NASHVILLE Tenn. O’Charley’s Inc., operator or franchisor to 370 restaurants under three casual-dining brands, swung to a loss of $63.1 million in its fourth quarter on declining sales and millions in asset impairment charges.
The company reported Thursday a net loss of $68.2 million, or $3.34 per share, for the fourth quarter ended Dec. 28, versus earnings of $727,000, or 3 cents per share, in the same quarter a year earlier.
The latest-quarter result included a goodwill impairment charge of $45.7 million related to the 2003 purchase of Ninety Nine Restaurants and additional restructuring charges totaling about $15.4 million.
O’Charley’s also recorded a 5.7-percent drop in revenue to $202.9 million. Same-store sales fell 6.1 percent at O’Charley’s corporate locations, 8.4 percent at Ninety Nine Restaurants and 18.2 percent at its Stoney River Legendary Steaks.
“During the fourth quarter of 2008, we saw a continuation and acceleration of the negative trends that were evident throughout the fiscal year,” said Gregory Burns, chairman and chief executive of O’Charley’s Inc., who is set to retire Feb. 12. “With reductions in consumer spending due to worsening economic conditions, and increases in commodity, labor and utility costs, we continued to experience declining sales and contracting margins.”
In an attempt to reduce costs, Burns said O’Charley’s has eliminated positions at its support centers, implemented a companywide salary freeze and redesigned its hourly benefit programs. In addition, the company cut its capital expenditures for 2009 to between $15 million and $18 million, compared with $47.9 million spent in 2008.
For the full year, O’Charley’s posted a net loss of $132.5 million, or $6.34 per share, compared with a $7.2 million gain, or 31-cents-per-share profit, a year earlier. Fiscal 2008 revenues fell 4.8 percent to $931.2 million. In fiscal 2008, goodwill impairment charges totaled $93.7 million, effectively writing off all of the goodwill on the company’s balance sheet.
Contact Elissa Elan at [email protected].