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CKE Reports Loss Due to Hardee's Write-Off

June 14, 2002|MARC BALLON | TIMES STAFF WRITER

CKE Restaurants Inc., owner of the Carl's Jr. and Hardee's hamburger chains, Thursday announced a large quarterly loss stemming from a write-off due to a reduction in the value of its Hardee's acquisition.

However, both Carl's Jr. and Hardee's reported continued sales growth at restaurants open at least a year, a key industry measure. And excluding the write-off, CKE said it would have made a profit of $13.2 million, or 23 cents a share.

"All in all, it was a pretty positive quarter," said Anton Brenner, an analyst at Roth Capital Partners.

The Santa Barbara-based chain said it lost $162.6 million, or $2.84 a share, in its fiscal first quarter ended May 20, with the $175.8-million Hardee's charge. That compares with a loss of $37.1 million, or 74 cents a share, a year earlier. Sales fell nearly 8% to $434.5 million because of the sale and closure of under-performing stores.

The company bought Hardee's four years ago for about $760 million. The chain's value has declined because annual sales at a typical outlet are lower than in 1998.

Carl's Jr. reported a same-store sales hike of 4.2%, its fifth consecutive quarter of comparable sales growth. Hardee's sales increased at a more modest 0.3%. The strong performance of such premium products as the Six-Dollar Burger helped drive sales, the company said.

Hardee's, which has dramatically scaled back its product discounting, contributed $2.4 million to operating income, excluding some charges. That contrasts with an operating loss of $4.5 million in the same period last year.

CKE, which recently has diversified its holdings by snapping up the Green Burrito and La Salsa Mexican chains, said it expects to earn 57 cents to 60 cents this year, before so-called goodwill write-offs like the one related to Hardee's.

CKE shares increased 10 cents on Thursday to close at $10.10 on the New York Stock Exchange.

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