LOUISVILLE Ky. Shares in Texas Roadhouse Inc. fell to an all-time low Tuesday, a day after the company reported an 18-percent decline in third quarter profit and said it would slash plans for new company stores next year.
For the quarter ended Sept. 23, Texas Roadhouse posted net income of $8.6 million, or 12 cents per share, which was down from earnings of $10.5 million, or 14 cents per share, in the same quarter a year ago.
Revenue increased 15 percent to $217.7 million, driven primarily by more restaurants in operation. Third quarter same-store sales fell 3.2 percent at company restaurants and 4.5 percent at franchised stores, Texas Roadhouse reported Monday.
G.J. Hart, president and chief executive of the 308-unit Texas Roadhouse, said the company would slow company store development in 2009 to 15 new stores, or about half the 29 company stores expected to open this year. So far this year, Texas Roadhouse has opened 23 corporate stores and one franchised store and closed one corporate unit.
Hart said the company believed that "moderating our new restaurant development plan, maximizing free cash flow and maintaining our conservative balance sheet are the right things to do for the long-term success of the Texas Roadhouse brand."
Morgan Stanley research analyst John Glass praised Texas Roadhouse's decision to slow growth, saying in a report, “Management is doing the right things by slowing development, focusing on operations, emphasizing value and eschewing discounting, but uncertainty remains.”
Texas Roadhouse said it anticipated flat earnings for fiscal 2008, as compared with 2007, when the company earned 51 cents per share. That projection takes into account an extra operating week for the current year, which the company said could boost earnings by as much as 2 cents per share. Full-year same stores sales are expected to fall between 2 percent and 2.5 percent, the company said.
The company reported that same-store sales were down 4.5 percent for the first four weeks of the current fourth quarter.
On Tuesday, shares in Texas Roadhouse fell 3.8 percent to close at $6.87, a new low for the company. In the past year, Texas Roadhouse has traded as high as $13.60 a share.
Based in Louisville, Texas Roadhouse operates 238 casual restaurants and franchises 70 branches.
