The Pantry reported fourth quarter results this morning that were below analyst expectations, as the Cary convenience store chain continued to face sluggish merchandise sales at its stores.
Excluding one-time charges, the Cary convenience store chain reported net income of $8.4 million, or 37 cents a share, compared to 43 cents a share during the same period a year ago.
Net income for the fiscal year 2011 was $17.5 million or $0.78 per share, compared to earnings per share of $0.97 in 2010.
That was below 99 cents per share, the consensus among analysts who follow the company.
The Pantry's stock, which opened at $11.87, was down 11 percent in early trading today.
The Pantry has more than 1,600 stores throughout the Southeast, primarily under the Kangaroo Express brand. Merchandise sales at those stores decreased .8 percent in the fourth quarter, compared to a 7.7 percent increase during the same period a year ago.
For the year, merchandise sales were down .2 percent.
In a statement, interim CEO Edwin Holman said next year would be a transitional period for the company and that actions are needed to improve comparable store sales.
He also said the company would focus on a pricing strategy that is intended to both improve merchandise sales and align gasoline volumes with industry trends.
The company's gross profit from fuel was $257.1 million in 2011, compared to $260.8 million in the prior year period after excluding the estimated impact of an additional week in 2010.
Terrance M. Marks, The Pantry CEO who had led the convenience-store chain's aggressive turnaround strategy in recent years, announced in August that he was resigning to become CEO of the Hooters restaurant chain.
Holman, chairman of the company's board of directors, was named interim CEO. A recruitment firm has been hired to find Marks' permanent replacement.
The Pantry's business has been hurt by high gas prices and a bad economy, which have caused consumers to travel less and spend less on merchandise.
Under Marks, The Pantry had been trying to become less reliant on the sale of gasoline, which has lower margins and is more volatile. Sales of gasoline are also expected to decline or remain flat over the next decade.
The company is in the midst of an aggressive remodeling program of its stores, called Program Fresh.