CKE Restaurants, Inc. (NYSE: CKR) announced September 14 the results for its second fiscal quarter, the 12 weeks ended August 14, 2000. Results for the quarter are as follows:
• Net income (loss) for the second quarter decreased $24.2 million to a
net loss of $13.9 million, or $(0.28) per share on a diluted basis, compared with net income of $10.3 million, or $0.20 per share on a diluted basis for the same prior-year period. Excluding the impact of
the losses incurred on the sale and closure of company-operated restaurants during the quarter, the net loss would have been $3.0 million or $(0.06) per share on a diluted basis.
• Revenues for the 12 weeks decreased $26.8 million, or 5.8 percent, to $438.5 million as compared with the second quarter of the prior year. Revenues for Carl's Jr. and Taco Bueno increased $11.8 million and $1.9 million, or 7.2 percent and 8.8 percent, respectively, while Hardee's revenues decreased $40.2 million from the prior-year period. The decrease in Hardee's revenues is primarily due to the divestiture
of company-operated restaurants during the current fiscal year in connection with the company's previously announced refranchising program and the continuing same-store sales decline.
• Company-operated restaurant-level margins for the quarter were
20.7 percent for Carl's Jr., down 4.1 percent as compared with the
prior year. Hardee's company-operated restaurant-level margins were
7.4 percent in the second quarter of fiscal year 2001 as compared with
15.5 percent in the prior year. Taco Bueno's restaurant-level margins
were 23.0 percent, down 2.0 percent from the prior year.
• Company-operated Carl's Jr. same-store sales increased 2.3 percent for
the second quarter and same-store sales from the Carl's Jr. franchise
system were up 5.7 percent, for an overall system increase of
3.4 percent. company-operated Hardee's same-store sales were down
8.4 percent. Hardee's franchise restaurants were down 5.1 percent for
the quarter, for systemwide same-store sales of negative 6.7 percent.
Same-store sales at Taco Bueno decreased 2.1 percent for the quarter.
Year-to-date results are as follows:
• Net income (loss) for the 28-week period was a loss of $16.4 million,
or $(0.32) per share on a diluted basis, compared with net income of
$29.7 million, or $0.56 per share on a diluted basis for the same
period of the prior year. Excluding the impact of the losses incurred
on the sale and closures of company-operated restaurants during the
year, the net loss would have been $6.0 million or $(0.12) per share on
a diluted basis.
• Revenues for the 28 weeks decreased to $1.023 billion, down
$38.2 million, or 3.6 percent, from the prior year-to-date period.
Revenues increased $28.6 million, or 7.7 percent, for the Carl's Jr.
chain and revenues for the Taco Bueno chain increased $4.5 million or
9.3 percent from the prior year-to-date period. Hardee's revenues
decreased $70.8 million, or 11.2 percent, as compared to the prior
• Company-operated restaurant-level margins for the Carl's Jr. chain
decreased 2.9 percent to 21.3 percent for the 28 weeks.
• Restaurant-level margins at Taco Bueno were 22.8 percent, a decrease of
3.4 percent as compared to the prior year-to-date period. Hardee's
restaurant-level margins decreased to 9.6 percent from 16.2 percent in
the prior year-to-date period.
"As CKE's new president and CEO, I am ready to take the baton from Tom Thompson and run,'' said Andrew F. Puzder. "Together with the rest of the CKE team, I am confident that we will succeed. Our focus will continue to be on reducing our leverage and turning around sales, improving operations and completing the refranchising plan at Hardee's. We are making significant progress with that plan, which will allow us to reduce debt and rebalance the Hardee's system to a more manageable number of company restaurants.
" Our sales to date of 254 Hardee's restaurants generating approximately $73 million of net cash proceeds, along with several pending transactions, have us well on our way to rebalancing the Hardee's system and reducing our leverage in a meaningful way. I believe our refranchising plan is one of the solutions to accelerating the recovery at Hardee's. It not only allows us to put the restaurants in the hands of very capable franchise operators and more effectively allocate our company management resources, but allows us to transfer a portion of the capital requirements of remodeling restaurants to the new franchise owners, enabling us to complete remodels more quickly.''
The company announced last week that it has signed a letter of intent to sell Taco Bueno to Red Tail Ventures LLC for an amount in excess of $90 million. The transaction is expected to be completed during the company's fourth quarter. In addition, the company anticipates selling 75 to 100 Carl's Jr. units within the fiscal year.
Carl's Jr. reported its third consecutive quarter of same-store sales increases, up 3.4 percent systemwide. The chain also continues to experience strong new unit openings with 15 new units opened during the quarter. "Over the past several months we have invested additional labor to reinforce guest service, which, along with the continuing strong sales of our $0.99 Spicy Chicken Sandwich and increased beef prices, resulted in some erosion of our restaurant-level margins -- although still strong at 20.7 percent,'' Puzder stated. "With sales and transactions up and Carl's Jr. attribute ratings at their highest levels in the past two years, we will refocus on margin improvement.''
Sales at Taco Bueno were down 2.1 percent for the quarter, rolling over a 7.2 percent increase in the prior-year second quarter and five years of same-store sales growth. The chain, however, continues to excel, posting industry-leading restaurant-level margins.
Puzder added, "From an operating results outlook, excluding asset sales and any additional store closures, we are anticipating losses in fiscal year 2001 to be in the range of $0.28 to $0.38 per share. We anticipate that EBITDA for the fiscal year will be in the range of $135 million to $145 million.''
At the company's board of directors meeting on September 6, 2000, the board elected not to declare the regularly scheduled $0.04 semi-annual cash dividend at this time.
CKE Restaurants, Inc., through its subsidiaries, franchisees and licensees, operates more than 3,800 quick-service restaurants, including 962 Carl's Jr. restaurants located in 13 Western states and Mexico; 2,762 Hardee's restaurants in 34 states and 10 foreign countries; and 125 Taco Bueno restaurants in Texas and Oklahoma.