JERICHO, NY – Net income at Nathan’s Famous Inc. surged 61.8 percent in the third quarter with lower sales costs and higher royalty income providing tailwinds.
For the 13 weeks ended Dec. 25, 2016, the company reported net income of $699,000, or $0.17 per diluted share, compared with $432,000, or $0.10 per diluted share reported in the year-ago period.
Sales for the quarter totaled $14,859,000, down 5 percent from the third quarter a year ago. Revenues for the most recent quarter declined 3 percent to $19,937,000 compared with $20,564,000 generated last year.
Foodservice sales in the Branded Product Program retreated 5.1 percent to $12,868,000 in the third quarter, compared with sales of $13,565,000 in the year-ago quarter. The company attributed the decline to an 8.2 percent decline in average selling prices as a direct result of the company’s cost basis pricing strategy resulting from a 14.5 percent decline in beef costs partly offset by a 4.2 percent increase in the volume of products sold.
Sales at company owned restaurants slipped 1.9 percent to 1,991,000 during the third quarter. This compares to $2,030,000 reported during the third quarter a year-ago. Nathan’s Famous said the result primarily was due to lower sales at the company’s Oceanside and Yonkers locations, partly in addition to the closing of the restaurants for the Christmas holiday which fell on a weekend. Further, greater online shopping impacted customer counts, the company noted. Direct retail sales also decreased by $168,000, compared to the third quarter fiscal 2016 as the company transitioned the business into its Branded Product Program.
License royalties for Nathan’s Famous totaled $3,990,000 in the third quarter, and increase of 10.4 percent.
“Total royalties earned on sales of hot dogs from our license agreement with John Morrell & Co. at retail and foodservice, substantially from sales of hot dogs to Sam’s Club, increased 10.8 percent to $3,500,000 for the third quarter fiscal 2017 as compared to $3,160,000 in the third quarter fiscal 2016,” the company said in a regulatory filing. “The increase is due to a 4.9 percent increase in volume and higher average net price (reported by licensees) during the third quarter fiscal 2017 as compared to the third quarter fiscal 2016. Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products increased by $36,000 during the third quarter fiscal 2017 as compared to the third quarter fiscal 2016.”