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Through the first three periods of fiscal 2002, same-store sales increased .5 percent on top of a 4.1 percent increase for the first three periods last year.
"We realize that our guests' spending habits have been affected by national economic uncertainties," said chairman and CEO Robert J. Nugent. "So it's more important than ever to continue offering value-oriented products and pricing, such as the recent addition of a new sandwich—the Big Cheeseburger—to our under-a-dollar Value Menu and free jumbo sizing with the purchase of a Bacon Ultimate Cheeseburger combo meal. In addition, we continue to develop higher standards of customer service that have helped us improve our industry rankings, according to such surveys as QSR Magazine's 2001 Drive-Thru Time Study.''
Based on the softer sales experienced through the first three periods, the company now expects its same-store sales to increase approximately 0.6 percent for the first quarter and approximately 1 percent for the year. These sales estimates are slightly lower than prior guidance; however, the company still expects to meet current earnings per share consensus estimates of 64 cents for the first quarter and $2.18 for the full year due to the implementation of its new Profit Improvement Program.
"In keeping with our philosophy of producing solid, disciplined earnings growth over time, this program is not simply a cost-cutting measure in response to what we feel is a short-term economic downturn," Nugent said. "Rather, it is a comprehensive, company-wide effort designed to develop more effective ways to operate the business to better support our future growth, as well as generate improvements to our current profit margins.'"
With the implementation of this new program, the company now expects its first quarter EBIT margin to be approximately 8.2 percent vs. 8.1 percent in prior guidance, with gross profit rate at approximately 19.3 percent vs. 19.0 percent previously, and with SG&A rate at approximately 11.1 percent vs. 10.9 percent previously, due primarily to reduced leverage on expenses resulting from the lower sales estimates.
For the full year, the company now expects its EBIT margin to be approximately 8.3 percent vs. 8.2 percent in prior guidance, with gross profit rate at approximately 19.4 percent vs. 19.2 percent previously, and with SG&A rate at approximately 11.1 percent vs. 11.0 percent previously, again, primarily due to reduced leverage from lower sales estimates.