Although Alimentation Couche-Tard is reporting solid Q2 earnings, its same-store merchandise revenue is slumping in Canada.

For the quarter ended Oct. 9, net earnings were $810.4 million, up 16.6% year-over-year.

The Quebec-based convenience operator of Circle K is reporting its total revenues were $16.9 billion, up 19.7% from the same period last year, as a result of large 24% hikes in fuel revenues. By contrast, the company is reporting total merchandise and service revenues of $4.1 billion, up a more modest 2.3%, with CPG growth driven by carbonated soft drinks and energy drinks.

In Canada, same store merchandise revenue was down 1.5%, thanks to the “strongly” negative impact of the illicit cigarettes market, the company says. Same-store road transportation fuel volumes also decreased by 6.5% in Canada.

Couche-Tard president and CEO Brian Hannasch reports it had a solid quarter overall and “good performance” in convenience with favorable same store sales, and that he expects supply chain issues to mitigate over the upcoming quarters.

In this morning’s earnings call, Hannasch said the company is seeing solid in-store demand. He’s very pleased with the platform “Fresh, Food Fast” concept network, with sales up 20% across the whole network of 4,200 stores.

“It’s a good formula to work on,” Hannasch says, adding that fresh food is also having a halo effect across the store.

Other new programs it is working on is a loyalty program being piloted in the U.S. and in Europe that the company hopes to expand. Couche-Tard’s “Sip&Save” beverage subscription is also driving repeat trips and enhancing baskets, with 420,000 subscribers.

In the quarter, the company completed the acquisition of 218 sites within the Wilsons Gas Stops network, consisting of 79 company-owned and operated convenience retail and fuel locations, two company-owned and dealer-operated locations, 137 dealer-owned and operated locations, and a fuel terminal in Atlantic Canada.

In November, Couche-Tard also expanded its retail relationship with Fire & Flower in Ontario.