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Jack in the Box's Profit Falls on Same-Store Sales Dip

May 15, 2003|Karen Robinson-Jacobs | Times Staff Writer

Fast-food chain operator Jack in the Box Inc. said Wednesday that its fiscal second-quarter profit fell 10%, weighed down by its biggest quarterly drop in sales at established restaurants since 1994.

Net income fell to $16.3 million, or 44 cents a share, down from $18.2 million, or 45 cents, in a year ago. Still, the results beat analysts' estimates by 1 cent.

But the lackluster economy, loss of customers to competitors offering bigger discounts, bad weather in some parts of the country and slack sales near military bases during the Iraq war hammered the San Diego company's sales at stores open at least a year -- a key measure of financial health. For the quarter ended April 13, Jack in the Box sales fell 4.3%, compared with a 0.3% drop a year ago.

Total revenue in the quarter was $463 million, up 3.3% from $448 million a year ago.

The nation's fourth-largest burger chain said it anticipates an 18% drop in third-quarter per-share earnings to about 49 cents from 60 cents in the year-earlier period. But it stuck with its estimate for the year of $1.97 to $2.01. Full-year same-store sales are expected to drop 2.5%.

"We anticipated that competitor discounting and weak economic conditions ... would continue to impact sales but unusually high fuel costs and the war in Iraq adversely affected sales as well," Chief Executive Robert Nugent said.

The company's shares Wednesday gained 92 cents to $21.18 on the New York Stock Exchange.

Jack in the Box operates or franchises 1,900 eponymous outlets and 90 Qdoba Mexican Grill restaurants.

Sales at other fast-food chains also fell this winter.

"This was terrible for everyone," said David Geraty, senior restaurant analyst at RBC Capital Markets. "The war, the weather, the economy."

The company's most encouraging figures came from the its Qdoba chain. In its first full quarter since being acquired in January, the chain posted an increase of at least 9.9% in same-store sales, the company said, without providing a figure.

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