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Shells chain posts $1.2 million net loss as comps fall 10.8%

TAMPA Fla. Shells Seafood Restaurants Inc. reported a $1.2 million net loss for the second quarter ended July 1, versus a $9,000 loss in the same period last year, on a 12.1-percent decline in revenues to $11.5 million.

The operator of 24 casual-dining outlets blamed a 10.8-percent decrease in same-store sales and two underperforming restaurants that were not in the same-store group. The downbeat comps were also up against a strong performance in last year’s second quarter, when Shell’s same-store sales increased 8.3 percent.

The loss also reflected an asset impairment charge of $610,000 for an underperforming restaurant.

However, Shell’s booked a net gain of $86,000 from the $225,000 sale of a leasehold interest in another underperforming restaurant in June.

The second-quarter net loss equaled a deficit of 5 cents per share; last year’s quarterly loss left nil earnings per share.

Like many chains in casual dining, Shells is blaming negative macroeconomic influences for its troubles. President and chief executive Leslie Christon said the company’s second-quarter setback was related to higher gasoline prices, a difficult local economy in the chain’s Florida trading areas, and competitors’ value offerings that have influenced consumers’ “dining-out patterns.” 

Shells ended the quarter with one fewer restaurant than a year earlier. In the late 1990s the company had a failed expansion and had to close 50 restaurants. Under Christon, a veteran of Brinker International and Darden Restaurants, Shells since 2003 has been trying to re-energize its concept through store remodels and other initiatives.

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