Industry News | October 31, 2008
BK Not As Strong As Expected
* Revenues up 12 percent to $674 million
* 19th consecutive quarter of worldwide positive comparable sales; 3.6 percent
* 18th consecutive quarter of United States and Canada positive comparable sales; 3.0 percent
* Trailing 12-month (TTM) average restaurant sales (ARS) up 8 percent, to $1.32 million – a new record high
* TTM net restaurant count increases by 342 – on target to meet annual guidance Burger King Holdings, Inc. delivered robust revenue growth led by an increased number of company restaurants, positive worldwide comparable sales in all segments and significant worldwide net restaurant expansion.
Comparable sales were up 3.6 percent, marking the 19th consecutive quarter of worldwide same-store-sales growth. In the United States and Canada, comparable sales were up 3.0 percent, the 18th consecutive quarter of same-store-sales growth. Additionally, the system opened 67 net new restaurants, the highest number of first quarter net restaurant openings in seven years.
As a result, the company posted strong revenues for the first quarter of $674 million, up 12 percent from $602 million in the same quarter last year.
Comparable sales worldwide were fueled primarily by the implementation of strategic pricing as well as a strong mix of high demand indulgent and value product offerings and promotional tie-ins. Results were also aided by regionally based offerings such as the successful introduction of an innovative and healthy kids meal, which includes BKTM Fresh Apple Fries and nutritionally fortified Kraft Macaroni and Cheese in the U.S. and Whopper sandwich limited time offers in both Europe and Latin America. Also contributing to sales were family promotions used throughout many markets including Pokemon, Crayola, and Neopets.
“We significantly expanded our revenue as we leveraged our global footprint and broad-based consumer appeal," says John Chidsey, chairman and CEO. "Our guests continue to seek our affordable pricing, elevated quality and convenience. We believe our brand is positioned to perform well in spite of the current economic slowdown as proven by our track record of continued sales increases."
Worldwide trailing 12-month ARS reached a record high--posting an 8 percent increase to $1.32 million compared to $1.22 million in the same period last year. Worldwide first quarter fiscal 2009 ARS increased 5 percent to $343,000 compared to $327,000 in the same quarter last year.
“We are very pleased with our top-line performance; however, we recognize company restaurant margins were significantly pressured by record high commodity costs, expenses related to our U.S. and Canada reimaging program and acquisition start-up costs,” Chidsey says.
The company’s earnings were also impacted by an incremental $9 million of expenses recorded in Other Income and Expense as compared to the same period last year. Five million (equaling $0.02 of EPS) of the increase consisted of primarily non-cash expenses resulting from volatility in foreign currencies and interest rate markets.
For the quarter, the company reported earnings per share of $0.36 compared to $0.35 in the same quarter last year. Adjusted earnings per share, excluding $3 million of adjustments, increased 9 percent percent to $0.38 compared to $0.35 in the year ago period. These adjustments consisted of expenses related to the previously announced acquisition of 72 franchise restaurants, specifically settlement charges and start-up costs.
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