(Radio Iowa) – The Ankeny-based Casey’s convenience store chain reports a strong second quarter. Casey’s C-E-O, Darren Rebellez, spoke during a conference call Wednesday with investors. “Inside Sales remained strong despite the challenging economic environment, frightening inside gross profit up almost nine percent to almost 504 million dollars. The company generated 138 million in net income, an increase of 42 percent,” according to Rebellez. He says some easing of supply issues helped with the sale of prepared foods. “Sales were up due to strong performance and pizza slices and whole pies, as well as cold dispensed beverages. We had better product availability in both cups and doughnuts, which led to improved performance within the bakery and dispense beverage categories,” he says.

Inflation continues to be an issue with supplies and Rebellez says cheese costs in particular have been up 14 percent. He says they have had to offset some of that with price increases. “In about the last 14 months, we’ve taken for different price increases. We’ve tried to keep pace to a certain extent with inflation, but but we’re also trying to balance that with our relative value proposition to our guests,” Rebellez says. He says they feel like they’re striking the right balance in adjusting prices for now.  “We continue to keep an eye on on those commodity costs. And when we think those are a little more permanent in nature, than we’ll take pricing action to offset that,” he says. ” But right now, it’s, it’s fairly volatile. And what we don’t want to do is raise prices too much — and then have to whipsawed the customer and go backwards.”

The company continued to make a generous margin on gas sales of 40-and-a-half cents. Rebellez says they make more profit on gas when prices are falling than when they are going up.  “Right now, since really the beginning of October, we’ve experienced a steadily declining wholesale environment, so you would expect those margins to expand,” Rebellez says. “What I would remind everybody of is that we saw the same thing happen last year. In the month of November last year, wholesale costs drop 40 cents a gallon. And then over the next two months, they rose 60 cents a gallon. It’s a dynamic environment.”

Their total gallons increased around three percent compared to last year due to an increase in the number of stores. The same-store gallons sold were down two-point-three percent compared to last year.