Declining fuel prices triggered an overall sales decrease, but same-store sales and profitability improved for Tops Markets during the fiscal second quarter, according to parent company Tops Holding II Corp.
The retailer, based in Williamsville, N.Y., recorded an inside sales improvement of 1.2% to $544.6 million and same-store sales of 1.4%, sparked by newly acquired stores, and a shift in the Easter holiday, officials said. Overall revenues were down by 1.7% to $585.9 million, reflecting a decrease in fuel prices.
Profits as percent of sales increased a full percentage point to 29%, reflecting more profitable fuel sales and a healthier margin mix.
Costs associated with a debt refinancing during the quarter triggered a $37.5 million compared loss in the quarter, compared with a net loss of $1 million in the second quarter of 2014.
“Tops continued to make excellent progress as we generated very strong cash from operations, invested in our supermarkets and refinanced most of our long-term debt to enhance our financial flexibility,” Frank Curci, Tops president and CEO, said in a statement. “The debt refinancing extended maturities into 2022 at a more favorable borrowing rate.
“In-store sales and same store sales were both up in the quarter and the profitability of our fuel operations improved despite an almost one-third decrease in fuel sale revenue as gas prices significantly declined,” Curci continued. “We are confident in our direction and believe we are in a solid position to continue building the value of the Tops brand, which is anchored by a leading position in our markets, a large network of well-located stores and strong customer loyalty.”
For the 28-week period ended July 11, net sales of $1.3 billion were down 3.3%, from the prior-year period. Inside sales decreased slightly to $1.2 billion, reflecting a $16.6 million reduction in pharmacy sales attributable to the closure of 27 in-store pharmacies during January and a 0.2% decrease in same store sales.
Tops operates 160 corporate supermarkets, 159 under the Tops banner and one under the Orchard Fresh banner, with an additional five supermarkets operated by franchisees under the Tops banner.
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