CKE Cuts Its Losses, Predicts a Profit

CKE Restaurants Inc. slashed its losses for the third quarter and predicted Thursday that it will return to profitability early next year, underscoring rising optimism about the restaurant industry.

The stock lost ground Thursday after the announcement, but has still more than tripled this year. Earlier this week, the shares hit a 52-week high, a peak also achieved by several other restaurant chains amid projections of an economic recovery by midyear.

The Anaheim owner of the Hardee’s and Carl’s Jr. hamburger chains lost $1.7 million, or 3 cents a share, for the three months ended Nov. 5, down from $29.4 million, or 58 cents a share, in the same period a year earlier.

Revenue dropped nearly 20% to $326.6 million as the company continued to shed poorly performing restaurants.

Meanwhile, sales increased at Hardee’s and Carl’s Jr. restaurants open a year--a key industry measure. Hardee’s same-store sales rose 1%, the second quarterly gain in a row. Carl’s Jr. same-store sales, fueled by its “$6 burger” promotion, moved up 6.1%, well above the average gain of 2.8% for hamburger chains.

CKE shares fell $1.15, or 12%, to close at $8.30 on the New York Stock Exchange. Analysts said the stock may have dropped because some investors had expected CKE to post a profit.

For the year, the stock has surged as the company pared down a $300-million debt and began to turn around its long-struggling Hardee’s chain.

Shares of several casual dining restaurants have moved up recently, a reflection of a more optimistic outlook for the economy next year.

Outback Steakhouse Inc. and P.F. Chang’s China Bistro Inc. hit 52-week highs Wednesday, while shares of Cheesecake Factory Inc. reached that milestone Thursday.

Cheesecake Factory shares closed at $34.13, up 66 cents, after peaking at $35.23 earlier in the day. Outback Steakhouse was off 89 cents to $32.60 and P.F. Chang’s was off 68 cents to $46.55 Cheesecake Factory and P.F. Chang’s shares trade on Nasdaq. Outback trades on the NYSE.

Restaurant shares tend to outperform other sectors coming out of a recession, said Robertson Stephens analyst Paul Westra. Historically, restaurant stocks have appreciated by 150% in the three years following the bottom of an economic downturn, he said. By contrast, the S&P; 500 has gained about 50% in the same period.