Unseasonably cool temperatures in March and April put a chill on third-quarter sales for drive-in operator Sonic Corp., the company said Tuesday in releasing preliminary same-store sales results.
The Oklahoma City-based brand estimated systemwide same-store sales for the three-month period ended May 31 rose 0.1 percent, with franchised drive-in sales slightly positive and company-owned units posting a 1-percent decline.
“Weather is estimated to have had a 300 to 400 basis point adverse impact on same-store sales for the quarter,” the company said in a release. “Despite the adverse weather, systemwide same-store sales were positive in April and improved further in May.” The company will release full March-May results after the market closes June 24.
The preliminary same-store comparisons were “shy of expectations,” said Sharon Zackfia, an analyst with William Blair.
“At company‐owned units, comps are estimated to have declined roughly 1 percent against a 3.7-percent comparison (the first negative company‐owned comp since November 2011),” Zachfia and the William Blair team wrote in a market note Tuesday, “while franchised comps were slightly positive (we estimate roughly 0.2 percent) against a 2.7-percent comparison.”
Lynne Collier, an analyst with Sterne Agee, said she was maintaining a neutral rating on the Sonic stock. “We believe that the potential for accelerating unit growth and the conversion of franchise license agreements provide catalysts as we look out to [fiscal year 2015],” she wrote.
“Weather was the driving factor behind lower comps this quarter as the Texas and Oklahoma markets experienced a much colder spring versus historical averages,” Collier said. “In addition, the spring of 2012 experienced a warmer than average season, making the comparison more difficult.”
Collier lowered earnings per share estimates by a penny for both the quarter and the fiscal year, to 25 cents for the third period and 68 cents for the year.
She added that Sonic planned an investor day on June 27, where management planned to discuss strategic initiatives. “Among the topics being discussed are technological improvements at the drive-in level, the implementation of a new POS system (which we believe has been slightly delayed), and the company's increased focus on unit growth,” Collier said.
Sonic has more than 3,500 drive-ins nationally.