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SYRACUSE, N.Y. -- The Penn Traffic Co. here held a conference call yesterday to release financial information for the first time since it entered bankruptcy protection in May 2003, revealing fiscal 2006 revenues from its 111 corporate retail stores and two stand-alone pharmacies of $1.038 billion, representing 80 percent of the company's total revenues.
The grocer also reported fiscal 2006 revenues of about $216 million, or 17 percent of its total revenues, for its wholesale/franchise division, and about $29 million, or 3 percent of total revenues, for its bakery manufacturing and distribution division.
Additionally, the company revealed that same-store sales for its supermarkets declined 1.6 percent during the 39-week period ended Jan. 28, 2006 from the year-ago period, and that same-store sales went down 1.7 percent during the 34-week period ended Sept. 23, 2006 compared with last year.
Penn Traffic further said that its revenues for the period ended Jan. 28 were $969.3 million, while its revenues for the period ended Sept. 23 were $849.0 million, its capital expenditures for that period came to $20.4 million, and its total debt at that date was $59.1 million.
During the call, which featured chairman Bob Kelly, new co-c.o.o.'s Greg Young and Bob Panasuk, and s.v.p. finance Randy Martin, Penn Traffic also said:
--The company has opened four locations and completed 25 renovations since emerging from bankruptcy in April 2005, as well as closing two stores.
--Its margins were adversely affected by the decision to dispense with the price optimization solution Demand-Tec at the beginning of calendar year 2006, prompting the company to re-engage Demand-Tec. The new rollout is currently underway, with some impact expected in the fourth quarter of fiscal 2007 and full impact by April of fiscal 2008.
--The SEC's and U.S. Attorney General's ongoing investigations into Penn Traffic's promotional allowance practices and policies has cost the retailer about $6.2 million, with another $3.5 million paid to the company's prior auditors.
--Once the company is finalizing its review of allowance accounting with Alix Partners, it will restate its financial statements for prior years.
--Penn Traffic plans to hold a shareholders' meeting after its audited financial statements, which will be handled by Eisner, LLP and starting with the emergence date of April 13, 2006, are complete.
Despite its financial problems, the company was upbeat about its chances for success going forward. "There's nothing major broken here that can't be fixed," said Kelly.
For the future, Panasuk and Young outlined an ambitious two-phase business improvement plan, divided into short-term tactical initiatives and a "more strategic approach" to "realign[ing] the company for the longer road ahead."
Among the short-term goals are to reinvent the company's management culture, with an emphasis on "eliminating complacency" and instilling a "passion for selling"; expanding the private label offering in both the company's Food Club and Value Time tiers, so as to better compete with competitors' EDLP programs; and to counter the incursions of Wal-Mart Supercenters with a new Fresh Market format stressing fresh product and service. Already 18 Fresh Markets are up and running under the company's various banners, according to the co-c.o.o.'s.
Panasuk and Young also talked about improving branding techniques in their Fresh Market stores and signature offerings; tailoring marketing initiatives to specific customer demographics, taking advantage of co-branding opportunities with such potential partners as Staples, Dunkin' Donuts, and Starbucks; establishing a Manager Advisory Council to facilitate direct communication between store managers and top executives as a way to run the company more effectively; the implementation of an aggressive e-auction and bidding process; and leveraging synergies of the Fresh Markets so as to lower conversion costs.
Longer-term goals include fostering an atmosphere of "two-way accountability" between associates and management, a focus on organizational effectiveness that would result in fewer employees and clear lines of reporting, and positioning the "right fresh offering in the right market," whether a full offering or particular components of the format.
Noted Young near the close of the presentation, "We're trying to instill a sense of urgency in every level of the organization that we need to make change, and we need to make it right now."