Pantry Fuel Margins

Chain foresees challenges ahead for larger fuel picture

Angel Abcede, Senior Editor/Tobacco, CSP

CARY, N.C. -- Noting extreme price volatility in the past several weeks, officials at The Pantry Inc. have scaled back projected earning potential for fuels going into its fourth quarter.

During the company's third-quarter earnings call on Tuesday, Dennis Hatchell, president and CEO for The Pantry, said fuel gross profit decreased 16.3% in the third quarter of fiscal 2012 compared to the same period a year ago, primarily due to a reduction in retail fuel margin per gallon to $0.146 from $0.166 a year ago.

At the same time, retail fuel gallons sold in the third quarter of fiscal 2012 decreased 5% overall and 3.6% on a comparable store basis vs. last year's third quarter. Fuel gross profit was $67.1 million, compared to $80.1 million a year ago.

Based upon current fuel-price volatility, he said the company would be reducingits financial outlook for 2012, with the primary change being fuel margins.

The company is implementing a fuel-pricing technology that will be designed to track and project street postings, to be more responsive to market elasticity, Hatchell said, adding that the software is currently "learning" to do its job by building sales histories and collecting data.

Regarding fuels, Pantry officials also brought up the company's new supply agreement with San Antonio, Texas-based Valero Energy Corp., switching brands at stations formerly supplied by San Ramon, Calif.-based Chevron. The change is scheduled to be completed in three months, he said.

Crediting the more agreeable co-branding agreement, Hatchell said it wants to maintain "the prominence of the Kangaroo brand wherever possible."

See Related Content below for more details on The Pantry's third-quarter earnings call.

In other company news, The Pantry said it will donate $1 to the USO of North Carolina for every "Like" received on the Kangaroo Express Facebook page from August 6 to August 17, up to $10,000, as part of its "Salute Our Troops" campaign. The campaign is inviting guests in The Pantry's more than 1,600 Kangaroo Express stores across 13 states to demonstrate united support for military personnel and families all summer long.

More than $1.5 million has already been donated by generous individuals at Kangaroo Express checkout counters, with Charlotte, N.C., leading the funds raised in a single market.

Donations from the campaign will support the USO, lifting the spirits of America's troops and their families; Wounded Warrior Project, honoring and empowering injured servicemen and women; and six state-based military support organizations, including the USO of N.C.

A Salute Our Troops Caravan, traveling to Kangaroo Express stores through the Southeast to raise awareness for the campaign.

"After the generosity and enthusiasm our guests and employees have shown to the Salute Our Troops campaign, donating $1 for every new Facebook supporter is just one of many ways Kangaroo Express is showing its appreciation," said John Fisher, senior vice president of marketing, merchandising and restaurant operations at Kangaroo Express. "It is our honor to donate to the USO of N.C. with the support of our fans, especially as the Salute Our Troops Caravan makes its way into North Carolina--the shared backyard of the USO of N.C. and Kangaroo Express."

Celebrations also include custom patriotic vehicles and the Salute Our Troops Command Center, where store guests can add their own voice of gratitude with video "shoutouts" of pride and appreciation.

To join the Salute Our Troops campaign and have $1 donated to the USO of N.C., customers visit, log in to Facebook and "Like" the page.

Based in Cary, N.C., The Pantry Inc. is an independently operated c-store chain in the southeastern United States and one of the largest in the country. As of August 6, 2012, the company operated 1,589 stores in 13 states under select banners, including Kangaroo Express, its primary operating banner.

Angel Abcede, CSP/Winsight By Angel Abcede, Senior Editor/Tobacco, CSP
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