The Pantry's Progress

Chain reports strong fuel, merchandise sales increases ahead of Couche-Tard assimilation

The Pantry Dennis Hatchell (CSP Daily News / Convenience Stores / Gas Stations)

Dennis Hatchell

CARY, N.C. -- As Southeast convenience store chain The Pantry Inc. prepares to become a subsidiary of Laval, Quebec-based Alimentation Couche-Tard Inc. (click here for CSP Daily News coverage), it reported increased fuel and merchandise sales for its fiscal first quarter ended Dec. 25, 2014.

Due to the pending merger, expected to close by the end of March 2015, The Pantry is no longer issuing financial guidance and is withdrawing the previous financial guidance for fiscal 2015. The Pantry did not host a first-quarter earnings conference call.

"Our strong first-quarter results reflect continuing progress as we grew merchandise and fuel gross profit while controlling expenses," said Hatchell. "Improved merchandising effectiveness drove a 3.6% increase in comparable-store merchandise sales and a 5% increase in sales per customer. Fuel gross profit and comparable-store fuel volumes improved significantly as we benefited from our focus on fuel price management and a continued decline in fuel costs."

Net income for the quarter was $18.9 million. This compares to a net loss of $5.1 million in the same quarter last year.

Merchandise revenue in the first quarter of fiscal 2015 increased $11.2 million from the first quarter of fiscal 2014. Comparable-store merchandise revenue increased 3.6%, or $15.8 million driven by a 5% increase in merchandise revenue per customer.

The chain experienced stronger comparable-store merchandise revenue growth in packaged beverage products and proprietary foodservice categories. Cigarette sales, which have been declining for an extended period, strengthened during the quarter, contributing $2 million to the overall increase in merchandise revenues through a 2.6% increase in cigarette sales on a comparable-store basis. Merchandise revenue also increased $700,000 from the first quarter of fiscal 2014 as a result of new convenience store openings since the beginning of that quarter. These increases were partially offset by lost merchandise revenue from stores closed since the beginning of the first quarter of fiscal 2014 of $4.7 million.

Merchandise gross profit increased $5 million or 3.4% from the first quarter of fiscal 2014 primarily due to the increase in sales and a 30-basis-point improvement in merchandise margin to 33.8% from 33.5% in the 2014 period.

Continued on next page.

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