NASHVILLE Tenn. Citing a challenging consumer environment, O’Charley’s Inc. reduced Thursday its full-year, per-share earnings guidance as it reported a net loss for the second quarter compared with a year-ago profit, which was caused by one-time charges and declining same-store sales.
The company, which operates or franchises 363 restaurants under three casual-dining brands, said it now expects to earn between 66 cents and 73 cents for the fiscal year ending Dec. 30, down from previous expectations of between $1 and $1.10 per share. In fiscal 2006, O’Charley’s earned 86 cents per share.
The updated guidance reflects charges and expenses of between 27 cents and 29 cents per share relating to the company’s sale of its commissary, which closed just prior to the end of the latest quarter, and other supply chain changes.
For the second quarter ended July 15, O’Charley’s posted a net loss of $1.1 million, or 5 cents per share, versus a year-ago profit of $4.4 million, or 19 cents per share. Excluding $7.6 million in charges and expenses related to the supply chain changes, employee severance and legal costs, earnings in the fiscal 2007 second quarter totaled $4.2 million, or 17 cents per share, O’Charley’s reported.
Second-quarter revenue rose 2.3 percent to $228.8 million. Same-store sales declined 2.1 percent at O’Charley’s corporate restaurants and 0.4 percent at Stoney River Legendary Steaks. Same-store sales increased 1.6 percent at the Ninety Nine Restaurants.
O’Charley’s chairman and CEO Gregory L. Burns said that while the company continues to increase average checks at all of its concepts, a difficult consumer environment and competitive discounting among competitors contributed to a reduction in guest counts at all three concepts.
Projected results for the second half of the year are based on anticipated same-store sales increases of less than 2 percent for O’Charley’s and between 1 percent and 3 percent for Ninety Nine.