Portland, Oregon-based McCormick & Schmick’s Seafood Restaurants, Inc. (MSSR) reported fourth quarter 2010 adjusted earnings of 22 cents, below the Zacks Consensus Estimate of 24 cents, but up 47.0% year over year. The lower-than-expected results were due to negative comparable sales growth.

During the quarter, GAAP net loss was $25.1 million or $1.69 compared with loss of $16.6 million or $1.12.

McCormick’s operating seafood restaurants in the upscale dining segment said that total revenue in the quarter climbed 3.4% from the prior-year quarter to $91.6 million, but narrowly missed the Zacks Consensus Estimate of $92.0 million. The upside in revenues was attributable to a 13% improvement in private dining. However comparable restaurant sales dipped 1.0% during the fourth quarter of 2010.

The company’s full-year adjusted earnings per share were 35 cents versus 26 cents in full fiscal 2009. Revenues were $351.1 million in full fiscal 2010, representing a year-over-year decline of 2.3%, as comparable- restaurant sales plunged 4.9%.

During the quarter, restaurant margin was flat year over year at 13.4%, aided by a 70 basis points (bp) fall in food and beverage cost, 30 bp decrease in labor cost, 40 bp cut in occupancy cost, partially offset by a 130 bp spike in operating expense.

Outlook

For fiscal 2011, the company anticipates revenue to be between $345 million to $355 million, and earnings per share to be approximately 35 cents to 40 cents.

The company expects capital expenditure in the range of $17 million to $21 million and depreciation and amortization to be $15 million in 2011.

Our Take

McCormick is taking initiatives to drive top line, traffic and margins in the long term, but we expect estimates to go down in the coming days based on below expectation fourth quarter results and earnings outlook. The company’s earnings forecast for 2011 is lower than the Zacks Consensus Estimate of 52 cents.

One of McCormick’s primary competitors, Red Robin Gourmet Burgers, Inc (RRGB) posted fourth quarter 2010 adjusted earnings of 12 cents per share, which surpassed the Zacks Consensus Estimate of 5 cents. Results benefited from the upside in revenue driven by comparable sales growth.

 
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