INDIANAPOLIS -- Village Pantry, the 160-unit convenience store chain owned by financially beleaguered Marsh Supermarkets Inc., has named Douglas W. Dougherty as senior vice president, chief financial officer and treasurer following the resignation of John Elbin from these positions on December 6. Dougherty served as the company's CFO for more than 10 years until he retired in May 2005, when he was succeeded by Elbin.
The change follows a report in late November that Marsh could be placing some, if not all its assets, up for sale. As reported in CSP Daily [image-nocss] News, the company said it has retained Merrill Lynch & Co. to investigate strategic alternatives, including a possible sale, after it reported a net loss of $3.4 million for the second fiscal quarter ended October 15.
We are clearly disappointed with the loss reported for the quarter, said Don E. Marsh, chairman and CEO of the Indianapolis-based retailer. The positive developments of recording our sixth consecutive quarter of increases in sales from comparable stores and the new credit facility were outweighed by a number of negative factors.
He added, During the past several months, management has been working diligently to reduce costs during a time of increasing competition, and while we believe our initiatives will improve profitability, our responsibility is to consider the best interests of our employees, the communities we serve and, above all, our shareholders. One of the strategic alternatives that we believe should be considered would be the possible sale of the company to the right party. For this reason, we have authorized Merrill Lynch to investigate the potential of such a transaction as an integral part of our considerations.
Total revenues for the quarter increased to $549.6 million from $524.9 million for the prior year quarter. Sales in comparable supermarkets and convenience stores increased 3.6% in second-quarter 2006 from the same period in 2005, but comparable store merchandise sales, which exclude gasoline sales, declined 0.7%. The company excludes gasoline sales from its analysis of comparable store merchandise sales because retail gasoline prices fluctuate widely and frequently, making analytical comparisons difficult, it said.
Marsh also announced that its board has suspended the payment of future cash quarterly dividends on common stock until the company improves its financial performance and its credit ratios on a sustainable basis.
The company added that on Nov. 9, 2005, it entered into a new five-year $95 million revolving credit facility with a group of lenders led by Bank of America. The new credit facility is secured by eligible receivables, inventory, certain real estate and other fixed assets. The company borrowed approximately $51 million to repay the previous credit facility that was scheduled to expire in February 2006. The agreement for the new credit facility contains covenants and events of default that are customary for a credit facility of this kind.
Marsh said the company believed that Elbin did not resign as a result of any inaccuracy in the company's financial statements, but rather because he disagreed with other members of senior management on actions to improve the company's results of operations and financial condition. The company indicated Elbin's departure would not change its previously announced plans to pursue strategic alternatives.
Marsh is a leading regional food retailer, operating 70 Marsh supermarkets, 38 LoBill Foods stores, 8 O'Malia Food Markets, 160 Village Pantry c-stores, two Arthur's Fresh Market stores and one Savin$, in Indiana and western Ohio. The company also operates Crystal Food Services, which provides upscale catering, cafeteria management, office coffee, coffee roasting, vending and concessions, and restaurant management and Primo Banquet Catering and Conference Centers; Floral Fashions, McNamara Florist and EnfloraFlowers for Business.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.