Arko Corp.'s Q2 2025: Unpacking Contradictions in Dealerization, Macroeconomic Outlook, and OTP Growth Strategies

Dealerization program and savings expectations, macroeconomic and consumer spending assumptions, OTP back bar expansion and refresh, dealerization program and savings target, OTP growth and strategic focus are the key contradictions discussed in Arko Corp.'s latest 2025Q2 earnings call.



Macroeconomic Challenges and Retail Performance:
- Arko Corp.'s adjusted EBITDA for Q2 2025 was $76.9 million, below the midpoint of their guidance.
- Same-store merchandise sales, excluding cigarettes, were down 3% year-over-year, while total same-store merchandise sales were down 4.2%.
- This decline was due to macroeconomic challenges, including geopolitical events, persistent inflation, and restrained personal consumption, leading to more price sensitivity and increased reliance on loyalty-driven offers.

Dealerization Program and Financial Impact:
- Arko Corp. plans to convert more than 300 stores to dealer locations, expecting cumulative annualized operating income benefits of more than $20 million.
- Since launching the initiative, they have identified over $10 million in expected annual structural G&A savings upon full scaling.
- The program aims to transition select stores to dealer locations, enhancing long-term economics and enabling targeted capital investment in retail stores.

Fuel Margin Improvement and Channel Optimization:
- Fuel margin increased to $0.45 per gallon, up from $0.426 in the prior year.
- The company's wholesale segment experienced mid- to high-teen percentage operating income growth due to channel optimization, contributing more than 19 million gallons for the quarter.
- The improvement in fuel margin and channel optimization efforts supported profitability despite lower retail fuel volumes, which were down approximately 4%.

Loyalty Program and Merchandise Sales:
- Arko's loyalty program saw more than 38,000 new members in the quarter, with total enrollment reaching 2.35 million, up 10% year-over-year.
- Enrolled Fas Rewards members spent an average of 50% more and visited 3 more times per month than non-members.
- The program's effectiveness in driving sales and engagement increased during the quarter, especially with the implementation of the Fueling America's Future campaign.