Jack in the Box Reports Lower Sales, Cuts Restaurant Count as Turnaround Continues

Dow Jones08-13

Jack in the Box reported lower sales and profit in its fiscal third quarter as the burger chain continued to close restaurants and work to improve franchisee profitability.

The San Diego-based company on Wednesday reported net earnings from continuing operations of $20.1 million, or $1.04 a share, down from $22.0 million, or $1.16 a share, a year earlier. Excluding certain items, operating earnings per share fell to 96 cents from $1.04.

Revenue declined 1.8% to $257.7 million from $262.4 million a year earlier. This was due to same-store sales declines and a lower number of restaurants. Analysts surveyed by FactSet expected revenue of $264.6 million.

The company said that same-store sales fell 1.1% in the quarter, with transactions declining despite higher prices. Systemwide sales fell 1.4%.

Jack in the Box closed 17 restaurants and opened four during the quarter, leaving it with 2,115 Jack in the Box locations at the end of the period, down from 2,168 a year earlier.

The restaurant closures are part of the company's "JACK on Track" program, which includes closing underperforming locations and selling real estate as the company works to improve its business.

Mark King, Jack in the Box's interim chief executive, said he had spent his first months in the role meeting with franchisees and employees and evaluating the business.

"With our refinancing now complete, we're fully focused on improving restaurant performance," King said. He added that the company was focused on strengthening franchisee profitability, improving execution and building a foundation for longer-term growth.

Jack in the Box also updated its outlook for the fiscal year ending Sept. 27. The company now expects to end the year with about 2,100 restaurants, including roughly 25 new openings and 50 to 60 closures, most of them franchise locations. The company maintained its forecast for a low-single-digit decline in same-store sales for the full fiscal year.

The company expects capital expenditures between $45 to $55 million, focusing on investment in technology to drive sales.

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