SANFORD, N.C. -- The Pantry was named the best-managed company in the Food Market category in Forbes magazine's America's Best Big Companies list, making the annual ranking for the first time.
Casey's General Stores joined The Pantry in the Food Markets category. This was its eighth appearance on the list. Marathon Oil (sixth time), Sunoco (eighth time) and Valero Energy (sixth time) made the list in the Oil & Gas category.
To compile the list, Forbes screened more than 1,000 corporations with $1 billion or more in revenues, [image-nocss] using metrics such as latest-12-month and five-year stock market returns, sales and earnings-per-share growth and debt-to-capital ratios. It used Thomson IBES consensus forecasts for long-term earnings growth; accounting and governance scores came from Audit Integrity of New York and Los Angeles to help weed out companies with potential problems. It assigned companies into 26 industries and ranked them against their industry peers on five-year and 12-month sales and earnings growth and total return to shareholders.
The magazine highlighted winners in various categories. Here is the complete feature on The Pantry:
Foodies may fawn over organic apples and peanut butter, but The Pantry earned a net income of $89 million on $6 billion in sales in fiscal year 2006 by selling cigarettes, beer, calorie-laden snacks and gasoline. The 1,500-store chain based in North Carolina is snapping up competitors, reinforcing its status as the dominant convenience store chain in the southeastern United States.
The Pantry gets over 70% of its sales from gasoline, but the real money is in the in-store merchandise, which grossed $518 million in profits this year, compared with $281 million from gas.
To bolster merchandise margins (37% this year, up 0.8%), The Pantry has added pricey items like private-label water, and has moved high-margin coffees to the front of the store to attract more attention. Food items from Subway and Quiznos have been added. And it's been converting all of its stores to a consistent brand called Kangaroo Express.
CEO Peter Sodini, who's held the job for a decade, is snapping up smaller competitors, most recently 24 Sun Stop stores for an undisclosed sum.
He's also building more new stores. The strategy carries some risk: The Pantry owes $843 million in leases and long-term debt, while shareholders' equity is only $337 million. Moreover, the Securities & Exchange Commission has been examining its accounting of sale-leasebacks.
Sodini says the company is cooperating, and maintains The Pantry makes better use of its capitals by putting it to work. The shop may not be gourmet, but it pays the bills.
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