CARPINTERIA Calif. Aggressive cost management and a focus on premium products helped drive up fourth-quarter net income at CKE Restaurants Inc., despite a slight drop in revenues, officials said Wednesday.
For the fourth quarter ended Jan. 31, net income for the parent of the Carl’s Jr. and Hardee’s brands was $2.6 million, or 5 cents per share, compared with $98,000, or nil per share, the year earlier. Revenues for the quarter fell about 3 percent to $327.4 million.
For the year ended Jan. 31, profits jumped nearly 19 percent to $37 million, or 69 cents per share, compared with $31.1 million, or 50 cents per share, in the prior year. Revenues for the year dropped 3 percent to $1.48 billion.
The company also recorded $9 million in interest expense for the year resulting from adjustments related to an interest rate swap agreement. Without those adjustments, earnings per share would have been 79 cents for 2009, versus 62 cents the prior year.
Andrew Puzder, CKE chief executive, said, “Fiscal 2009 was an extremely challenging year for our economy, including record commodity costs, the collapse of the credit markets and a significant decline in consumer spending in the latter half of the year.”
However, Puzder said, “We believe both of our brands remained well-positioned to attract those consumers looking for premium-quality products as they trade down from more expensive dining options.”
Puzder said the company would continue to focus on the value of its products compared to casual-dining fare.
“While we will continue to promote the price and affordability of certain products through point-of-sale materials and couponing, we believe that focusing our television advertising on the value of our premium products will positively distinguish us from our competitors, drive sales at both brands and preserve our profitability and brand equity over the long term,” he said.
Both Carl’s Jr. and Hardee’s saw same-store sales increase and hit record average unit volumes in fiscal 2009. Same-store sales at company-owned units were up 2.1 percent at Carl’s Jr. for the year, and revenues for the brand were up 5 percent.
At company-owned Hardee’s units, same-store sales were up 1.2 percent for the year, but revenues dropped 16.5 percent, in part because the chain completed its refranchising effort during the year, selling 102 restaurants to franchisees for a total of 238 restaurants sold over the past two fiscal years, officials said.
The company mitigated rising commodity costs and minimum-wage increases by aggressively managing costs at the store level and raising prices, Puzder said.
Based in Carpinteria, CKE had a total of 3,116 franchised or company-operated restaurants in 42 states and in 14 countries as of Jan. 26, including 1,195 Carl's Jr. restaurants and 1,908 Hardee's restaurants.
Contact Lisa Jennings at [email protected].
