Out in the cold

by Meat&Poultry Staff
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NEW ALBANY, Ohio – Severe winter weather not only affected traffic on roads. Bob Evans Restaurants posted a decline in third quarter sales as severe winter weather kept diners out of its establishments. In response to the results, the company outlined plans to cut jobs and other costs.

Bob Evans reported third quarter net sales declined 2 percent to $240.5 million compared to net sales of $245.5 million in the year-ago period, while same-store sales declined by 1.8 percent for the quarter.

"The third quarter of fiscal 2014 was especially challenging due to a number of factors, including: sustained and severe winter weather of a magnitude not seen in many years, particularly in our core Midwest markets; continued higher than projected sow costs; and higher than projected fiscal 2014 startup inefficiencies following the expansion of the BEF Foods' Sulphur Springs, Texas, plant," said Steve Davis, chairman and CEO. "However, we expect these issues will be confined to fiscal 2014, and as such will not impact fiscal 2015 results."

The company said the unusually harsh winter cost Bob Evans approximately $5.6 million including $3.6 million of profitability associated with the lost sales; $0.5 million in labor expenses; $0.3 million of food costs; and $1.2 million in unfavorable other operating expenses such as snow removal, utilities, facility repair and other maintenance related items.

Rising prices for sows and a supplier dispute were noted as items affecting Bob Evans Foods (BEF). The company said third quarter sow costs averaged $72.36 per hundredweight compared to $58.72 per hundredweight for the comparable period last year.

For the three months ended Jan. 24, the company reported net income of $5.7 million, or $0.22 per diluted share, compared with a net loss of $55.1 million, or $1.96 per diluted share, in the comparable year-ago quarter.

"We also announced today a strategic realignment and, while admittedly a difficult decision, a reduction of personnel at Bob Evans Restaurants, BEF Foods, and at our corporate office as part of our comprehensive plan to reduce SG&A expense and deliver on our commitment of 300 to 350 basis points of margin improvement by fiscal year 2018," Davis said.

The company also announced that Randy Hicks, president of Bob Evans Restaurants, will retire after serving 30-plus years at the company. Hicks' retirement is unrelated to the company's plan to cut costs.

"Randy has graciously agreed to continue in his position for several months to facilitate transition to new leadership," Davis said. "A search process for Randy's replacement is currently underway."
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