Fast-food restaurant operator Jack in the Box Inc. said Tuesday that it expects its fiscal second-quarter profit to meet the lower end of forecasts because of higher energy costs. Its stock fell 11%.
San Diego-based Jack in the Box said it will meet the lower end of its estimate for the quarter of 46 cents to 50 cents per share. The company is expected to earn 48 cents a share, the average estimate of six analysts surveyed by First Call/Thomson Financial.
Chief Executive Robert Nugent said at a Banc of America Securities conference that the company expects to meet the lower end of its annual earnings forecast of $2.20 to $2.30 a share.
Shares of Jack in the Box fell $3.42 to close at $26.69 on the New York Stock Exchange.
"California is clearly the problem for Jack in the Box and it could get worse later in the year," said Charles Weissman, a Bear, Stearns & Co. analyst who rates the shares "buy." "Most of their restaurants are company-owned, not franchised, so the company has direct exposure to higher energy costs."
Jack in the Box has about 1,700 restaurants in 16 states. About half of its outlets are in California, where energy costs have soared.
Jack in the Box spokesman Brian Luscomb said the company is also being affected by higher energy prices in Oregon and Washington.
Weissman said he cut his 2001 earnings estimates to $2.17 from $2.28 a share and his 2002 estimates to $2.50 from $2.60.
On Monday, Oakland-based Dreyer's Grand Ice Cream Inc. cited higher energy costs as one of the factors contributing to a weak 2001 profit forecast.
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At a time when rivals are struggling to stand out in the fiercely competitive fast-food industry, Jack in the Box has generally gotten favorable reviews from investors. Its stock has risen nearly 30% in the last year. But the company warned that higher energy costs may affect profit.
Jack in the Box, monthly closes and latest on the NYSE
Tuesday: $26.69, down $3.42
Source: Bloomberg News