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Losses at the Penn Traffic Co. grew in the chain's fiscal 2008 ended Feb. 2, but officials of the financially troubled grocer are looking on the bright side.
The grocer, based in Syracuse, N.Y. with more than 200 stores in the Northeast, reported a net loss of $41.7 million, or $4.92 per share, vs. $28.0 million, or $3.29 last year.
“While much work remains to be done, ” said president and c.e.o. Gregory J. Young, “Penn Traffic’s fiscal 2008 financial results overall demonstrate our progress toward stabilizing the business, improving gross margins, enhancing the in-store customer experience, and investing in the most promising locations in Penn Traffic’s core store portfolio. These results also reflect substantial nonrecurring expenses and a smaller corporate-owned store portfolio.”
That smaller portfolio is due to the closure of eight stores, as well as a Jamestown, N.Y. warehouse and the company’s Penny Curtiss bakery operation, Young said in a conference call on Friday.
Among the enhancements to the grocer’s 103 remaining stores he mentioned were an outsourcing agreement with Keene, N.H.-based C&S Wholesale Grocer, a beefed-up shopper loyalty program, and the recent launch of an integrated marketing campaign, “Big Smiles, Fresh Food, Low Prices,” with the goal of changing customer perceptions of the P&C, Quality, and BiLo banner through improved customer service, a superior fresh offering, and “very competitive” pricing.
Young further noted during the call that the company, which emerged from bankruptcy protection in 2005, was catching up on its SEC filings and aimed to hold conference calls on a more regular basis.
For the fourth quarter of fiscal 2008, the company reported a net loss of $19.8 million, or $2.34 per share, including a loss from discontinued operations of $8.9 million and $3.6 million of non-recurring charges. In the year-ago period, the Penn Traffic posted a net loss of $15.0 million, or $1.76 per share, including a loss from discontinued operations of $519,000 and $7.5 million of nonrecurring charges.
As for revenues, the grocer reported $1.22 billion for the 52 weeks ended Feb. 2, 2008, compared with $1.29 billion for the 53 weeks ended Feb. 3, 2007. Penn Traffic attributed the decline to such factors as a reduction in the number of its corporate-owned stores to 103 from 106 during the period.
Fiscal 2008 gross profit was $322.0 million, or 26.4 percent of revenues, vs. $328.8 million, or 25.4 percent of revenues during the prior year. The company was able to achieve the 100 basis-point increase despite the impact of higher fuel prices driving up distribution costs, aided by its adoption of such aggressive gross-margin-improvement initiatives as improved transportation and distribution efficiency, increased emphasis on higher-margin private label and signature products, the implementation of a new price-optimization software system and improved operational discipline to reduce shrinkage.
Additionally, the company narrowed its operating loss from continuing operations, posting $15.2 million in fiscal 2008, vs. $16.8 million last year.
Penn Traffic reported fourth-quarter revenues of $304.9 million, compared with $337.9 million in 2007. Fourth-quarter gross profit was $77.2 million, or 25.3 percent of revenues, vs. $85.5 million, or 25.3 percent of revenues in year-ago period. The grocer’s fourth-quarter operating loss from continuing operations was $10.9 million, compared with $14.5 million in 2007.
Retail food segment revenues from Penn Traffic’s continuing retail operations were $1.0 billion in the 52 weeks of fiscal 2008, vs. $1.1 billion in the 53 weeks of fiscal 2007. Same-store sales increased 140 basis points to a 0.3 percent decrease, from a 1.7 percent decrease last year. Gross profit was $306.2 million, or 30.5 percent of revenues, vs. $313.4 million, or 29.3 percent of revenues during the year-ago period.
Operating profit from continuing retail operations was $57.2 million for the year, a 10.4 percent improvement over $51.8 million in fiscal 2007.
“The core of our corporate-owned-store portfolio is very healthy, though we still have some locations that are not performing at the high level we require,” noted Young. “We’re making great strides to increase retail profitability, offering the right products at the right prices for our customers. Penn Traffic is also putting resources into rewarding, retaining, and training in-store associates, and investing in renovating and enhancing retail stores.”
The retail food segment, which accounts for about 80 percent of Penn Traffic’s total revenues, posted fourth-quarter revenues of $249.1 million in 2008, vs. $280.6 million in 2007. Same-store sales from continuing operations went up 230 basis points to a 1.6 percent decrease in the fourth quarter, from a 3.9 percent decrease last year. Fourth-quarter retail gross profit was $74.5 million, or 29.9 percent of segment revenues, in 2008, compared with $81.6 million, or 29.1 percent of revenues, in 2007. Fourth-quarter retail operating income was $12.3 million, or 4.9 percent of segment revenues, in 2008 compared to $11.6 million, or 4.1 percent of revenues, in 2007.
Wholesale food distribution segment revenues came to $210.0 million in fiscal 2008, vs. $217.3 million in the year-ago period. Segment gross profit rose to $13.0 million, or 6.2 percent of segment revenues, in fiscal 2008, compared with $11.7 million, or 5.4 percent of revenues, in fiscal 2007. Wholesale operating profit from continuing operations was $6.9 million in fiscal 2008, 46.8 percent growth over $4.7 million in fiscal 2007.
Wholesale posted fourth-quarter revenues of $52.8 million in 2008, as opposed to $54.0 million last year. Fourth quarter wholesale gross profit was $3.1 million, or 5.8 percent of segment revenues, in 2008, vs. $2.8 million, or 5.3 percent of revenues, in 2007. Fourth-quarter wholesale operating income was $1.5 million, or 2.9 percent of segment revenues, in 2008, compared with $1.0 million, or 1.8 percent of revenues, in 2007.
Penn Traffic operates or supplies over 220 supermarkets in upstate New York, Pennsylvania, Vermont, and New Hampshire under the P&C, Quality and BiLo banners, and its wholesale food distribution business supplies independently operated supermarkets and other wholesale accounts.