero 2006 Annual Report Download - page 15

VA L E R O E N E R G Y C O R P OR AT I O N 13
Turning Retail and Wholesale
into World-Class Competitors
For many years, the “Three F’s”
– Fast, Friendly, and Fanatically Clean
– have been the mantra of Valero’s
retail operations. In 2006, the Retail
Division put added emphasis on
another “F” – Fiercely Competitive.
Optimization, Upgrades and
Profitability for Retail Sites
Valero’s retail organization continued
to focus on converting its Corner Store
network to the Valero fuel brand,
upgrading its stores, offering quality
products and strong in-store programs,
and realizing cost efficiencies – all
with the goal of making the network
more competitive.
This plan continues to reap rewards.
Because the fuel brand and Corner
Store offerings have been well-
received by customers, the Retail
Division achieved its highest per-store
earnings in history, growing per-store
inside sales by 7 percent and gross
profit by approximately 10 percent.
Even though there were 41 fewer
stores in its network in 2006 due to
the divestiture of underperforming
sites, the U.S. Retail Division still
had a nearly 40 percent increase in
operating income over 2005 and had
its third-best earnings ever.
In recognition of Valero’s dramatic
growth and success in the retail
industry in a very short period (the
company had no branded retail
operations in early 2000), Valero’s
Corner Store network was named the
2006 Convenience Store Chain of the
Year by Convenience Store Decisions
magazine. This award annually
honors a petroleum convenience store
chain that has established itself as a
superior retailer and innovator in its
markets of operation.
“Valero is a model of consistency with
an outstanding retail offering and the
refining capacity to deliver consumers
a good value on fuel with no dropoff
in quality,” said the magazine’s Editor-
in-Chief John Lofstock. “Valero has
managed to create some excitement
in the market with new stores, strong
in-store programs and a popular credit
card network. With its commitment to
retail excellence, Valero was an easy
choice for Chain of the Year.”
Record Growth for Branded
Wholesale Business
With the continued, aggressive growth
of its branded wholesale locations
as well as its unbranded wholesale
volumes, Valero also was labeled
America’s “fastest growing” gasoline
marketer by the Lundberg Group, a
well-respected source for information
Valero earned this distinction for
its track record of growth in 2006,
according to a study released in
January 2007 by Lundberg. According
to the study, Valero achieved nearly 15
percent growth in gasoline sales over
2005, while the rest of the industry
had an average decline of about 1
percent.
Thanks to Valero’s ability to provide
reliable supply, competitive pricing,
and a wide range of brand support
programs, distributors have been
signing on with the company in
record numbers. In fact, Valero
contracted over 1,100 additional
sites in 2006 alone, representing an
additional 1.4 billion gallons in fuel
sales per year. Today, the branded
wholesale network consists of nearly
3,900 branded wholesale sites in the
U.S., and the company’s goal is to
have 7,000 U.S. sites by 2011.
Retail and Wholesale Strive to be
Fiercely Competitive
Despite the success that the retail and
wholesale organizations achieved in
2006, they are continually working
to make their operations even more
successful. In fact, they are currently
implementing aggressive plans to
further improve their profitability
and achieve their ultimate goal of
becoming Fiercely Competitive.
on the U.S. automotive fuel market.