The Pantry rolls out a new coffee program, more fresh food options and a new look for stores to help offset lower profit margins on fuel.
Cary, N.C.-based The Pantry Inc. announced a loss of $12.2 million, or 54 cents per share, in its first quarter ended Dec. 30, the News and Observer reported.
Last year during the same quarter, the company reported a loss of $26.1 million or $1.17 per share.
The Pantry, one of the Triangle’s largest publicly traded companies, is seen as a marker of the state of the broader economy because its health is tied closely to consumer and business spending, especially at the gas pump, the News and Observer noted.
During the quarter, gas prices crossed the “psychologically important threshold of $3 per gallon,” said CEO Terrance Marks on a conference call with analysts earlier this week. “Rising fuel prices have their greatest impact on that segment of the population that is struggling to make ends meet,” he said. “Many of our markets in the Southeast continue to see declining housing values—and consequently—less housing construction.”
Winter weather during the month of December also hurt store sales. At stores that have been open at least two years, sales were up 9 % for the first 10 weeks of the quarter, but suffered a dip of 1% during the final three weeks when winter storms wreaked havoc on The Pantry’s territory. Despite the lower-than-expected results, the company’s stock still grew $1.29 to close at $17.04 on Tuesday. The shares are down about 30% since September.
For the quarter, profits from fuel were down 10.9% when compared to the same quarter in the previous year, while the average price per gallon rose 12%. The number of gallons of gas sold by The Pantry was down 5.2%.
Pantry executives said the company is moving ahead with initiatives to offset lower profit margins on fuel.
For example, the company is focused on growing its foodservice program by adding more fresh food options, as well as debuting a new look to its stores, with the goal of having 400 renovated stores by the end of the year. The company also rolled out its new Bean Street Coffee brand. Merchandise sales, which account for about 80% of the company’s gross profit, were up 1.3% for the quarter.
“We are quickly taking action to respond to our current business challenges,” Marks said.