SCOTTSDALE Ariz. P.F. Chang’s China Bistro Inc. on Wednesday reported a 20-percent plunge in third-quarter net income that the company blamed on declines in same-store sales and rising costs.
The Scottsdale-based company, which operates the namesake full-service Asian dining chain as well as the fast-casual Pei Wei Asian Diner, also revised downward its full-year earnings forecast to $1.19 per share from $1.34 per share. P.F. Chang’s said the revised projection reflected lower revenue growth from anticipated same-store sales declines at both chains and the ongoing current-year cost trends including increased operating expenses. In addition, lower-than-expected sales at new Pei Wei stores would negatively affect profit for the year, the company reported.
P.F. Chang’s, typically a star in the industry, reported the same double-whammy of weaker sales and higher costs that many bellwethers in the restaurant sector also have reported for the fiscal third quarter.
“While not too surprising given consumer trends in restaurants and retail, [P.F. Chang’s results] mark a continuation of guarded guidance from companies that have reported,” Steven Kron, an analyst with Goldman Sachs in New York, said in a note to clients. “[That] suggests that the road gets rougher still before year-end.”
Kron rates P.F. Chang’s shares as “neutral.” Goldman Sachs does hold an investment banking relationship with P.F. Chang’s.
For its latest quarter ended Sept. 30, P.F. Chang’s reported net income of $5.3 million, or 20 cents per share, down from year-earlier results of $6.6 million, or 25 cents per share. Latest-quarter revenues increased 17.3 percent from a year ago to $270.9 million, mainly on new restaurant openings.
Revenues at the P.F. Chang’s Bistro chain rose 12.8 percent to $208.5 million, which was still $1.1 million below the company’s forecast. Same-store sales declined 1.6 percent on reduced traffic, the company reported.
Revenues for the Pei Wei concept increased 33.9 percent to $61.7 million, which also was $1 million below the company’s forecast. The sales miss was pegged to lower-than-expected sales both at new stores opened during the year as well as at existing locations. Same-store sales fell 1 percent.
P.F. Chang’s said its board of directors on Oct. 19 increased the amount of the current share repurchase program authorization from $50 million to $100 million. Chang’s said it intended to use cash on hand and available credit lines to buy back shares.
In addition to the 162-unit China Bistro and 137-unit Pei Wei, the company also has one unit of Taneko Japanese Tavern in Scottsdale.