Sonic Gives Disappointing Annual Guidance
October 24 2016 - 7:30PM
Dow Jones News
Fast-food chain Sonic Corp. expects the weak consumer spending
and competitive pressure that led to a sharp sales slowdown in the
most-recent period to carry into the current fiscal year.
Shares, down 18% this year, fell 12% to $23.39 in after-hours
trading, below its 52-week low.
The Oklahoma City-based company said Monday it projects adjusted
per-share profit for its current fiscal year to be flat to down as
much as 7% from the previous fiscal year ended Aug. 31, with
comparable sales, which Sonic defines as sales at stores open for
at least 15 months, between flat and down 2%.
For the year ended Aug. 31, comparable sales rose 2.6%, a sharp
deceleration from the 7.3% increase it reported the year
before.
Analysts surveyed by FactSet had expected per-share adjusted
profit to increase further this year with comparable sales
improving 0.9%.
Sonic, which targets 14% to 20% per-share profit increases, is
pushing to convert about 95% of its stores to franchises by the end
of the current business year.
Over all, Sonic's fourth-quarter profit fell 3% to $25.4
million, or 53 cents a share. Excluding certain items, profit rose
to 45 cents a share from 43 cents a year earlier. The results, at
the high end of preliminary earnings the company released last
month, are based on 9% fewer shares outstanding.
Revenue, which includes franchise royalties and fees, fell 7.5%
to $162.1 million, short of the $167.2 million projected by
analysts surveyed by Thomson Reuters. Meanwhile, comparable sales
fell 2%, compared with a 2% increase in the previous quarter and
4.9% in the year-before period.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
October 24, 2016 19:15 ET (23:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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