Karcher Profit Declines 9% in Third Quarter
Selling premium-priced sandwiches amid heavy industry discounting, the parent company of the Carl’s Jr. hamburger chain said its third-quarter earnings were off 9%, to $1.9 million, from a year earlier.
Carl Karcher Enterprises Inc. in Anaheim continued to blame the recession for its depressed earnings, although company President Donald F. Karcher said the results were in line with expectations. He said the company is well-positioned to rebound once the economy picks up.
“We are continuing to selectively trim costs at both the restaurant and corporate level,” Karcher said, adding that the company is installing a new computer system to better track productivity and labor costs.
For the quarter ended Nov. 4, Karcher earned 11 cents per share compared to earnings of $2.1 million, or 11 cents per share, a year earlier. Revenue rose 2%, to $123.2 million, from $120.9 million in the 1990 quarter.
The rise in sales was attributed to the opening of new Carl’s Jr. restaurants during the quarter. Same-store sales--which compares sales of stores that existed a year earlier--were down 2% to 3%, said Loren Pannier, chief financial officer.
Carl’s Jr. has 619 restaurants in California, Nevada, Arizona, Oregon, Japan and Mexico.
Although its everyday sandwich prices remained basically unchanged, Carl’s Jr. offered more discount specials during the quarter, which ate into profits.
Karcher will introduce a major new advertising campaign Monday in Southern California. The company hopes that the promotion will bring more customers into its restaurants, reducing the need to offer discount specials.
David Rose, an analyst for the Cruttenden & Co. investment firm in Newport Beach, said he is encouraged that Karcher is reducing its debt and paying more attention to its fast-food rivals.
For the nine-month period, Karcher posted earnings of $8.4 million, or 46 cents per share, down 32% from $12.4 million, or 68 cents per share, a year earlier. Revenue was up 4% to $419.5 million, from $403 million.