Murphy USA Inc. announced before Wednesday’s opening bell that it entered into a five-year supply agreement with West Coast retailer marketer Core-Mark to be the primary non-fuel wholesale distributor to the Arkansas company’s retail locations across 23 states.
Under the deal, San Francisco-based Core-Mark will deliver over 75% of the merchandise sold in Murphy’s retail stores across the Southwest, Southeast and Midwest United States. Services under this contract are expected to begin in the first quarter of 2016 and estimated to generate approximately $1.7 billion in annualized revenue for Core-Mark while creating efficiencies and a strategic supply chain relationship for Murphy USA. Terms of the deal were not disclosed.
“We are confident the Core-Mark team will be an excellent strategic partner for Murphy USA and we look forward to working together to achieve our mutual goals of profitable growth, efficient operations and superior execution for our stores and our customers,” Murphy USA President and CEO Andrew Clyde said in a news release.
Over the next several years, Murphy USA has said its strategic partnership with Walmart will be a key driver to the El Dorado retail marketer’s growth. Murphy USA strategy includes plans to continue building out the Walmart “200” near existing and planned Walmart locations across the nation. Murphy USA also operates more than 150 Murphy Express locations across the country as stand-alone convenience stores.
At the end of the second quarter, Murphy USA had 1,282 total locations in operation that include 1,069 Murphy USA sites and 213 Murphy Express sites. The Arkansas convenience store operator, which split off from Murphy Oil Corp. two years ago, also said it has 39 sites under construction that will be added to its network.
Publicly-traded Core-Mark bills itself as one of the largest marketers of fresh and broad-line supply solutions to the convenience retail industry in North America. Founded in 1888, Core-Mark offers a full range of products, marketing programs, and technology solutions to over 36,000 customer locations in the U.S. and Canada through 29 distribution centers.
“This contract win, driven by our trusted relationships and transparent approach, is a bell weather moment for this organization,” said Core-Market CEO Thomas Perkins. “We are committed to serving Murphy USA stores with operational excellence and an innovative approach.”
Murphy USA is expected to report its third quarter earnings on Nov. 4. At the close of business Tuesday, the El Dorado retailer’s shares (NYSE: MUSA) ended at $59.48, down 32 cents, on the Nasdaq stock exchange.