Total revenues for the fiscal third quarter 2007 grew 2.1% to $153.6 million compared to the same quarter last year. During the third quarter, same store sales declined by 4.3% reflecting continued consumer challenges as some segments of Steak n Shake consumers continue to be sensitive to high gasoline prices and mortgage interest rates. In addition, the Company’s new product launch of chicken sandwiches and entree salads, while well received by consumers in early results, have not yet resulted in a significant increase in guest counts.
Net earnings for the fiscal third quarter 2007 were $0.1 million, or $0.00 on a per diluted share basis, compared to $7.3 million, or $0.26 per diluted share, in the prior year period. During the third quarter of 2007 pre-tax charges totaling $5.4 million ($3.3 million or $0.12 per share, net of tax) were recorded for impairment charges primarily related to the planned closure and expected sale of fourteen Company owned restaurants and $0.4 million ($0.2 million, or $0.01 per share net of tax) related to non-operating expenses related to evolution of the organization and completion of major IT projects. Earnings were also impacted by higher commodity costs and minimum wage increases experienced during the fiscal third quarter, partially offset by a favorable effective tax rate.
Peter Dunn, President and Chief Executive Officer commented, “During the third quarter we continued to manage through a difficult operating environment. Our new product launches have provided consumers with healthier choices which should drive additional guest frequency over time. We are clear that while we have made progress over the past several years improving service, guest satisfaction, and product innovation, we must focus on taking our core products and service to a new level in order to drive same store sales growth and gain share.”
“We are in the process of intensifying our focus on execution excellence, and the testing of an evolved brand positioning based on “food and service exactly the way you want it”. Recent research indicates significant potential upside from initiatives related to this brand positioning. In July, we entered a test market with a new and more integrated approach to enhanced service and a new product launch which builds on our cook to order heritage including “Create Your Own Steakburger”(TM). We anticipate that the impact of these initiatives will help us to gain share in a difficult environment over time.”