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Penn Traffic Expands C&S Pact

Penn Traffic Co. said last week it will expand its procurement agreement with C&S Wholesale Grocers to encompass virtually all categories in an effort to free up cash to invest at store level. The company also said it had a loss and lower sales for the second quarter and first half, which ended Aug. 2. The chain's new, eight-year agreement with C&S, which is scheduled to begin

SYRACUSE, N.Y. — Penn Traffic Co. here said last week it will expand its procurement agreement with C&S Wholesale Grocers to encompass virtually all categories in an effort to free up cash to invest at store level.

The company also said it had a loss and lower sales for the second quarter and first half, which ended Aug. 2.

The chain's new, eight-year agreement with C&S, which is scheduled to begin next month, will include groceries, bakery, deli, seafood, dairy, floral, frozen foods, store supplies and other merchandise. Keene, N.H.-based C&S has been providing procurement services for produce to Penn Traffic since last March, and distribution and warehousing services for general merchandise and health and beauty products since March 2007.

“We believe this move will free up cash that would otherwise be tied up in inventory and trade receivables, [thereby] improving our ability to reinvest in our stores, and enhancing the service and value the company delivers to all customers,” said Gregory J. Young, Penn Traffic's president and chief executive officer.

Penn Traffic will continue to be responsible for outbound logistics and distribution, Young said, adding that, while about a dozen corporate positions will be eliminated, there will be no impact on warehouse employees, drivers and other transportation workers or on category managers and other merchandising personnel.

The loss for the quarter was $3.4 million, compared with a loss of $4.9 million in last year's second quarter; the company said the loss reflected non-recurring charges of $2.9 million, compared with non-recurring charges of $5.9 million a year ago.

Sales for the quarter fell 3.5% to $306.9 million, which reflected a drop in the number of corporate stores to 93 from 103.

For the half, the loss was $15.8 million, vs. $12.3 million a year ago, while sales fell 3.6% to $594 million.

Q2 RESULTS

Qtr Ended 8/2/08 8/4/07
Sales $306.9M $318M
Change -3.5%
Comp-store -1.2%
Net Income (Loss) ($3.4M) ($4.9M)
Inc (Loss)/Share (42¢) (58¢)
26 Weeks 2008 2007
Sales $594M $616M
Change -3.6%
Comp-store Not available
Net Income (Loss) ($15.8M) ($12.3M)
Inc (Loss)/Share ($1.88) ($1.45)
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