DEERFIELD Ill. Having narrowed its fourth-quarter and full-year net losses, fast-casual operator Cosi Inc. said its efforts to cut costs and improve service would help the chain recover from the beating it has taken from the lingering economic downturn.
As Cosi tries to rebuild its sales, which have fallen precipitously during the past few years, it also will have to present a plan to the Nasdaq Hearings Panel to prevent the delisting of its stock, which has fallen below Nasdaq’s minimum bid price of $1 and triggered the process of Cosi's removal from the stock exchange. Nasdaq informed Cosi on March 16 of the possible delisting, which has been stayed pending the company’s appeal.
For the Dec. 28-ended fourth quarter, Cosi reported a net loss of $4.4 million, or 11 cents per share, compared with a net loss of $8.4 million, or 21 cents per share, in the year-ago quarter. The company recorded charges of $1.4 million and $6.3 million in the fourth quarters of 2009 and 2008, respectively, for asset impairment provisions and costs related to closed stores and terminated leases.
Fourth-quarter revenue decreased 8.1 percent to $28.2 million, reflecting a 7.2-percent decline in sales at company-owned stores and a fall in franchise fees and royalties to $529,000 from $875,000 in the fourth quarter of 2008.
Systemwide same-store sales in the fourth quarter fell 5.4 percent, reflecting declines of 6.6 percent at company-owned units and 0.8 percent at franchise locations, Cosi reported. The company operates 99 stores and franchises another 44 locations.
“Although 2009 was a difficult year with the impact on our business of the recession, high unemployment and reduction in consumer spending, we were encouraged by the improvement we saw in our systemwide sales results during the fourth quarter,” said James Hyatt, president and chief executive of Cosi. “Also, given the significant reduction in operating costs, continued improvement in our guest satisfaction ratings and the increased focus on external marketing initiatives, we believe we are well-positioned to drive higher sales and improve our operating margins.”
Cosi's full-year net loss was $11.1 million, or 27 cents per share, compared with a net loss of $16.2 million, or 40 cents per share, in fiscal 2008. The company’s full-year charges were $1.9 million and $7.7 million in 2009 and 2008, respectively, related to asset impairments, store closures and lease terminations.
Revenues for 2009 decreased 12.5 percent to $118.6 million from fiscal 2008, which reflected a 12.2-percent falloff in sales from corporate restaurants to $116.4 million and a decrease in franchise revenue to $2.2 million from $3.1 million in fiscal 2008.
Systemwide same-store sales decreased 10 percent, which included declines of 10.8 percent at company-owned restaurants and 6.9 percent at franchised units.
Cosi soon will present its intentions to the Nasdaq Hearing Panel on its plans to regain compliance with listing rules, which could include a reverse stock split, if other initiatives can’t accomplish those goals.
Cosi's stock has closed under $1 since May 29, 2009. In midday trading Wednesday, the company's stock price was down slightly at 89 cents.
Contact Mark Brandau at [email protected].