Jack in the Box profit falls in first quarter
Feb. 23, 2012
by Meat&Poultry Staff
SAN DIEGO, Calif. – Net earnings at Jack in the Box Inc. for the first quarter ended Jan. 22 was $12.0 million, or 27 cents per diluted share, compared to net earnings of $32.4 million, or 61 cents per diluted share for the same quarter in fiscal 2011. Gains from refranchising were roughly 2 cents per diluted share for the quarter compared to approximately 34 cents per diluted share in the year-ago quarter.
“Jack in the Box company same-store sales increased 5.3 percent in the first quarter, driven by a combination of traffic growth as well as an increase in average check," said Linda Lang, chairman, chief executive officer and president of the company. "On a two-year cumulative basis, this represented a 500 basis point acceleration from the fourth quarter of 2011 and our sixth consecutive quarter of sequentially improving company same-store sales trends.
"We believe these results have been largely driven by the investments we have made to enhance the entire guest experience at the Jack in the Box brand, including the substantial completion of our system-wide re-image program during the quarter," she added.
Lang said Qdoba’s same-store sales increased 3.8 percent system-wide in the first quarter. This represents the fourth consecutive quarter that two-year cumulative same-store sales have been greater than 9 percent.
The company reported consolidated restaurant operating margins of 13.5 percent of sales in the quarter compared to 12.6 percent of sales in the year-ago quarter.
Food and packaging costs were 110 basis points higher compared to 2011, the company said. Overall commodity costs were approximately 8 percent higher, attributable to higher costs for most commodities other than produce, the company said.
Impairment and other charges increased slightly to $4.4 million, compared to $3.6 million a year ago. The company said the increase was primarily driven by the impairment of two underperforming Jack in the Box restaurants in 2012 and an increase in costs associated with closed restaurants. The company said a decrease in accelerated depreciation related to the company’s re-image program partially offset the impairment increases.
The company acquired 11 franchised Qdoba restaurants in two markets during the first quarter of 2012 for $6.2 million, and subsequent to the end of the quarter, acquired 25 franchised Qdoba restaurants in two additional markets for $33.0 million. These acquisitions are expected to be accretive to fiscal 2012 restaurant operating margin and earnings per share.
Jack in the Box repurchased approximately 327,000 shares of its common stock in the first quarter of 2012 at an average price of $19.43 per share for an aggregate cost of $6.4 million, completing the $100 million authorized by the company’s board of directors in May 2011. The company’s board of directors authorized an additional $100 million stock-buyback program in November 2011 that expires in November 2013. None of those funds were used during the first quarter, according to the company.
The company reported 16 new Jack in the Box restaurants were opened in the first quarter, including 11 franchised locations, compared with eight new restaurants opened system-wide during the comparable 2011 quarter, of which three were franchised.
In the first quarter, 15 Qdoba restaurants opened, including nine franchised locations, compared to 20 new restaurants in the year-ago quarter, of which 14 were franchised.
As of Jan. 22, 2012, the company had 2,236 Jack in the Box restaurants, including 1,602 franchised locations, and 597 Qdoba restaurants, including 335 franchised locations.
Company guidance for fiscal 2012 included diluted earnings per share of $1.15 to $1.43. The range is intended to reflect uncertainty in the timing of anticipated refranchising transactions as well as same-store sales results and commodity inflation, the company said.