Carl Karcher Anticipates 4th-Quarter, Annual Losses
Carl Karcher Enterprises Inc., owner of 379 Carl’s Jr. restaurants, said Friday that it expects to post fourth-quarter and annual losses after setting aside more than $15 million to cover the cost of a failed attempt to take the company private, store closings, staff severance payments and workers’ compensation costs.
The annual loss is expected to range from $4.5 million to $5.5 million, or 25 cents to 32 cents per share, contrasted with net income of $13 million, or 72 cents a year earlier. Revenues are expected to fall to $493 million from $534 million a year earlier.
Karcher stock closed at $8.25 a share on the NASDAQ exchange, down 12.5 cents.
The company, which also franchises an additional 244 restaurants, expects to report reserves and charges against earnings in its fourth fiscal quarter that will result in a quarterly loss of about $11 million to $13 million.
On a per-share basis, the quarterly loss is expected to be 60 cents to 74 cents per share. Quarterly revenues are expected to decline to about $104 million from $116 million a year earlier.
Same-store sales in the quarter are expected to fall 6% from a year ago, largely because of the recession in Southern California, bad weather, and competition.
The quarterly results will include reserves for workers’ compensation, store closings, severance costs from previously announced corporate staff cuts, and expenses related to a failed leveraged buyout attempt by founder Carl N. Karcher. The reserves and charges will add up to $15 million to $17 million.
The company said Friday that it plans to open eight to 12 company-owned Carl’s Jr. restaurants in the United States this year and another 20 franchise restaurants.
The company also plans to expand its presence in Mexico, said Loren Pannier, chief financial officer for the Anaheim-based hamburger chain.
Pannier also said the company would liquidate its $25-million investment portfolio in stocks and concentrate its resources in the restaurant business.
