The Pantry Inc. announced that it has mailed definitive proxy materials in connection with its 2014 Annual Meeting of Stockholders, in which it urged stockholders to vote for its nine “highly qualified and experienced director nominees.”
The 2014 Annual Meeting of Stockholders is set for March 13.
The nominees are Robert Bernstock, Thomas Dickson, Wilfred Finnegan, Kathleen Guion, Dennis Hatchell, Edwin Holman, Terry McElroy, Mark Miles and Thomas Murnane.
“Your Board of Directors and management team are focused on creating value for all stockholders of The Pantry through the continued implementation of our strategy, which balances prudent cost management with targeted initiatives to strengthen The Pantry’s presence in high-value, high-demand markets. Since 2012, when your Board installed the company’s leadership team led by President and CEO Dennis Hatchell, The Pantry has successfully executed plans to improve performance and unlock the potential of our powerful convenience store platform. We have made significant progress and we are confident that The Pantry is well positioned for continued growth and success,” wrote Edwin Holman, chairman of the board and Dennis Hatchell, president and CEO.
A dissident stockholder group, led by JCP Investment Management LLC, is attempting to replace some members of the board with handpicked nominees.
“Consistent with its fiduciary duty, your Board is always open to considering qualified director candidates. In fact, as was clearly communicated to the dissident stockholders, your Board is currently seeking an additional director with significant senior management experience in the fuels area to assist the Board in its oversight of this important area. After evaluating the individuals that the dissident group has put forth, your Board concluded that none of the dissident group’s nominees possess the particular experience and expertise required to serve on The Pantry’s Board at this time or to further the interests of all stockholders,” the letter noted.
The letter also noted that The Pantry has been successful in executing its strategy to drive stockholder data.
“Following an in-depth strategic and operational review that culminated in October 2013, the company’s leadership, with the support of a globally recognized consulting firm, identified key areas of focus through which to create meaningful value for our Company and all stockholders, including sales growth initiatives, strategic store enhancements, acquisitions and thoughtful expense management,” the letter noted.
Highlights of The Pantry’s accomplishments include:
Attracted leading talent to The Pantry to further strengthen operational management, The Pantry noted it has taken decisive action to grow a best-in-class management team.
• In March 2012 it appointed Dennis Hatchell, an industry veteran with more than 40 years of retail and distribution experience, as President and CEO.
• Since Hatchell’s appointment, it has significantly strengthened its bench of executive talent with the addition of a new CFO, Chief Merchandising Officer and VP of Real Estate and Business Development.
• Most recently, it appointed a Chief Information Officer in January 2014 to ensure that The Pantry operates at the forefront of technological innovation in its industry.
• The company increased same-store sales through an enhanced merchandise mix and effectiveness. The Pantry has refocused its merchandising strategy to emphasize localization and targeted advertising and promotions, including adding local merchandising programs in more than 900 stores across its footprint; driving sales increases through the use of more consistent and competitive fuel and cigarette pricing, localized product offerings and initiatives designed to increase traffic from the pump to the store.
• The Pantry has invested in technology to support pricing optimization and made strategic investments in technology and cost management tools in order to improve fuel pricing and minimize the impact of volatility, including implementing state-of-the-art fuel pricing software and have installed electronic fuel price signs in nearly 1,000 stores, with plans to add 150 more in fiscal 2014.
• The company has also prudently managed expenses and reduced debt. The Pantry’s Board and management team have steadily reduced costs throughout the organization, giving the company a stronger balance sheet and providing additional liquidity to reinvest in our business.
• The Pantry has embareked on a significant store remodeling program, enhanced proprietary foodservice and added quick-service restaurants in existing stores. The company has a significant remodel program underway and is rapidly increasing its number of quick-service restaurants (QSRs). The remodels support our plans to grow proprietary foodservice revenue and, when combined with the QSR additions, to expand our overall mix in the high-growth, high-margin foodservice category.
In fiscal 2013 the company completed 72 store remodels and opened eight new QSRs. The Company intends to build on this momentum into 2014 with additional remodels and more than 20 QSR build-outs.
• The company also utilized new store opportunities and acquisitions to accelerate growth and strengthen The Pantry’s competitive position in key markets.
The company’s achievements include:
• Positive growth in same-store merchandise sales for eight of the last nine quarters, as average revenue per customer has steadily improved;
• Rapid growth in proprietary foodservice revenue;
• Implementation of management disciplines and technology to aggressively address our fuel market share underperformance; and
• Steady reduction of total debt.
“The Pantry’s leadership has the right vision for a successful future, and is pursuing the right opportunities for growth through a thoughtful balance of investment and cost management. Under the direction of an outstanding management team and the oversight of an engaged and knowledgeable Board, the Company is solidly positioned to continue delivering results and creating value for all stockholders,” the letter noted. “Your Board has nominated nine highly qualified directors who together possess significant retail, convenience store, consumer packaged goods, foodservice and financial experience that is highly relevant and critical to the business. Of the nine nominees, eight have direct experience working in the retail and/or convenience store industries, and seven have executive management experience at Fortune 500 companies.”
The letter knocked the dissident group, saying it has been unable to demonstrate how their director nominees would do anything to improve the value of shareholders’ Pantry investment. “From a strategic perspective, the dissident group has also shown that it would rather create problems than propose solutions. Despite our repeated attempts to engage with the dissident group to better understand their views as to how they might propose to enhance value for all stockholders, to date the dissident group has not provided any constructive suggestions about improvements to the company’s strategy,” the letter said, adding, “Your Board and management team are making important and significant progress on our strategic plan and have positioned The Pantry well for sustained and profitable growth.”