SANFORD, N.C. -- The slow economy has The Pantry looking closer at a new aspect of its business that it seldom gave much attention to in its quarterly reports: diesel fuel. "With the slowing economy, truck traffic was down significantly, and our diesel gallons were down 18.3% in quarter one," chairman and CEO Peter Sodini said. "This decline contributed 150 basis points to the decline in our total gasoline gallon comps."
Sodini, speaking on a first-quarter earnings call with analysts earlier this month, added, "We've never dealt with diesel specifically in terms of [comparable-store [image-nocss] sales.] We felt compelled to do it this time because of what's happening with truck traffic as relates to the slowing economy... If you look across the country, at least from the people I've talked to, a 17% [decline] is not that unusual of a number for diesel, but that's a big number."
Berry Epley, vice president and corporate controller, said The Pantry has about 1,000 stores that sell diesel fuel, about 200 of which are considered high-volume diesel sites.
"We never offered [a store-comp] number before because it wasn't a big number," he said, "but as we started looking at the business, it's one of these things that could be a leading indicator in terms of the economy because obviously, if you're shipping less goods, you're seeing a big decrease in truck traffic."
He added, "The other thing that's interesting about it is, because the average fill on that is huge, it has a big impact in gas gallons but doesn't have nearly as big an impact on the merchandise side because, per-trip, you're talking about a much-bigger purchase than what you're doing to fill up a car."
Epley added that diesel fuel margins have averaged about 5 cents per gallon, compared to gasoline's average 25.8 cents per gallon in the company's fiscal first quarter of 2009.
Click here to read a complete report on The Pantry's first-quarter report.
Based in Sanford, N.C., The Pantry is a leading independently operated convenience-store chain in the southeastern United States and one of the largest independently operated c-store chains in the country, with revenues for fiscal 2008 of approximately $9 billion. As of Feb. 3, 2009, the company operated 1,648 stores in 11 states under select banners, including Kangaroo Express, its primary operating banner.
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