J. Alexander's Corporation Reports First Quarter Results for 2006
CEO Stout said that the Company's average guest check, including alcoholic beverage sales, increased by approximately 6% for the quarter, while average guest counts declined by approximately 1%.
Highlights for the most recent quarter compared to the first period of 2005 were as follows:
-- Net sales increased 9.6% to $35,238,000 from $32,154,000.
-- Weekly average same store sales rose 5.1% to $96,100 from $91,400.
-- Net income climbed 51.4% to $1,437,000, or $ .21 per diluted share, from $949,000, or $ .14 per diluted share.
Commenting on the results, J. Alexander's Corporation chairman, president and chief executive officer Lonnie J. Stout II said, "We are pleased with our financial performance for the first quarter. Our improvements were driven by solid same store sales increases, which came in on the high side of our expectations, and stronger restaurant operating margins. While we are quite satisfied with these results, we do want to note that they are compared to a prior year quarter in which cost of sales and other operating costs were relatively high, and we believe our second quarter comparisons will be much more difficult."
Stout said that the Company's average guest check, including alcoholic beverage sales, increased by approximately 6% for the quarter, while average guest counts declined by approximately 1%. Average weekly sales per restaurant advanced 5.9% to $96,800 from $91,400 reported in the corresponding quarter of 2005.
The Company's restaurant operating margins increased to 13.0% of net sales in the first quarter of 2006 from 12.4% in the first quarter of 2005. According to Stout, the increase was due primarily to lower cost of sales as a percentage of sales.
"We continued the favorable trend in cost of sales compared to previous periods beginning in the second quarter last year when we changed to the modified a la carte menu pricing format," Stout explained. "The effects of the menu pricing format change along with menu price increases on selected items combined with emphasis on operating expense management and control allowed us to maintain other restaurant operating expenses in the first quarter of 2006 at the same percentage of net sales as reported in the first period of 2005. This was achieved in spite of significant increases in utility costs."
Stout said the Company's overall outlook for 2006 remains favorable. He noted, however, that the Company posted very strong financial performance in the second quarter of 2005 immediately following its change in pricing format and, as reflected in the Company's business plan, earnings comparisons for the second quarter of the year to the second quarter of 2005 will be difficult because of the reduction in cost of sales and other operating efficiencies achieved in the second period last year. He said that operating expenses continue to be under pressure in 2006 from increases in utility costs, and that training and other general and administrative expenses are expected to be higher in the second quarter of 2006. As a result of the more difficult comparisons and higher projected expenses, the Company currently expects earnings for the second quarter of 2006 to be below those for the second quarter of last year, although earnings for the first half of 2006 are expected to be above those for the first half of 2005.