Arko Corp’s Earnings Call: Mixed Sentiment Amid Growth

Arko Corp ((ARKO)) has held its Q2 earnings call. Read on for the main highlights of the call.

Arko Corp’s recent earnings call presented a balanced sentiment, highlighting both positive developments and challenges. The company reported improved same-store sales trends and strong fuel margin performance, alongside successful progress in their dealerization program. However, these positive aspects were counterbalanced by declines in retail segment operating income and same-store sales, painting a mixed outlook for the company.

Improved Same-Store Sales Trends

In July, Arko Corp experienced a slight year-over-year increase in same-store sales excluding cigarettes, marking the best performance in the last 18 months. The total merchandise same-store sales trend improved by 3 percentage points compared to the second quarter, indicating a positive shift in consumer behavior.

Dealerization Program Progress

Arko’s dealerization program is making significant strides, with over 300 stores converted to dealer locations and an additional 200 sites under contract. This initiative is expected to deliver more than $20 million in annualized operating income benefits, showcasing the company’s strategic focus on enhancing operational efficiency.

Fuel Margin Performance

The company reported an increase in retail fuel margin to $0.45 per gallon, with consecutive improvements in same-store gallon growth from May to July. This performance underscores Arko’s ability to capitalize on fuel sales despite broader market challenges.

Loyalty Program Success

The Fueling America’s Future campaign has successfully boosted loyalty enrollment, with members spending 50% more and making three more trips per month compared to non-members. This highlights the effectiveness of Arko’s customer engagement strategies.

New Format Stores

Arko opened its first new-format store in June, which has shown positive early results. These stores are being remodeled to enhance customer experience and emphasize food service, aligning with consumer preferences for convenience and quality.

Retail Segment Operating Income Decline

Despite positive trends in other areas, Arko faced a decline in retail segment operating income, dropping from $87.9 million to $80.4 million year-over-year. This was primarily due to a lower retail merchandise contribution, highlighting areas for potential improvement.

Same-Store Sales Decline

The company reported a 3% year-over-year decline in same-store merchandise sales excluding cigarettes, with total same-store merchandise sales down 4.2%. This decline indicates challenges in maintaining sales momentum across their retail operations.

Decline in Fuel Volumes

Arko experienced a $0.8 million decline in same-store fuel contribution, with a 6.5% drop in gallons sold. However, this was largely offset by an increase in fuel margins, reflecting the company’s ability to adapt to changing market conditions.

Forward-Looking Guidance

Looking ahead, Arko Corp reported an adjusted EBITDA of $76.9 million for the second quarter of 2025, surpassing the midpoint of their guidance despite macroeconomic challenges. The company expects third-quarter adjusted EBITDA to range between $70 million and $80 million, with full-year 2025 adjusted EBITDA maintained between $233 million and $253 million. These forecasts reflect Arko’s confidence in navigating the current economic landscape while continuing to expand its dealerization program and new-format stores.

In summary, Arko Corp’s earnings call revealed a balanced sentiment with both positive developments and challenges. While the company made notable progress in its dealerization program and achieved strong fuel margin performance, it also faced declines in retail segment operating income and same-store sales. Looking forward, Arko remains optimistic about its strategic initiatives and financial outlook, aiming to sustain growth amidst a dynamic market environment.