Coming Off the Sidelines
Newly flush with cash, the Pantry ready to get back in acquisition game in 2009
SANFORD, N.C. -- The Pantry's cautious stance in early 2008 could pay off in the next year as the company prepares to reenter the acquisition game as a leaner company. "Between organizational restructuring at the beginning of the year and a variety of other measures to reduce costs through out the year, we've reduced expenses by $26 million from the point of our initial 2008 guidance," chairman and CEO Peter Sodini told analysts on a conference call yesterday before announcing, "We're back in the acquisition market, but we're cautiously in the acquisition market."
Eight [image-nocss] months after shutting the door on anymore acquisitions in calendar year 2008, Sodini said the key is back in the lock and the door could be reopened in the first quarter of 2009.
"I wouldn't be surprised if something happened in the first couple months [of 2009]," he said. "It's just a gut feeling; when people come off a good quarter, their expectations rise."
Not that The Pantry ever took its eye off of potential acquisitions, Sodini said.
"We announced last spring we would be getting out of acquisitions through the end of calendar year, and we did that," he said. "We did not, however, cut ourselves off from the world and say we won't look at anything, because if nothing else, you glean what's available [and] what kind of multiple expectations sellers have. We've stayed in contact with the marketplace."
Sodini added, however, that reentering the acquisition pool won't necessarily come in the form of a cannonball.
"By saying that we are now interested in looking at things, we don't want to convey the impression that we're out there looking for a 700- or 800-store acquisition," he said, "but more staying in tune with the marketplaces and looking at individual stores or small pockets of stores that fit into an existing market that we're already present in and have a critical mass."
Sodini's announcement came as The Pantry unveiled positive financial results for the fourth quarter of its fiscal 2008, which he described overall as an "unprecedented year."
"[It's] unprecedented particularly from the perspective of cost volatility," he said. "Despite this incredibly challenging environment, we closed our fiscal 2008 on a strong note, with fourth-quarter earnings per share of $1.03, up sharply from 25 cents a year ago."
See related story in today's CSP Daily News for a complete summary of The Pantry's fourth-quarter earnings.