Let me take a few minutes to summarize the results of the first quarter, then afterwards, we'll open up for questions about our results. As all of you have seen, diluted earnings per share for the first quarter were $1.01 compared to $1.03 for the same quarter a year ago. Results reflect strong gains inside our stores, especially in Prepared Foods. Excluding gasoline, gross profit increased over 13%. I will go over each category to give more details on what is driving these results.Our fuel margin improved each month throughout the quarter as the wholesale cost of fuel declined, resulting in a fuel margin of $0.149 per gallon. Our average gasoline margin for the past 4 years has been $0.143 per gallon. Same-store customer traffic slowed significantly in the quarter due to excessively hot weather conditions throughout a major portion of our marketing territory. As a result, same-store gallons sold in the quarter were down 0.2%. However, total gallons sold for the quarter increased 3.7% to 394.1 million. The average retail price during this time was $3.38 per gallon compared to $3.63 in the same quarter last year. Due to a lower gasoline margin compared to a record margin a year ago, gross profit in the quarter was down 10% to $58.8 million. Same-store gallons sold in August are trending positive. Sales in the Grocery & Other Merchandise category were solid in the first quarter, despite being impacted by the previously mentioned weather and changes in the cigarette environment. Same-store sales rose 2.6% with total sales up 5.7% to $386.1 million. During the quarter, primarily in July, we experienced one of the hottest periods on record, pushing same-store customer count to the lowest level in over 3 years. We also incurred a change in the cigarette tax in one of our largest states, resulting in cigarette carton volume dropping significantly. Excluding cigarettes, same-store sales were up 6.4% during the quarter.
The average margin in the quarter increased about 90 basis points to 33.4%, primarily due to a onetime gross profit benefit related to the cigarette tax change. Towards the end of the quarter, we have seen a more competitive pricing on cigarette packs in parts of our marketing territory. Cigarettes are an important destination item in a convenience store industry. We believe it is imperative to remain competitive in this product line to maintain market share and long-term sales growth in other products. In light of this, we have recently adjusted pricing to match this change in about 1/3 of our stores.Overall, we are pleased with the gains in the Grocery & Other Merchandise category and anticipate acceleration in revenue throughout the fiscal year as we benefit from the rollout of additional operational initiatives. That being said, we also expect the same-store sales in cigarettes to continue to be adversely impacted by the challenges mentioned previously. Prepared Food & Fountain category continues to perform very well. Total sales were up 15.2% to $142.7 million for the quarter. Same-store sales in the quarter were up 10.6% with an average margin of 63.5%, up 220 basis points from the same quarter a year ago. This is primarily due to lower commodity costs and a price increase implemented in February. The average cost of cheese this quarter was $1.81 per pound compared to $2.11 a year ago. The average cost of coffee was about $0.90 a pound lower this year compared to the first quarter a year ago. Gross profit dollars in the quarter were up over 19% to $90.6 million. Same-store sales in August are turning ahead of our annual goal. However, commodity prices have been trending upwards so far in the second quarter. Average cost of cheese is currently approximately $2.05 per pound. Read the rest of this transcript for free on seekingalpha.com