Tops Posts Double-digit Q3 Sales Growth
Tops Holding Corp., the parent of Tops Markets LLC, posted net sales for its fiscal 2010 third quarter ended Oct. 9, 2010, of $519.9, a rise of $146.6 million, or 39.3 percent, from the third quarter of fiscal 2009. Sales related to the stores retained from the company’s January 2010 Penn Traffic acquisition accounted for $133.3 million of the increase.
Inside sales were $483.5 million in the quarter, up $139.4 million, or 40.5 percent, from the prior year. Williamsville, N.Y.-based Tops attributed the increase to the newly acquired Penn Traffic stores, a 1.0 percent rise in same-store inside sales and the opening of a new store in August 2010. Gas sales grew $7.2 million, or 24.7 percent, to $36.3 million in the third quarter, reflecting a 3.0 percent rise in the retail price per gallon and a 21.1 percent rise in the number of gallons sold, the latter of which Tops said was due to five new gas stations that opened since the fiscal 2009 third quarter.
“We continued to demonstrate same-store sales growth and drove basket size through our marketing and advertising efforts,” observed Tops president and CEO Frank Curci. “We also benefited from the acquired supermarkets as each store’s performance has strengthened from the rebranding to Tops. This was the second consecutive quarter we increased same-store inside sales, after experiencing deflationary declines for most of 2009 and into the start of 2010.”
Curci also noted the recent additions to Tops’ management team of Lynne Burgess as SVP, secretary and general counsel; Rick Mills as SVP and, effective Dec. 1, CFO; Kevin Darrington as COO; and Stacey Rauch as a member of the company’s board of directors.
For the 40-week period ended Oct. 9, 2010, net sales were $1.73 billion, an increase $455.5 million, or 35.8 percent, vs. the $1.27 billion logged for the 40-week period ended Oct. 3, 2009. Tops attributed the increase to the acquired Penn Traffic stores, which contributed $420.9 million, same store-inside sales growth of 0.3 percent and a 34.2 percent rise in gas sales. Net sales for the 24 Penn Traffic supermarkets that Tops closed, sold or liquidated were $33.9 million during the 2010 year-to-date period, while net sales for the seven supermarkets that Tops is currently under a proposed order from the FTC to sell were $41.1 million.
Tops is awaiting the approval of a final order by the commission, under which the company would three months to sell the stores to FTC-approved buyer(s). Third-quarter 2010 net sales and operating income for the seven stores were $13.6 million and $0.2 million, respectively. Of the 55 acquired supermarkets the grocer is now operating, 48 have switched to the Tops banner.
Gross profit for the quarter grew 39.5 percent to $146.9 million, from $105.3 million last year, mainly because of the addition of the Penn Traffic stores. Total operating expenses rose 42.8 percent to $140.5 million, compared with $98.4 million in the third quarter of 2009. According to Tops, the increase was due to incremental costs associated with operating the acquired Penn Traffic supermarkets, including labor costs to complete the rebannering process and reopening events, integration expenses, and higher advertising expense for customer communications related to the Penn Traffic acquisition.
Operating income was $6.4 million, or 1.2 percent of net sales, in the quarter, vs. $7.0 million, or 1.9 percent of net sales, in the year-ago period. Net loss for the third quarter was $7.6 million, as opposed to $0.9 million in the 2009 third quarter.
Tops operates 132 full-service supermarkets -- 127 corporate-owned and five franchise supermarkets – in upstate New York and northern Pennsylvania, and employs about 12,700 associates.