Cost-cutting lifts Burger King earnings
MIAMI – Cutting some operating expenses offset soft comparable sales and buoyed earnings at Burger King Worldwide.
For the three months ended March 31, 2013, the company reported net income of $35.8 million compared to $14.3 million in the comparable year-ago period. Revenues declined 42.5 percent to $327.7 million compared to $569.9 million in 2012.
“We delivered strong earnings per share growth of 49 percent in the first quarter of 2013 in spite of a challenging economic and competitive environment that resulted in negative comparable sales growth of 1.4 percent globally,” said Bernardo Hees, CEO, Burger King Worldwide, Inc. “In addition, we announced the increase of our dividend by 20 percent and initiated a $200 million share repurchase program, demonstrating our positive outlook for the long-term prospects of the business and commitment to returning cash to shareholders.
“While comparable sales growth was not up to our expectations, we made progress toward achieving our target business model and remain committed to executing our Four Pillar strategy in the US and Canada and driving net restaurant growth internationally.”
Comparable sales growth fell 1.4 percent in the quarter on the impact of leap day and negative comparable sales growth in the US and Canada and Latin America and the Caribbean. However, this was partially offset by positive growth in Europe, the Middle East and Africa and Asia Pacific, the company said.
"After negative comparable sales growth early in the quarter, comparable sales growth in the US and Canada was positive in March, as we took a more balanced approach to value and premium offerings," Burger King said. "Value-oriented promotions such as our $1.29 Whopper Jr and “2 for $5” specials were successful when paired with our premium limited time offers such as the Chipotle Whopper and Chipotle Chicken sandwiches.
“Additionally, we launched a Turkey Burger for the first time in the brand’s history, which was one of the best performing limited-time offers during the first quarter.”
The company also refranchised 33 company-owned restaurants during the quarter in the US and Canada segment, which netted the company cash proceeds of $9.3 million, development commitments and re-imaging commitments. BKW completed refranchising transactions in Mexico and Canada during April, and currently only 132 company-owned restaurants remain to be refranchised in Germany and Spain. The company expects to finish its refranchising initiative by the end of 2013.