Naugles Reports $2-Million Loss for 3rd Quarter
Although Naugles Inc. increased the number of its outlets and boosted sales of its burritos, hamburgers and tostadas during the period, the Mexican-American fast-food chain said Tuesday it still lost $1.9 million in its fiscal 1985 third quarter. During the same period last year, Naugles lost $7.1 million.
Revenues for the quarter ended April 4 increased to $27.5 million, a 7% rise from the prior year’s third-quarter sales of $25.7 million. Company officials attributed the sales increase largely to the opening of 21 new restaurants within the last nine months and said sales at Naugles’ 187 older and established outlets dropped steeply enough to cause the quarter’s loss.
For the first nine months of the fiscal year, the company lost $1.7 million, compared to a loss of $5.2 million last year. The year-ago loss includes a $4.8-million reserve established in the third quarter to cover the closing of 35 poorly-performing restaurants. Revenues for the first three quarters of the current fiscal year were $93.3 million, an increase of 7.4% over the $86.9 million recorded a year ago.
Although declining sales in the older restaurants has persisted for the last seven months--sales were down as much as 8% in January--company officials said they have yet to pinpoint the cause.
Among the possible reasons, said Wayne Withers, Naugles’ chief financial officer, are a general slowdown in restaurant sales, the so-called “burger wars” that have focused attention on McDonald’s, Wendy’s and Burger King, and price-cutting competition from other chains.
Whatever the cause, Withers said Naugles expects the slide to end quickly enough for the company to post a profit in the fourth quarter than ends June 26. However, the company still expects to post a loss for the entire 1985 fiscal year.
Gateway Posts Slim Quarter Turnaround
Gateway Communications Inc., an Irvine-based communications equipment maker, Tuesday announced earnings of $49,011 for the first quarter, a significant turnaround from last year’s loss of $252,621.
Revenues for the period ended March 31 were a record $644,876, nearly four times higher than the $164,655 recorded in the year-ago period.
In a prepared statement, David S. McMaster, president and chief executive, said the young company has also increased its distributors and customers and no longer is dependent solely on a few key customers.
