SANFORD, N.C. -- The Pantry Inc. has announced financial results for its second fiscal quarter ended March 29, 2007. Total revenues for the second quarter were approximately $1.5 billion, a 10.7% increase from last year's second quarter. Net income was $8.4 million, or 36 cents per share on a diluted basis, compared with $9.2 million, or 39 cents per share, a year ago.
Results for the second quarter of fiscal 2007 include a gain of approximately 13 cents per share from an insurance settlement relating to prior year's hurricane claims, as well as charges [image-nocss] totaling approximately four cents per share, primarily related to a previously disclosed class-action lawsuit.
Merchandise revenues for the quarter were up 11.7% overall and 2.7% on a comparable-store basis, on top of a 5.4% increase a year ago. The merchandise gross margin was 37.7%, up 10 basis points from a year ago. Total merchandise gross profits for the quarter were $136.2 million, a 12.1% increase.
Gasoline gallons sold in the second quarter increased 11.8% overall and 0.8% on a comparable-store basis, on top of a 4.0% increase a year ago. Total gasoline revenues rose 10.3%. The average retail price per gallon decreased 1.3%, to $2.29. The gross margin per gallon was 11.4 cents, compared with 11.1 cents a year ago. Gasoline gross profit for the quarter totaled $54.8 million, a 15.7% increase from last year's second quarter.
While total gross profit for the quarter was up 13.1%, operating, general and administrative expenses (excluding the unusual items discussed above) increased 16% from a year ago, reflecting integration costs related to newly acquired stores, professional and consulting fees and certain store variable expenses. In addition, substantially higher net interest expense and depreciation and amortization charges related to the company's acquisitions this year affected results for the quarter.
Chairman and CEO Peter J. Sodini said, We are disappointed with our bottom line for the second quarter, which primarily reflects the unprecedented concentration of acquisition-related activity during the period; however, we are pleased with the continued solid performance of our merchandise operations in the quarter, despite sluggish retail sales trends in several of our key regional markets. In addition, margins in our gasoline business were above the seasonally strong year-ago levels, and significantly improved from our first fiscal quarter. Finally, we believe our year-to-date acquisitions have positioned the company for stronger growth in the quarters and years ahead.
For the first six months of fiscal 2007, total revenues were approximately $2.8 billion, a 7.8% increase from the first half of fiscal 2006. Net income for the six months was $8.5 million, or 37 cents per share, compared with $42.2 million, or $1.84 per share, in the corresponding period last year.
Including a number of small transactions early in the third quarter, the company has now acquired or agreed to acquire 152 stores so far this fiscal year, well above the total of 113 stores for fiscal 2006. The largest acquisition this year was the purchase of 66 Petro Express stores in North Carolina and South Carolina, which was completed in early April. The company also has opened seven new large format stores so far in fiscal 2007, with plans for a total of approximately 18 openings for the full year.
Sodini concluded, While we still expect a stronger bottom-line performance in the second half of our fiscal year, we are lowering our guidance for fiscal 2007 earnings per share to $2.30 to $2.40. Our guidance includes the 152 stores acquired or agreed to be acquired, increased interest expense primarily from acquisition related financing and a charge of approximately $2.1 million, or six cents per share, for deferred financing costs in connection with the refinancing of our credit facilities expected to close in May 2007. Although we almost certainly will fall short of last year's unusually strong results, we have made significant strategic progress this year, strengthening our position as the Southeast's leading convenience store operator and enhancing our longer-term earnings power.
As of April 25, 2007, Sanford, N.C.-based The Pantry, with revenues for fiscal 2006 of approximately $6 billion, operated 1,638 stores in 11 states under select banners, including Kangaroo Express, its primary operating banner.
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