The Pantry Inc., which operates more than 1,650 stores in the Southeast, has announced financial results for its fiscal fourth quarter and year ended Sept. 24, 2009.
Its net income for the fourth quarter was $13.3 million, or $0.60 per share on a diluted basis, compared with $22.9 million, or $1.03 per share in the prior year. EBITDA was $70.6 million, compared with $87.4 million a year ago. Retail fuel margin per gallon was 14.0 cents, compared with 19.2 cents a year ago.
“Our fourth quarter results were strong but below a year ago, primarily due to an abnormally favorable gasoline market in the fourth quarter of last year,” said Frank G. Paci, executive vice president and chief financial officer. “While we faced significant headwinds from a soft economic environment and increased tobacco taxes, an above-average gas margin and continued tight expense controls enabled us to report sharply higher earnings for the year.”
CEO Terrance Marks, who replaced former CEO Pete Sodini in September spoke during the quarterly earnings conference call about an aggressive strategy for 2010 that focuses three areas: technology (information systems), food offerings and meeting customer needs in its current stores.
First, the Pantry will invest in technology, installing a register point-of-sale system that gathers information about which products are being purchased and when. Currently, 400 stores have the new system, and the transition is expected to be finished by the summer.
Expanding food offerings is also a top priority. To-go dining options will get more focus as the store adds more quick-breakfast, lunch and snack options. New formats and products will be tested in the spring before being launched chain-wide. The Pantry will also add a quick service restaurant option to 25 more stores next year, which is more than double the 10 locations it added this year. Most of those restaurants will be Subway franchises.
Capital Allocation also will be changing. After an aggressive acquisition strategy under the previous CEO, in 2010 there will be fewer new stores and more investment on existing stores. ”New stores, both through acquisition and new construction will continue to play an important role in our long-term growth and we will be disciplined in our approach,” Marks said. “We believe, however, that the clearest investment opportunity before us today is our own stores, to improve their ability to meet consumer needs and drive sustainable shareholder returns over time.”
The addition of a new CEO also is poised to take the company in a new direction.
“I think Pete Sodini was more focused on acquisitions and growth versus brand image,” Morgan Keegan analyst Ben Brownlow, who follows the convenience store industry told the News and Observer. “I think what they need to really do is focus on the current store base they have and improving the customer experience within the stores.”