The Pantry CFO downbeat about consumer spending
The Pantry, Inc. (Nasdaq: PTRY) CFO Frank Paci said the company has lower expectations for fiscal 2008. Paci made the comments during a conference call.
“Given the deterioration of U.S. consumer spending over the last couple of months, we now believe our comparable-store gas gallon and merchandise sales may be below our previous estimates,” Paci said.
Going forward, The Pantry announced in a press release that it now expects fiscal 2008 gas and merchandise sales below previous expectations due to weak consumer spending. The firm expects fiscal 2008 merchandise sales of between $1.6 billion and $1.7 billion and gas gallons sold to be between 2.1 billion and 2.2 billion gallons.
The company has also become involved in distributing ethanol at its gas stations. Pantry receives a $0.51 per gallon federal tax break for blending ethanol, CEO Peter Sodini said.
“It remains to be seen how much of a longer term benefit we’ll realize from this program,” Sodini said. “We continue to pursue the rollout of ethanol at additional stores and we’re working to overcome the logistical challenges presented by a lack of ethanol infrastructure in the southeast.”
The chief executive also said Pantry’s board has authorized the Sanford, N.C.-based company to begin hedging energy costs.
“At this point, we have no hedges in play,” Sodini said. “We continue to study alternatives.”
Before the opening, Pantry posed second-quarter net income of $3.2 million, or $0.15 per share, up substantially from $0.1 million, or $0.01 per share, a year earlier. Analysts were expecting, on average, earnings of $0.13 per share.
“We’ve obviously struggled a bit with the gasoline market over the last four or five quarters, but we continue to remain very confident in Pantry’s fundamental long-term strength,” Sodini said. “We’re the leading regional player in the southeast and clearly have the financial resources to continue executing our business model.”
Quarterly revenue totaled $2 billion, up 43% from $1.4 billion during the prior-year period. The results were in line with Wall Street analysts’ projection of $2 billion in revenue.
In midday trading, PTRY shares are down 2.04%, or $0.60, at $28.81. Over the last 52 weeks, shares have ranged from $23.99 to $51.57.
