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Sales at Carl's Jr. fall, while Hardee's improves

CKE: High unemployment still hurting West Coast stores

The high unemployment rate in California continued to hurt sales at Carl’s Jr. in the second quarter, deepening the loss for parent company CKE Restaurants Inc., the now-private company reported Tuesday.

Carpinteria, Calif.-based CKE Restaurants, parent to both the Carl’s Jr. and Hardee’s quick-service chains, was acquired in July by Columbia Lake Acquisition Holdings Inc., an affiliate of Apollo Management VII LP. Officials have indicated that quarterly reports will continue under the new owners.

For the second quarter ended Aug. 9, which included about four weeks under the new owners, CKE reported a loss of $27.1 million, compared with profit of $12.3 million for the same quarter a year ago. The most recent quarter included $26.8 million in costs related to the merger, which were offset slightly by a $3.4 million gain from the July sale of Carl's Jr.'s distribution business, the company said.

Second-quarter revenue totaled $313.9 million, down 6.6 percent from the year-earlier quarter in part because of the sale of the distribution business, the company said. Excluding the distribution center revenue, CKE's total revenue would have been down 0.9 percent.

Blended same-store sales Carl's Jr. and Hardee's were down 1.1 percent, an improvement over the 4.6-percent decrease of blended same-store sales in the second quarter of fiscal 2010.

Carl’s Jr.'s same-store sales for the most recent quarter fell 7.4 percent, compared with a 6.1-percent decline in the same quarter last year.

Sister brand Hardee’s, on the other hand, with 1,898 locations located primarily in the Midwest and Southeast, reported a same-store sales increase of 6.8 percent in the second quarter, compared with a 2.7-percent drop for the same quarter last year.

Andrew Puzder, CKE’s chief executive, continued to blame the weak economy in California, the core market for the 1,239-unit Carl’s Jr. chain.

“While the weak U.S. economic environment, particularly the ongoing high unemployment rate among our core target audience of young men, continued to impact same-store sales at Carl’s Jr., we experienced a significant improvement in same-store sales at Hardee’s,” said Puzder, noting that Hardee’s same-store sales have been positive for six consecutive periods.

Puzder said the company planned to stay the course.

“We remain focused on maintaining our premium-quality brands and improving same-store sales with innovative products and cutting-edge advertising that focuses on the taste, quality and value of our products,” he said.

Contact Lisa Jennings at [email protected].

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