The Pantry Narrows 1Q Loss

CARY, N.C. -- The Pantry, the largest independently-operated convenience store chain in the Southeast, today reported a net loss of $12.2 million for its fiscal first quarter, ended Dec. 30, 2010. That compares to a net loss of $26.1 million for the first quarter of 2010.

The company noted that 2010 first quarter results were affected by impairment and other charges. Net loss was $5.8 million excluding the impact of those charges in 2010.

Other key facts released by the retailer include:

• Adjusted EBITDA was $31.3 million, compared to $40.3 million a year ago
• Comparable store merchandise revenue increased 1.3 percent
• Merchandise gross margin improved to 33.5 percent from 32.6 percent in last year's first quarter
• Fuel gross profit was $50.7 million, compared to $57.0 million a year ago
• Completed the 47-store Presto acquisition, using $47.6 million in cash

According to The Pantry's President and CEO Terry Marks, soft merchandise comparable store sales and low fuel margins resulted in keeping adjusted EBITDA below company's expectations.

"Merchandise sales performance was particularly weak in the latter half of December, which we believe was primarily driven by the severe winter weather that affected the Southeast," said Marks. "On a positive note, the sales performance of our Fresh stores continues to exceed expectations. We completed the Charlotte, N.C., store conversion process on schedule in December and are moving quickly to our next markets."

Comparable store merchandise sales in the first quarter increased 1.3 percent and 1.7 percent excluding cigarettes. Total merchandise gross profit for the quarter was $140.5 million, an increase of 3.1 percent from the first quarter a year ago.

Comparable store retail gallons sold in the first quarter decreased 5.2 percent. Retail fuel revenues in the first quarter increased 4.8 percent to $1.4 billion primarily as a result of the 12 percent increase in the average retail price per gallon to $2.81 from $2.52. Fuel gross profit for the first quarter decreased 10.9 percent compared to the same period a year ago, due to a decrease in retail fuel margin per gallon to $0.104 compared to $0.109 and the decrease in retail fuel gallons sold.

Total store operating and general and administrative expenses for the first quarter increased 4.6 percent to $160.0 million from the first quarter last year primarily as a result of strategic investments in advertising and category management capability to support the Program Fresh initiative and professional costs associated with the Presto acquisition.

The company remains comfortable with its liquidity position given the $132 million in cash on hand and approximately $106 million in available capacity under its revolving credit facilities as of Dec. 30, 2010.

Fiscal 2011 Outlook

The company updated the following guidance ranges for its expected performance (excluding potential acquisitions) in fiscal 2011, which is a 52-week fiscal year:

Year Ending September 29, 2011

Source: The Pantry

For more on the weather's impact on convenience store business, go to: CSNews Exclusive: C-stores Struggle Through Winter Mix

For more on The Pantry's Fresh initiative and its new corporate culture, go to: The Pantry's Cultural Revolution

For a video tour of one of The Pantry's first Fresh stores, go to: CSNews Exclusive: Opening The Pantry