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    The Pantry Releases Outlook for Fiscal 2013

    The Southeast chain is rolling out a new fuel pricing system this year.

    By Linda Lisanti, Convenience Store News

    CARY, N.C. – The Pantry Inc., operator of the Kangaroo Express chain of convenience stores throughout the Southeast, released its outlook for fiscal 2013 yesterday, at the same time as it reported its financial results for fiscal year 2012.

    The publicly traded company set the following guidance ranges for the new fiscal year:

    • Merchandise sales are expected to be between $1.83 billion and $1.87 billion. In fiscal 2012, The Pantry generated merchandise sales of $1.81 billion for the year.
    • Merchandise gross margin is targeted at 33.7 percent to 34.2 percent. The company achieved a merchandise gross margin of 33.7 percent in fiscal 2012.
    • Retail fuel gallons are projected to total 1.71 billion to 1.77 billion. The chain reached 1.81 billion retail fuel gallons this past fiscal year.
    • Retail fuel margin per gallon is targeted at 11.5 cents to 12.5 cents. The Pantry's fiscal 2012 retail fuel margin came in at 11.5 cents per gallon.
    • Store operating and general and administrative expenses are expected to be between $613 million and $625 million. This line item in fiscal 2012 totaled $610 million.
    • Capital expenditures are projected to range from $80 million to $95 million. In fiscal 2012, the company spent $55 million on capital expenditures.

    During an earnings call yesterday, company executives said the plan is to use free cash on those projects that provide the best return. That includes the chain's ongoing store remodeling initiative, adding more quick-service restaurants (QSRs) and retiring debt. Currently, The Pantry has 36 store remodels and 10 new QSRs in some phase of development.

    The company's outlook for fiscal 2013 assumes the closure of 35 to 40 stores. In its latest quarter, the chain closed 14 locations, ending the fourth quarter of 2012 with 1,578 company-operated sites, 218 QSRs and 71 wholesale fuel locations. Most of the store closures are taking place at the end of the store's lease life, company leaders explained.

    One of the company's focal points for 2013 is to bring its fuel gallon sales more in line with industry standards. To do so, the c-store retailer is rolling out a new fuel pricing system. The price optimization program sets a specific gallon improvement target for each store, as well as a targeted cents-per-gallon goal, said President and CEO Dennis Hatchell.

    The system has been implemented at 200 stores during the first quarter of fiscal 2013, and the goal is to roll it out to the majority of its 1,500-plus locations over the next quarter.

    "We are pleased with the results. All 200 stores in the new fuel pricing program are showing improved gallons," Hatchell reported, noting that gas margins at those stores are also improving more than the chain in total. "We're letting the system work its way through and we're seeing nice progress at all the stores."

    By Linda Lisanti, Convenience Store News
    • About Linda Lisanti Linda Lisanti is editor-in-chief for EnsembleIQ's Convenience Store News and Convenience Store News for the Single Store Owner media brands. In this role, she is responsible for content development across all of CSNews' print and online properties, with a specialty in coverage of the foodservice category in convenience stores. Lisanti has more than 13 years of experience in the journalism field. After working as a reporter for several daily newspapers, she joined CSNews as a staff writer in August 2005 and held senior writer, senior editor and executive editor positions before becoming editor-in-chief in August 2014. Lisanti has a bachelor’s degree in communications/journalism from Rowan University.
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