Jack in the Box Inc. posted a 17% gain in its fiscal fourth-quarter profit, despite a $1.7-million after-tax charge stemming from the recent bankruptcy filing of Chi-Chi's.
Net income for the San Diego-based Jack in the Box burger chain, which also owns Qdoba Mexican Grill restaurants, was $16.4 million, or 45 cents a share, for the quarter ended Sept. 28, compared with $14 million, or 35 cents, a year earlier.
Total revenue for the quarter was $493 million, up 6% from $463.3 million a year earlier, boosted in part by an increase in restaurants.
The company opened 27 Jack in the Box restaurants in its fourth quarter, up from 22 opened in the year-ago quarter, and it added 15 Qdobas.
The charge in the latest quarter, which amounted to 4 cents a share, stemmed from obligations under leases on five Chi-Chi's restaurants. In 1994 Jack in the Box sold Chi-Chi's, a Mexican restaurant chain, but remained responsible for some leases if Chi-Chi's could not pay.
Chi-Chi's is one of three restaurant chains owned by Irvine-based Prandium Inc. that filed for bankruptcy protection last month.
Excluding the charge, Jack in the Box earned 49 cents a share, matching the company's previous projection and estimates from analysts surveyed by Thomson First Call. In the year-earlier quarter, the company earned 61 cents a share before a $10.4-million after-tax charge.
The latest earnings news boosted Jack in the Box shares, which rose 91 cents to $19.99 on the New York Stock Exchange. The stock has gained 16% this year.
In the latest quarter, Jack in the Box said sales at stores open at least a year rose 0.9%.
As the company moves ahead in its 3-to-5-year plan to "reinvent" the brand as a provider of higher-quality fare, it plans to curtail restaurant growth next year, said Chairman and Chief Executive Robert J. Nugent.
The company added 100 Jack in the Box restaurants in the U.S. in its 2002 fiscal year and 90 in 2003, but plans only 65 new restaurants for the current fiscal year. The company will instead convert existing stores in select markets to a new format that will include design changes and menu improvements.
Jack in the Box reiterated its earnings projection of 53 cents for the current quarter and $1.68 for all of fiscal 2004.
In fiscal 2003, the company's net income fell 11% to $73.6 million, or $1.99 a share, from $83 million, or $2.07 a share, in 2002.
Revenue rose 5% to $2.1 billion from $2 billion, but same-store sales fell by 1.7%.
Nugent said the company was hurt in fiscal 2003 by the soft economy and higher costs for food, insurance and utilities.