BJ's 3rd-Q profit hurt by hurricanes, holiday shift

HUNTINGTON BEACH Calif. BJ's Restaurants Inc. blamed bad weather, the July 4 holiday shift, and uncontrollable economic factors for a 35-percent drop in third quarter profit.

For the quarter ended Sept. 30, BJ’s reported net income of $2 million, or 8 cents per share. In the year-ago third quarter, BJ's earned $3.1 million, or 12 cents per share.

Revenue rose 19 percent, to $95.7 million, though same-store sales fell 1 percent for the quarter. Last year, BJ's boasted a 5.6-percent jump in third quarter same-store sales.

Jerry Deitchle, BJ’s chairman and chief executive for the 80-unit casual-dining chain, blamed the sales dip on the July 4th holiday shift and restaurant closures due to Hurricane Ike.

“Absent these two factors, we believe that our comparable restaurant sales would have been flat for the quarter just ended, which represents a very respectable performance in these highly volatiles times, and, in particular, given that over half of our restaurants are located in the states of California and Arizona, where the current economic slowdown had been quite pronounced,” he said.

Deitchle said BJ's results also were hurt by property damages from hurricanes Gustav and Ike, higher utilities and marketing expenses, and higher opening costs. The company opened six restaurants during the quarter, compared with only four openings in the third quarter last year. However, BJ’s benefited from lower incentive compensation liability costs, as well as a lower tax rate.\

BJ’s said it expects to open as many as 15 restaurants this year, as planned, Deitchle said.

However, with retail projects delayed or canceled by developers because of the slowing economy, Deitchle said BJ’s may not see as many quality locations for future growth, though the company plans to stick with its philosophy of selecting only “AAA-quality” sites in mature, densely populated trade areas with premium co-tenants.

“BJ’s four-wall economics are sound, and they support a continued steady pace of new restaurant expansion,” Deitchle said. "However, we depend on major retail project developers to provide us with a predictable supply of quality sites, and this supply is now more constrained.”

Deitchle said the company will announced growth plans for fiscal 2009 within the next couple months, but that the company is planning on growth in total restaurant operating weeks of 15 percent ot 18 percent.