WOODBRIDGE, N.J. -- Pathmark Stores here said earnings more than doubled while sales rose slightly for the first quarter ended April 29.
Net income for the 13-week quarter increased 135% to $4 million, while sales rose 0.3% to $1.03 billion. Same-store sales, including replacement stores, increased 0.8%.
Operating cash flow was up 17% to $65.4 million, or 6.3% of sales, compared with $55.8 million, or 5.4% of sales, a year ago.
Operating earnings rose 14.7% to $44.6 million, including an after-tax loss of $2.3 million relating to Plainbridge, a subsidiary of PTK Holdings, Pathmark's parent company. Plainbridge consists of a warehouse, transportation and real estate operation that serves Pathmark exclusively.
Excluding the loss, the company said operating earnings would have been up 20.6% to $46.9 million.
Gary Giblen, managing director of Smith Barney, New York, said net earnings benefited "from the steady progress Pathmark is making in improving its balance sheet, particularly with regard to incurring less interest expense."
The small sales increase came after several periods of slightly negative results, Giblen added, "so it represents a good improvement, particularly given the tough economic and competitive environment in the Northeast in general and the New York metropolitan area in particular."
On a long-term basis, the company's investment in its Pathmark 2000 format is likely to deliver positive sales gains, Giblen said, "though the short-term outlook is less positive because sales momentum in the second quarter has been sluggish."
Giblen also said he doubted that gains of 17% in operating cash flow are sustainable. "That level shows progress in same-store sales and margin improvements, but it comes off a weak quarter a year ago," he noted. "Cash-flow comparisons for the second quarter will be a lot tougher."
Jack Futterman, chairman and chief executive officer, said Pathmark expects to open six new stores during the current year. He said the chain has four new stores under construction and expects to begin construction on four more during the second quarter.
Pathmark operates 142 supermarkets, including 32 Pathmark 2000 prototypes, and 36 freestanding drug stores in the New York-New Jersey-Philadelphia metropolitan areas.
