Jack in the Box earnings decline in 3Q
Jack in the Box reported a 38-percent drop in earnings for the third quarter on Wednesday, and the company said it is looking at workforce reductions, restructuring functions and opportunities for outsourcing.
For the quarter ended July 8, the San Diego-based company reported net income of $11.6 million, or 26 cents per share, compared with $18.7 million, or 38 cents per share, in the year-earlier period. Gains from refranchising contributed about 5 cents per share for the quarter compared with a benefit of about 13 cents in the prior year quarter.
This fiscal year, the parent to the namesake quick-service chain and the fast-casual Qdoba Mexican Grill brand has been conducting a comprehensive review of its organization structure, including workforce reductions, the company said.
The quarter’s results included a restructuring charge of $11.3 million, or about 16 cents per share, related primarily to costs resulting from employees electing to participate in a voluntary early retirement program. More restructuring charges are expected during the fourth quarter, the company said.
During the quarter, Jack in the Box also entered into an agreement to outsource its distribution business, a move that is expected to be completed by the end of the first quarter of fiscal 2013.
Revenues for the quarter declined about 3 percent to $501.8 million.
For the Jack in the Box brand, same-store sales increased 2.8 percent systemwide, with an increase of 3.4 percent at company-owned locations and 2.6 percent at franchised units. Qdoba’s same-store sales rose 2.1 percent systemwide, with an increase of 3.3 percent for company-owned units and 0.9 percent for franchised units.
Linda Lang, Jack in the Box Inc.’s chair and chief executive, said same-store sales increases at company locations were driven by traffic growth and climbing average checks.
“Four weeks into the fourth quarter, our same-store sales are tracking above our third quarter results,” she said in a statement. “We believe the same-store sales increases we’ve experienced over the last seven quarters reflect the investments we have made to drive sustainable growth by enhancing the entire guest experience at the Jack in the Box brand.”
At the end of the quarter, the company operated 2,247 Jack in the Box locations, and another 1,661 were franchised. The company owns 614 Qdoba restaurants, and another 310 are franchised.
For the year, the company slightly upgraded projections for Jack in the Box, saying same-store sales will increase 4 percent to 4.5 percent. However, Qdoba’s system projections were downgraded slightly to between 2.5 percent and 3 percent. Earlier, the company had said same-store sales would grow between 3.5 percent and 4.5 percent for both brands.
Earnings per share will range between $1.48 and $1.58, excluding restructuring charges, the company estimated.
By the end of the year, the company is expecting to sell about 100 Jack in the Box locations to franchisees in an ongoing refranchising effort, which is expected to generate proceeds of about $45 million.