Shares in Sonic Corp. fell more than 8 percent Tuesday after the company reported a 35-percent dive in third-quarter profit amid slow sales at its 3,500-unit drive-in chain.
Sonic said Monday afternoon that net income for the May 31-ended quarter totaled $11.0 million, or 18 cents a share, compared with $16.8 million, or 27 cents a share, in the year-ago period. Revenue in the latest quarter declined 19.4 percent, to $145.9 million.
Systemwide same-store sales fell 6 percent in the third quarter, the company said. Same-store sales at partner drive-ins, or those in which Sonic owns a majority interest, declined 6.3 percent.
Sonic's stock price closed Tuesday at $8.52, down 8.3 percent.
Clifford Hudson, chairman and chief executive of Sonic, said in a statement Monday that the economy remained a challenge for the chain and its customers.
"In this fourth quarter and beyond, we are committed to managing our business with initiatives that are aligned with our core brand strengths and are relevant to the consumer," he said. "We believe these steps, which include a new value promotion strategy, new messaging, a targeted media allocation strategy and, most recently, a product quality initiative, will result in improvements in performance."
Sonic lowered its earnings outlook for the full fiscal year, citing same-store sales declines, diminished margins and other factors. The company said it now expects earnings for 2010 will total between 50 cents and 55 cents per share, compared with fiscal 2009 earnings of 72 cents per share, excluding gains and provisions for impairment. The company earlier had projected 2010 earnings in the range of 55 cents to 60 cents per share.
Also on Monday, the Oklahoma City-based company said it had hired Danielle Vona to serve as chief marketing officer. Vona is an 11-year veteran of PepsiCo, where she most recently served as vice president of marketing.
Contact Ron Ruggless at [email protected].