CARTERET, N.J. -- Pathmark Stores here, which last month had warned of a disappointing first quarter, announced a loss of $1.8 million and a 1.5% sales decline for the 13 weeks ended May 1.
Sales of $990.1 million decreased 1.5% from $1 billion during the same period one year ago and same-store sales dropped by 1.4%. The operating loss of $1.8 million, or 6 cents a share, was down from earnings of $900,000 in the same period a year ago.
The results for the first quarter included a gain of $1.2 million due to the sale of real estate. Excluding that, the Pathmark's loss was $2.5 million or 8 cents a share.
Pathmark last month said rapid inflation among key items and a failed promotional strategy had cost the chain sales and market share during the quarter and would depress sales and earnings estimates for the year. Eileen Scott, chief executive officer, last week said quarterly earnings finished in line with its earlier announcement but added same-same sales have improved during May.
However, she added, the chain is still reluctant to pass along the full amount of its wholesale cost increases at retail. Scott estimated Pathmark is still absorbing around 20% of its higher costs -- an improvement over earlier in the quarter but still challenging. Scott cited competitive pressure and concern over sticker-shocking customers as reasons for the reluctance to pass on increased costs.
"It is our hope that we can pass along more of our increases in the future," she said. "But it takes time when you see the record increases that we've seen. Nobody wants to have the highest price out there for a gallon of milk."
Pathmark compounded its first-quarter troubles when an attempt to recoup margins by promoting secondary items failed, Scott said. She added that the chain was slow to realize the plan wasn't working until sales fell dramatically in April.
A return to aggressive promotion in key destination categories -- designed to regain customer counts -- is helping the chain recover, Scott said.
"Our overriding goal is to regain the momentum that took us through last year," Scott said.
Pathmark reaffirmed its earlier revision of sales and earnings estimates for the year. Same-store sales are expected to be between flat and 1% and earnings-per-share will fall in the range of 28 to 47 cents.
