Thursday, quick service drive-in restaurants operator Sonic Corp. (SONC) said its same-store sales and partner drive-ins for the fourth quarter declined from the prior year, due to a fall in consumer spending, but improved from the preceding third quarter, helped by the company's sales-driving initiatives. Looking ahead to fiscal 2010, Sonic expects earnings per share to increase in the range of 10% to 12% from fiscal 2009 reported earnings, excluding special gains and impairment charges.
The Oklahoma City, Oklahoma-based company's same-store sales during the quarter declined 4.5% for the system and 5.4% for partner drive-ins, in which the company owns a majority interest, as challenging economic environment continued to constrain consumer discretionary spending, the company said. However, Sonic noted that its sales performance improved from the preceding third quarter, reflecting the positive impact of its sales-driving initiatives, which resulted in a relatively flat traffic, compared to the prior year. Fifteen analysts have a consensus revenue estimate of $170.48 million for the fourth quarter. During its third quarter, the company had reported a 10% decline in revenues to $191.90 million from $213 million in the prior-year quarter, reflecting lower restaurant sales at partner drive-ins as well as the impact of refranchising on the company's revenue mix.
According to the company, drive-in openings for the fourth quarter totaled 41, including 40 by franchisees, compared to 45 franchise drive-in openings in the year-ago quarter and 32 franchise drive-in openings in the immediately preceding third quarter. For the fiscal year, the company said there were 130 franchise openings, in comparison with 140 openings in the previous year. Clifford Hudson, chairman and chief executive officer said, "During the year, we completed the refranchising of approximately 200 partner drive-ins to both new and existing franchisees, reflecting the confidence our franchisees have in our brand. With this initiative nearly complete, we have achieved our goal to decrease both financial and operational risks to our stockholders." Looking ahead to fiscal 2010, Sonic expects net income per share to increase in the range of 10% to 12% from fiscal 2009 reported earnings, excluding special gains and impairment charges. The company noted that these expectations are based on some assumptions including capital expenditure in the range of $30 million to $40 million and a flat same-store sales at both partner and franchise drive-ins. Analysts polled by Thomson Reuters currently expect the company to report earnings of $0.80 per share for fiscal 2010. Analysts' estimates typically exclude special items. "Although we have faced significant challenges this past year related to the consumer, we are confronting these hurdles and believe that our brand is well-positioned for long-term growth," added Hudson. Sonic said it expects to report its fourth quarter and fiscal year end results at the market close on October 20, 2009.
SONC is currently trading at $12.42, up $0.40 or 3.33%, on a volume of 235 thousand shares.
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