Net Loss Widens for The Pantry
Retail fuel margins, gallons decline
CARY, N.C. -- Leading southeastern convenience store retailer The Pantry Inc. saw a net loss of $10.3 million for its fiscal second quarter ended March 27, 2014. This compares to net loss of $6.9 million in last year's second quarter.
Adjusted EBITDA was $36.2 million, down from $39.1 million a year ago.
Comparable-store merchandise revenue increased 2.3% even though challenging weather conditions constrained customer traffic.
Merchandise gross margin improved to 34% from 33.7% in the prior year quarter as packaged beverage and food service mix increased as a% of merchandise sales.
Fuel gross profit declined to $42.6 million from $48.4 million a year ago as wholesale fuel costs increased during much of the quarter putting pressure on fuel margins. Retail fuel margin per gallon decreased one cent from the prior year quarter to 10.7 cents per gallon. Comparable-store fuel gallons were down 3.2% and were also negatively impacted by weather during the quarter.
Store operating and general and administrative expenses were $151.1 million compared to $150.5 million a year ago. Second-quarter 2014 expenses included $1 million in proxy contest (see related story) costs related to the company's annual stockholders meeting held on March 13, 2014.
The second-quarter c-store portfolio activity included completing seven remodels, adding three new quick-service restaurants (QSRs) and closing four stores.
"We were encouraged with our second-quarter results even though they were affected by unfavorable weather," president and CEO Dennis G. Hatchell said. "Improved merchandising effectiveness drove a 3.6% increase in merchandise sales per customer as well as the 2.3% merchandise comparable store sales growth for the quarter. Despite continued progress inside our stores, lower fuel margins caused the year-over-year decline in adjusted EBITDA."
He added, "We remain focused on unlocking the company's potential as we build on the positive inside sales results and continue our efforts to improve fuel performance."
Based in Cary, N.C., The Pantry is a leading independently operated convenience store chain in the southeastern United States and one of the largest independently operated convenience store chains in the country. As of May 1, 2014, the company operated 1,534 stores in 13 states under select banners, including Kangaroo Express, its primary operating banner. The Pantry's stores offer a broad selection of merchandise, as well as fuel and other ancillary services designed to appeal to the convenience needs of its customers.