Penn Traffic Narrows Losses in Q3

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Penn Traffic Narrows Losses in Q3

The Penn Traffic Co. posted revenues of $287.3 million in the third quarter of fiscal 2009 ended Nov. 1, 2008, vs. $298.7 million in the year-ago period, reflecting a reduction in corporate-owned grocery stores to 93 from 104 last year. The company's net loss was $5.6 million, or 67 cents per share, in the third quarter of fiscal 2009, compared with $9.6 million, or $1.13 per share, during the same period last year.

Third-quarter fiscal 2009 operating loss from continuing operations was $3.1 million, as opposed to $3.3 million last year.

"We continued to make solid progress in improving Penn Traffic's efficiency and cost structure during the third quarter," noted Penn Traffic president and c.e.o. Gregory J. Young. "Our commitment to offer our customers good value in a welcoming shopping environment is unwavering. And, while we don't control the economic forces that have pressured revenues and margins across the retail grocery industry, we will continue to modernize and streamline operations to ensure Penn Traffic is well prepared to emerge from this recession stronger and fully prepared to take advantage of incremental improvements in the economy as they occur."

The company attributed its lower sales volumes during the third quarter to the fiscal 2009 industrywide trend of consumers consolidating shopping trips, trading down in their purchasing decisions, and curbing impulse buying. This effect was offset during the quarter, however, by the continued success of a rewards program, launched early in fiscal 2009, investments in marketing and advertising, and value pricing, Penn Traffic said.

The grocer noted that, in common with many other food retailers, its gross margins were squeezed by high commodity costs that weren't fully passed onto customers so as to maintain value pricing in the competitive marketplace. Gross profit was $72.4 million, or 25.2 percent of revenues, in the third quarter of fiscal 2009, compared with $79.8 million, or 26.7 percent of revenues, last year.

But even while boosting ad spending in the third quarter of fiscal 2009, Penn Traffic lowered selling and administrative expenses to $76.3 million, or 26.6 percent of revenues, vs. $83.3 million, or 27.9 percent, in the year-ago period. The company credited its lower selling and administrative expenses to aggressive continuous-improvement initiatives and corporate-overhead reductions during fiscal 2009, in addition to a smaller store portfolio.

Syracuse, N.Y.-based Penn Traffic operates or supplies more than 210 Northeastern U.S. supermarkets.