Montreal — Alimentation Couche-Tard Inc. said Thursday its first-quarter profit rose because of its expansion in the U.S. Midwest and higher margins.

Canada's biggest convenience store operator said that in the quarter ended July 21 its net earnings were $20.1-million or 23 cents a share up from $14-million or 18 cents a share in the year-before quarter.

Three analysts polled by research firm Multex were expecting an average profit of 22 cents a share.

Sales across its network of 2,245 stores in Canada and the United States were $680.9-million, up from $516.1-million in the same quarter of the previous year, the company said in a statement.

Same-store merchandise sales in Canada rose 7 per cent, while same-store sales of gasoline rose 7.3 per cent.

Couche-Tard recently closed the purchase of 287 Dairy Mart stores in Ohio, Kentucky, Pennsylvania, Michigan and Indiana for $79.5 million.

Couche-Tard president and chief executive Alain Bouchard, said the new Dairy Mart stores should add $700-million in sales and 2 cents a share in profit in the fiscal year ending next April. Bouchard expects Dairy-Mart to add 8 cents per share to the company's 2004 earnings.

The company said its long-term debt is $190.6-million, up from $172.3-million a year ago, while its debt-to-equity ratio is 48 per cent.

"Couche-Tard is therefore well positioned financially to integrate its latest acquisition and pursue its expansion in North America," Mr. Bouchard said in a release.

Mr. Bouchard's goal is to expand the company's Midwestern U.S. network, now counting 545 stores, to 1,000.

Couche-Tard class B stock, which has traded in a 52-week range of $7.75 to $17.63, was down 17 cents at $16.21 on the Toronto Stock Exchange Thursday morning.