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Sizzler Parent's Quarterly Profit Sliced by 14%

New-store costs and legal expenses weigh on Worldwide Restaurant Concepts. Full year net income rises 64%.

June 28, 2003|Karen Robinson-Jacobs | Times Staff Writer

Worldwide Restaurant Concepts Inc., the parent of the Sizzler steak chain, reported Friday that its fiscal fourth-quarter profit fell 14% because of the cost of opening new restaurants and legal expenses.

The Sherman Oaks-based company posted net income of $1.8 million, or 6 cents a share, for the quarter ended April 30, down from $2.1 million, or 8 cents, a year earlier. Fourth-quarter revenue was $71.5 million, up 12% from $63.6 million.

The company owns or has as franchises 317 Sizzler restaurants worldwide, including 244 in the United States; 110 KFC restaurants, mostly in Australia; and 21 Pat & Oscar's restaurants in Southern California.

As was the case for much of the last year, the company's Australian restaurants provided the biggest boost to the bottom line. In the fourth quarter, same-store sales rose 9.9% at KFC and 4% at Sizzler Australia but were offset by a 3.5% drop in sales for Sizzler USA and a 3.1% decline for Pat & Oscar's.

Same-store sales are considered a key measure of a chain's health.

For the full year, the company's net income rose 64% to $7.4 million, or 26 cents a share, up from $4.5 million, or 16 cents, in fiscal 2002. Revenue was $293.5 million, up 10% from $267.2 million.

"Our international opera- tions have clearly hit upon a winning combination ... and it has enabled our Australian Sizzlers and KFCs to post seven and eight consecutive quarters, respectively, of same-store sales growth," Worldwide Chief Executive Charles Boppell said.

But on the home front, the slack economy and troop deployments from military bases reduced sales at Pat & Oscar's locations, most of which are in San Diego County, Boppell said. In addition, opening four Pat & Oscar's restaurants in the fourth quarter dragged down profit.

Worldwide's stock gained 4 cents Friday to $3.13 on the New York Stock Exchange. Although Worldwide shares have climbed 18% since the start of the year, the stock has not consistently traded above $3.50 since the mid-1990s.

"I can't find anything to get excited about," said analyst Michael D. Smith of Fahnestock & Co. in Kansas City, Mo. "I can find other restaurant companies with similar [price-to-earnings] multiples that have better growth prospects."

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