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Earnings results include adjustments for the adoption of SAB 101, which occurred in the fourth quarter of fiscal 2001. On a full-year basis, SAB 101 adjustments are expected to have an immaterial impact on operating results.
Restaurant sales for the chain grew 7.4 percent to $418.1 million compared with last year's second quarter. Total revenues grew 8.3 percent to $447.6 million. Year-to-date, sales increased 8.4 percent compared with fiscal 2001, and revenues improved 8.9 percent to $1.04 billion.
Second quarter same-store sales at company restaurants declined 0.3 percent from last year, compared to a 4.1 percent increase last year. Same-store sales for period seven increased 0.4 percent on top of a 3.4 percent increase last year. Year-to-date, same-store sales have improved 0.3 percent on top of a 4.2 percent increase in the prior year.
"I am pleased with our earnings because they continue to reflect management's ability to operate the business prudently through a difficult period without losing focus on current initiatives, while also developing new, long-term strategies," said Chairman and CEO Robert J. Nugent. "The company's new Profit Improvement Program has helped produce a second quarter gross profit rate of 18.7 percent and an SG&A expense rate of 11.1 percent, each 0.1 percent better than forecast. Additionally, I have confidence in our ability to renew our momentum with investments in strategic initiatives currently underway in quality, new product development and technology."
During the second quarter, Jack in the Box introduced three new products, including Jack's Spicy Chicken Club sandwich, Spicy Cheddar Wedges, and the Chocolate Banana Shake, all of which contributed to sales systemwide.
In addition, the introduction of a new antenna ball promotion featuring the San Francisco Giants and Oakland A's baseball teams helped stimulate sales of premium Sourdough Jack combo meals in the Bay Area. During the third quarter, the company plans to roll out the antenna ball promotion with seven additional major league baseball teams from California to St. Louis. Also in the third quarter, Jack in the Box will re-emphasize its value menu and introduce its new Ultimate Berry Shake.
A major new product quality improvement program scheduled for the fourth quarter is designed to enhance the company's sandwich products and will be supported by special advertising, Nugent noted. He added, "Jack in the Box continues to aggressively examine consumer trends to ensure that we remain competitive in our segment."
The company reported that by fiscal year-end it would complete the rollout of a satellite system that improves information gathering and communications, while also providing a platform for future innovation. It is also rolling out a new, point-of-sale (POS) system that will help improve speed of service and guest interaction, as well as provide the technology to implement future loyalty programs and the use of credit/debit cards.
Jack in the Box opened 20 new company restaurants in the second quarter, 2 more units than forecast. Also, as previously forecasted, the company converted 6 of its company restaurants to franchised stores compared with three a year ago, as part of its initial effort to selectively increase the use of franchising in its business model as it grows. At the end of the second quarter, there were 1,476 company restaurants and 341 franchised restaurants for a systemwide total of 1,817 restaurants, compared with 1,693 total units a year ago.
The company estimates that its third-quarter earnings per share will be 57 cents compared with 53 cents in the third quarter last year. Guidance for fiscal 2002 earnings per share is now $2.27, versus $2.24 announced previously.
For the fourth quarter, the company currently expects its earnings per share to be approximately 58 cents compared with 52 cents in the prior year, primarily due to estimated improvements in revenues and gross profit margin.