MONTREAL -- Challenging economic conditions in Western Canada continued to weigh down on Alimentation Couche-Tard in the third quarter, despite the addition of 278 former Esso locations in Ontario and Quebec, the company said Tuesday.

Merchandise revenues from stores open for at least a year decreased by 0.9 per cent as a result of the region's struggling economy, while same-store fuel sales were off 0.8 per cent, the convenience store operator said.

Still, Couche-Tard (TSX:ATD.B) reported higher overall net income as revenue rose 22 per cent, largely due to its operations in the United States and Europe.

The Laval, Que.-based company said it earned US$287 million or 50 cents per share in the quarter ended Jan. 29, up from US$274 million or 48 cents per share in the comparable period last year.

Adjusted earnings were 53 cents per share, about the same as last year, but well below analyst forecasts of 66 cents per share, according to Thomson Reuters.

Revenue at the company, which reports in U.S. currency, rose to $11.4 billion from $9.33 billion a year earlier.

"Notwithstanding the headwinds seen in the overall retail industry during the quarter, we continue seeing positive results," CEO Brian Hannasch said in a news release.

Shares of Couche-Tard fell five per cent at C$58.71 in afternoon trading on the Toronto Stock Exchange after analysts described the results as disappointing.

Despite lower-than-anticipated margins in the U.S., overall fuel volumes grew 15.7 per cent from acquisitions and growth in existing operations outside Canada.

Couche-Tard's banners in Canada include Mac's, though it's switching to Circle K as its global brand everywhere but Quebec, where Couche-Tard will remain the company's main banner.

Hannasch said the company is accelerating the pace of its rebranding to Circle K, which now accounts for more than 1,000 stores in North America and 910 in Europe.

With the acquisition of Esso stations complete, Couche-Tard is anticipating the closing of the US$3.4-billion purchase of CST Brands to be finalized in the summer, a few months later than previously forecast.