SANFORD, N.C. -- An investor that owned 7.5% of The Pantry Inc. as of December 31 has cashed out its stake in the company, said The Triangle Business Journal. New York City-based Hayground Cove Associates LLC sold its last remaining shares in the convenience retailer on April 14, said the report, citing documents filed with the Securities & Exchange Commission (SEC). The move came days after The Pantry said it would post a loss for the quarter ended March 27. The company, which operates throughout the Southeast, has been hit by soft consumer spending and lower margins on its gasoline, it [image-nocss] said.
Shares of the Pantry lost nearly half of their value over the next two days, the newspaper reported, closing April 10 at $11.35, which it said is well off the company's 52-week high of $48.96.
The Pantry also faces a possible downgrade of its credit rating from Moody's, said the report. The company's low earnings and increased debt have put the company's B1 credit rating—four steps below junk-bond status—in jeopardy, according to Moody's.
As of May 2007, Hayground Cove Associates owned 722,935 shares of The Pantry, valued at about $32 million, according to the SEC.
Blaming the downturn on abysmal March weather along with static consumer disposal income, The Pantry Inc. said Wednesday that retail merchandise and fuel sales during second-quarter 2008 each dropped 3.4% from like-period 2007. In a conference call with analysts, chairman and CEO Peter J. Sodini said that "while we were pleased with our merchandise margin and continued progress in controlling expenses, we are disappointed with our gasoline gross margin and the initial losses in our hedging positions."
Sodoni added that "given a return to historical gasoline and oil market fundamentals, we believe these positions should contribute positively to our gas margin in the second half of the year. As a result of the weaker than expected results, we are trimming our net capital spending target for fiscal 2008 by $20 million to $110 million."
Overall, the organization expects to report a loss for the quarter—one that has not historically generated positive results for the chain—of between 24 and 30 cents per share.
(Click here for full CSP Daily News coverage of the Pantry's most recent results.)The Pantry, Sanford, N.C., has 1,643 stores in11 mainly southeastern states, operating largely under its Kangaroo Express banner.
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