Pantry CEO Talks Up Its Board of Directors Nominee
CARY, N.C. -- Thomas W. "Tad" Dickson, former CEO of Harris Teeter Supermarkets Inc., is a perfect choice for The Pantry Inc.'s board of directors, President and CEO Dennis G. Hatchell stated this morning during the company's 2014 fiscal first-quarter earnings call.
The nomination of Dickson is perhaps in response to the establishment of Concerned Pantry Shareholders (CPS), a group led by Houston investment groups JCP Investment Management LLC and Lone Star Value Management LLC, which combined owns 1.9 percent of The Pantry's outstanding shares.
CPS nominated Todd E. Diener, James C. Papas and Joshua A. Schechter to the Pantry's board last week. The operator of Kangaroo Express convenience stores quickly responded that CPS' three nominees "do not possess the particular experience and expertise that the company is seeking in director candidates at this time."
Dickson does possess such expertise, The Pantry stressed in a recent news release. He served as CEO of Harris Teeter, a chain of more than 200 Southeast and Mid-Atlantic supermarkets, from 1997 until the company's sale to The Kroger Co. earlier this month. "Tad has significant retail experience in the Southeastern U.S.," Hatchell said on today's earnings call. "We look forward to the guidance he can provide."
A vote to approve Dickson as a board member will take place at The Pantry's annual meeting on March 13.
Hatchell did not address CPS by name during today's call, nor did he respond to the dissident group's claims that The Pantry's current board has presided over a "prolonged period of underperformance," in its stock and that it "continues to lack a strategically coherent plan to stop the value destruction."
Surprisingly, no financial analyst questioned The Pantry about CPS during the question-and-answer portion of the earnings call.
The Pantry did, however, receive plenty of questions about its financial performance. The c-store operator reported a net loss of $5.1 million for its 2014 first quarter ended Dec. 26, vs. a loss of $3.1 million in the same period last year.
Same-store fuel comparables, increased operation and administration expenses related to the Patient Protection and Affordable Care Act, and an increase in facility expenses were cited as reasons for the wider year-over-year loss.
On a positive note, in-store merchandise sales rose 3.5 percent year over year, The Pantry's best quarterly growth since its 2012 third quarter. "Our grill, deli and fresh-food offerings have been very strong," stated Hatchell. "Our foodservice results are very encouraging."
The CEO added that merchandise sales are up another 1 percent thus far in its 2014 fiscal second quarter. A Roo Mug coffee promotion, where customers purchase the mug for $1.99 and receive 99-cent refills, has been a top seller with the Southeast experiencing much colder than expected temperatures throughout the month.
"This especially sells well on a day like today, where it's 9 degrees [at out headquarters] in Cary, N.C.," relayed Hatchell.
As for fuel sales, comparable store fuel gallon sales slid by 4 percent and fuel gross profit was $48.7 million in The Pantry's latest quarter, a decline of $500,000. These figures were partially offset by a retail fuel margin per-gallon increase of 4 cents in the company's latest quarter.
"We are certainly not pleased with our fuel comps," Hatchell acknowledged.
During its fiscal first quarter, The Pantry completed 28 store remodels and closed 11 underperforming stores. As of Dec. 26, the company operated 1,538 Kangaroo Express locations in 13 states, compared to 1,572 one year prior.
In addition, The Pantry opened four new quick-service restaurants in its 2014 Q1. Three of these are Little Caesar's restaurants.
Despite closing some stores, Hatchell noted that The Pantry is actively seeking acquisitions. "We've had several acquisitions presented to us," he said. "We have several in our markets that are of interest. They are small [potential acquisitions], but of interest to us."