NASHVILLE Tenn. O’Charley’s Inc., operator or franchisor of 364 restaurants under three brands, posted a 34-percent jump in its first-quarter profit as a large income tax benefit and reduced operating costs offset the company’s stalled sales.
For the quarter ended April 20, O’Charley’s earned $10.7 million, or 49 cents per share, compared with year-ago earnings of $8.0 million, or 33 cents per share. Aiding the latest-quarter profit growth was a $6.0 million income tax benefit, versus a $2.7 million income tax expense in the year-ago quarter. In addition, O’Charley’s recorded year-to-year drops in food and beverage costs, pre-opening expenses and general and administrative costs.
Income from operations in the latest quarter totaled $8.6 million, down from $14.6 million in the year-earlier quarter, and earnings before income taxes totaled $4.7 million in the latest period, down from $10.7 million last year.
First quarter revenue fell 4.9 percent to $297.5 million, and same-store sales were negative at each of the company’s brands, the 240-unit O’Charley’s, the 114-unit Ninety Nine Restaurant and the 10-unit Stoney River Legendary Steaks. Same-store sales fell 4.7 percent at O’Charley’s corporate units, 3.2 percent at Stoney River, and 2.2 percent at the Ninety Nine. The same-store sales decrease at O’Charley’s reflected a year-to-year drop in guest traffic of 8 percent, the company reported, and a 3.6-percent lift in average check.
The casual-dining operator lowered its earnings outlook for the remainder of the year, citing current economic conditions, its expectations for continued negative sales at each chain and a lowered outlook on spending for new unit openings and the company’s remodeling initiative. The company had expected to rebrand about 110 restaurants this year, but now said it would remodel about 80 locations.
Full-year, per-share earnings are expected to total between 18 cents and 28 cents, down from a previously expected range of between 30 cents and 40 cents a share. Last fiscal year, O’Charley’s earned 74 cents per share. The updated guidance includes anticipated per-share charges of between 30 and 35 cents related to the rebranding of its restaurants.
Gregory L. Burns, chairman and chief executive, said the current economy’s impact on consumer spending have made it a challenging time for all restaurant companies.
“Higher energy and food prices, lower home values, and generally negative economic news have made consumers more cautious about their spending, which we believe contributed significantly to our same-store sales performance,” he said in a statement.
