CEO Terry Handley told investors during a conference call that changes to the company’s stock incentive program and an increases in the tax rates in Illinois played a big part in the drop. Handley the economy also played a role — as the sales of prepared food items like pizza were up only 3.7%. That was well below the 5 to 7% increase they had hoped to see.
“We believe this pressure is related to the agricultural economy in our market area and the continued spread between food at home and food away,” Handley says. “Another contributing factor was the excessive heat during the month of July.” Chief financial officer Bill Walljasper says there was a definite impact from the warm weather.
“July actually was a negative customer count for us. Typically that is a very high customer count month for us,” Walljasper says. “That kind of permeated across all lines of our categories, especially in the prepared food categories. We just didn’t have people getting out and about. Certainly that was affected, especially in the pizza line of our business.” Handley says they are taking steps to adjust to the economic pressures.
“In the current environment we recognize that our customer has become more value conscious,” according to Handley. “In light of this, we will build upon our existing value-added offerings in this category along with new seasonal items that we anticipate will help lift the overall prepared food sales.” Handley says gas sales continued to benefit from low prices and were up 1.7% at existing stores in the quarter. The company made a little more than 19 cents on each of the 565 million gallons of gas it sold.
Overall, the company reported that the earnings per share in the first quarter were $1.46 in the first quarter, compared to $1.70 for the same quarter last year.