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The earnings per share was at the high end of the company's previously announced projection of $0.06 to $0.08. The company will incur a one-time, pretax charge of approximately $10.9 to $11.4 million, consisting of non-cash asset write-downs for stores to be closed or sold, reserves for future lease costs, and other related charges. On a pretax basis, the company currently estimates that $6.3 million of these one-time charges relating to the asset impairment will be incurred in the third quarter of fiscal 2001, with the remainder of the charges, consisting primarily of closed store lease reserves, to be incurred in the fourth quarter of fiscal 2001. After the one-time charge related to the earnings improvement actions discussed below, the net loss for the third quarter is $3.1 million or $0.34 per share.
Comparable store sales for the third quarter decreased 2.8 percent over the same period a year ago, as general economic conditions appear to have affected guest visits to the restaurants. The company opened five company-owned restaurants during the third quarter, bringing the total number of company-owned restaurants to 140 as of September 30, 2001. The company expects to open a total of 19 company-owned restaurants during fiscal 2001.
Earnings Improvement Actions
Rubio's reports it believes it can significantly improve future earnings by focusing efforts on adding new company units in its core markets of California and Arizona. In order to achieve this focus, the Rubio's says it intends to close certain stores and franchise other existing company stores outside of California and Arizona.
This project, say Rubio's officials, will primarily involve closing up to 11 under-performing stores in Colorado, Utah, and Nevada, and franchising these markets beginning with the remaining nine stores in these markets. In addition, the Rubio's intends to close one under-performing store in California and one in Arizona.
"By narrowing our presence to our best stores in Denver, Salt Lake City, and Las Vegas," said Ralph Rubio, chief executive officer and president, "we believe qualified franchisees that have the experience and infrastructure to support these stores will be successful in developing these markets. The company will then focus its efforts in more quickly building its presence in its core markets in California and Arizona; areas where we have consistently generated higher returns. We believe that these changes will have a meaningful positive impact on earnings per share in fiscal 2002. We believe that these actions will lead to greater profits from both a short term and long term perspective."