CKE Restaurants, Inc. (CKR) recently reported third-quarter 2010 results amid a crumbling economy, plagued by heavy job losses and waning consumer discretionary spending. The quarterly earnings of 15 cents a share (excluding mark-to-market adjustments), missed the Zacks Consensus Estimate by a penny, but remained flat compared to the prior-year quarter.
On a reported basis, earnings came in at 11 cents a share, up 10% from 10 cents reported in the year-ago quarter. The operator of Carl’s Jr. and Hardee’s fast food chain continues to experience fall in the top-line. After declining 4.2% and 4.7% in the first and second quarters of 2010, total revenue tumbled 3.7% to $324.2 million in the quarter dragged down by a fall in same-store sales.
The weak economy continues to hurt same-store sales, which fell 3.7% compared to an increase of 0.9% in the year-ago quarter. Same-store sales at the company’s restaurant concepts, Carl’s Jr. and Hardee’s restaurants, fell 5.2% and 1.8%, respectively during the quarter. Company-operated restaurants sales dropped 3.5% to $246.7 million, whereas franchise and licensed restaurant sales dipped 4.4% to $77.5 million.
Despite the downtrend, CKE Restaurants’ company-operated restaurant-level margin climbed 20 basis points to 18.1% compared to the prior-year quarter, favorably impacted by lower commodity costs for beef, cheese and oil products, partially offset by a rise in labor costs and depreciation. Company-operated restaurant-level margin at Carl’s Jr. restaurants shrank 60 basis points year-over year to 19.4%, whereas at Hardee’s restaurants margin expanded 130 basis points to 16.6% during the quarter.
However, CKE Restaurants and other fast-food chains, like McDonald’s Corporation (MCD), Burger King Holdings (BKC), Yum! Brands (YUM), and Chipotle Mexican Grill (CMG) are faring better than casual and upscale dining restaurants, as cash-strapped consumers trend towards lower-priced dining options.
However, on a broader perspective rising job losses have pushed back the restaurant industry, as consumers have now become more sensitive towards economic priorities. CKE Restaurants ended the quarter with cash and cash equivalents of $20.1 million, and long-term debt of $277.6 million. The company’s leverage ratio at the end of the quarter was 2.08. CKE also declared dividend of 6 cents a share payable on Feb 15, 2010 to shareholders of record as on Jan 25, 2010.
Read the full analyst report on “CKR”
Read the full analyst report on “MCD”
Read the full analyst report on “BKC”
Read the full analyst report on “YUM”
Read the full analyst report on “CMG”
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