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Tops Holding II Corp., the indirect parent of Tops Markets, LLC, inside sales of 678.1 million for the first quarter of 2016 ended April 23, a $1.4 million increase from the year-ago period.
According to the company, this result reflects the $16.6 million incremental contribution from six acquired and new supermarkets opened since May 2015, but was partially offset by a $2.4 million decrease in sales Tops attributed to the 27 in-store pharmacies it closed in January 2015.
Same-store sales, excluding the closed in-store pharmacies and franchise revenue, dipped 1.5 percent in the first quarter because of food cost deflation in certain categories, mainly meat and dairy, along with competitive pressure to respond with lower prices. Further, Tops’ fuel sales were adversely affected by a 22 percent decline in the average retail price paid per gallon, and so were $35.6 million in the first quarter, a decrease of $10.5 million, or 22.8 percent, from last year. As of April 23, the company operated 52 corporate fuel stations.
Overall, Tops’ first-quarter net sales were down $9.1 million, or 1.3 percent, to $713.7 million.
“We continued to perform well, given the strong deflationary headwinds that persist to affect supermarket operators industrywide,” noted Tops Chairman and CEO Frank Curci. “Inside sales were up slightly in the quarter and adjusted EBITDA, which excludes nonrecurring items, increased almost 5 percent. More importantly, Tops’ market share remains very strong, as we have recently achieved some of our best results in several years, with gains in our leading markets. We added one supermarket, in Westfield, Pa., during the quarter and opened another location, in Sanborn, N.Y., in late April. Both locations are performing exceptionally well in their smaller footprints.”
Added Curci: “While we do not see food cost deflation abating significantly in the near future, our strong market share positions us very well to capitalize when the recent macroeconomic challenges begin to recede. We continue to employ marketing initiatives that increase customer loyalty and drive traffic, including our popular Price-Lock guarantee program and the return of our Monopoly promotion in the second quarter. We are also in the process of relaunching our private label program, with redesigned packaging, new marketing programs and increased offerings in natural and organic categories, which should contribute positively to gross margin. These initiatives, combined with fill-in acquisitions to our supermarket portfolio and continued effective cost controls, are expected to mitigate the challenge of food cost deflation.”