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CARY, N.C. -- The Pantry Inc. is on the hunt for convenience store acquisitions both large and small, CEO Dennis G. Hatchell said during the company's 2013 fiscal third-quarter earnings call this morning. The parent of Kangaroo Express is seeking locations that can add to or shore up its current Southeast markets.
"We've been studying our markets closely," the chief executive said on the call. "More stores have become suddenly available and we didn't want to pass up the opportunity."
The Pantry's main acquisition requirement is stores that are at least 2,500 square feet or ones that have the ability to be expanded to house a quick-service restaurant, according to Hatchell.
In the meantime, the company continues to remodel its existing Kangaroo Express stores. Thirty-one remodels were completed during The Pantry's fiscal third quarter, which ended June 27. For the entire 2013 fiscal year, 70 to 80 remodels are expected to be completed. In addition, two new Kangaroo Express stores should open by the end of September.
Hatchell also highlighted the retailer’s temporary Kangaroo Express location on the infield of the Charlotte Motor Speedway. For competitive reasons, he said he couldn't provide specific sales figures for the location that supports auto racing events at the speedway. However, he did note that he was very pleased with the store's progress and the subsequent brand recognition Kangaroo Express receives following high-profile racing events.
In fact, Cary, N.C.-based The Pantry is looking to replicate the temporary store's success in other locations, such as football stadiums, the chief executive noted.
As for earnings, The Pantry, which operated 1,562 convenience stores and gas stations as of June 27, achieved a net profit of $5.9 million in its latest quarter, compared to $14.8 million during 2012's fiscal third quarter. A drop in retail fuel margins -- which were 2.3 cents weaker than the same period one year ago -- was cited for most of the year-over-year earnings decline.
Inside the store, same-store merchandise sales improved by 1.3 percent. Excluding cigarettes, same-stores merchandise sales increased by a much healthier 3.3 percent. Hatchell singled out the performance of the foodservice category, which he said continues to roll along.
"Foodservice increased 6.9 percent in our third quarter," he reported. "Cold dispensed, grill and deli items were especially strong.
Kangaroo Express' RooCup summer campaign is also wildly successful this year, Hatchell concluded. The Pantry has sold more than 500,000 of the $6.99, 20-ounce fountain and frozen beverage cups since the campaign began in June, and cups have been refilled approximately 7 million times, he said.