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CARY, N.C. -- The Pantry Inc. is in the "final stages of the selection process" for a new CEO and could name one in the near future.
"Considering I'm taking part in this call means I remain as interim CEO," Edwin Holman, who also serves as The Pantry's chairman, said during the convenience store chain's earnings conference call this morning. "The search [for a new CEO] is going nicely."
Holman however did not discuss who the finalists for the CEO role were. But he did say that the selected candidate would be a "terrific leader with a merchandising and operational background. All of the candidates we are looking at also have foodservice experience."
Whomever The Pantry selects as CEO will be implement the chain's just completed five-year plan. The Pantry has been evaluating its entire store network and has determined it would like to lease about 10 percent of its stores to independent operators. According to Mark Bierley, The Pantry's CFO and senior vice president, that equates to the company leasing about 35 to 40 stores to independent operators by the end of 2012.
"We expect 2012 to be a transitional year," he said. "But we have a solid cash position on hand [$150.7 million] that makes us believe we will get through it well."
"We've really been looking at what the right number of stores for us is moving forward," added Holman.
As for The Pantry's earnings, the parent company of Kangaroo Express stores lost $2.9 million during its 2012 fiscal first quarter, which ended Dec. 29. That compares to a $12.2 million loss during the same quarter in fiscal 2011.
According to Holman, the weakest segments of The Pantry's business were fuel and cigarette margins. Twenty-five percent of the c-store chain's stores had positive comparable store fuel margins for the latest quarter, while 75 percent of The Pantry's locations did not, said Bierley.
"Our main goal is to improve comp [comparable] store margins," said Holman. "Gasoline sales provide a challenge. Fuel demand is down. Margins have declined since mid-December. No data has suggested fuel demand will improve in the short term."
Another challenge is separating itself from increasing competition from other chains and independent operators. "In North Carolina, South Carolina and Florida, there are 19,000 stores," said Bierley. "The challenge is to differentiate ourselves."
On the bright side during the past quarter, foodservice was clearly The Pantry's shining star. Foodservice sales were up 17 percent and the c-store chain has now employed its Fresh concept at more than 380 stores. A new bakery component and fresh sandwiches were both considered successes during The Pantry's fiscal first quarter.
"We really want to expand on the Fresh concept during 2012," said Holman.