Jack in the Box Posts Weaker-Than-Expected Results -- Update
February 17 2016 - 6:34PM
Dow Jones News
By Joshua Jamerson
Jack in the Box Inc. reported results that fell short of
expectations for its latest quarter as its namesake restaurants
struggled amid new offerings at rival chains.
Shares fell 20% to $61.82 in after hours trading on Wednesday
after ending the day up 2.7% at $76.91.
Chairman and Chief Executive Lenny Comma said sales were
sluggish at Jack in the Box restaurants "as several competitors
began promoting aggressive value offers."
The company reported weakness in its breakfast and lunch
offerings during the period and blamed the timing of its
promotions. Mr. Comma said a "competitor's messaging around its
launch of all-day breakfast had some impact on our results,
particularly in the 10:30 a.m. to noon period."
In January, McDonald's Corp. posted its best U.S. quarterly
sales in nearly four years, driven by its recently launched all-day
breakfast menu.
Jack in the Box also narrowed its guidance for the year ending
in October, estimating earnings, excluding items, of $3.50 to $3.63
a share, compared with its earlier forecast of $3.55 to $3.70.
Jack in the Box and other chains have vied to come up with a
value offering that would resonate with customers. McDonald's
recently launched a new value meal that allows customers to pick
two menu items for a total of $2. Wendy's Co. reported
better-than-expected profit earlier this month by offering meals
for $4.
Jack in the Box has previously attributed prior revenue growth
to less discounting, with higher prices for breakfast, dinner and
"late-night" generating the strongest growth. In 2013 the company
introduced "munchie meals" to try to drive more post-dinner
sales.
In all, for the quarter ended Jan. 17, the company earned $33.2
million, or 92 cents a share, compared with $35.8 million, or 91
cents a share, a year earlier.
Operating earnings were 93 cents a share. Analysts polled by
Thomson Reuters projected earnings of $1.03 a share on that
basis.
Revenue edged up 0.5% to $470.8 million. Analysts had projected
revenue of $475 million.
At the Jack in the Box brand, systemwide same-store sales rose
1.4%, with a 0.5% increase at company-owned restaurants.
The Qdoba chain posted a 1.8% systemwide increase, with
same-store sales up 1.5% at company-owned locations. The company
had projected 1% to 3% same-store sales increases for company-owned
Jack in the Box restaurants and growth at Qdoba company-owned
restaurants of up to 2%.
Qdoba, acquired in 2003, has posted stronger same-store sales
growth than the flagship chain in recent quarters.
For the current quarter, the company expects Jack in the Box
same-store sales to fall as much as 3% at company-owned
restaurants. For Qdoba, the company anticipates sales rising up to
3% at company restaurants.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
February 17, 2016 18:19 ET (23:19 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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