Pantry calls halt to store purchases, exits hedging biz

摘要

The Pantry won't buy up any more small competitors for now - the company has put on hold acquisition plans, closed out its gasoline hedges, and is counting on ethanol to restore black ink to its bottom line. Pantry execs reported a net loss of $5.1 million for its second quarter last week, saying the red ink was largely due to mark-to-market losses on gasoline hedging positions. Unlike many peer companies, The Pantry reports on gasoline margins net of credit card costs. Were it not for hedging losses, it would have recorded gross fuel margins of 10.6cts/gal, slightly higher than second-quarter numbers for previous years. But when the company's hedging losses were spread over volumes at its 1,659-store network, about 1.6cts/ gal of the gross margin disappeared to paper loss. "Gasoline hedging did not perform as expected," CEO Pete Sodini noted, stressing that the company had concluded this practice as of May 5, with no plans to pursue any new hedges. The firm expects to take an additional after-tax charge of about $900,000 or 4cts/share to reflect hedging losses in the third quarter. In a call with analysts, Sodini cited "some real pressure on individuals' discretionary driving" and acknowledged that the squeeze was impacting merchandise sales across all categories. Fuel and inside sales numbers were both down 3.4% from the same quarter in 2007.