WOODBRIDGE, N.J. -- Pathmark Stores here reported that earnings increased but sales dropped in the second quarter ended July 29.
Net income soared 303.2% to $37.5 million for the quarter. Income increased 277.3% to $41.5 million for the six months.
For 13 weeks, sales for the 142-store chain dropped 1% to $1.02 billion. For the 26 weeks, sales decreased 0.5% to $2.05 billion. Same-store sales dropped 1.2% for the quarter and 0.2% for the half.
Quarterly earnings were affected by a pretax gain of $15.5 million related to the sale of its freestanding drug stores to Rite Aid Corp., Camp Hill, Pa., and a tax benefit of $21 million related to the valuation allowance of assets.
Operating results included an after-tax loss related to the sale by Pathmark's parent company, PTK Holdings, of its Plainbridge home centers segment. The loss amounted to $3.3 million for the quarter and $5.6 million for the year-to-date.
"Since the quarter end, we opened one new Pathmark 2000 supermarket and have another seven Pathmark 2000 stores under construction, five of which are expected to open in this fiscal year," said Jack Futterman, chairman and chief executive of Pathmark.
Frederick Taylor, director of corporate bond research at Salomon Bros., New York, said that Pathmark could reverse negative same-store sales by adding new stores. He noted that the company will likely add 5% to 6% in new square footage next year.